In the news recently TTF members would have seen a number of headlines relating to rocketing structural timber prices, particularly those in the USA, with even the Telegraph announcing, “lumber prices hit record high after lockdown spurs DIY boom”. But what effect is this having on the softwood market here in the UK?
In the 40 years I have been working in the softwood sector, the UK supply chain has always been able to hold sufficient stocks to protect customers against the short-term peaks and troughs of the global timber market.
However, anyone who has tried to buy studding or joists recently will know that the current crisis and the strength of the DIY and independent merchant sectors have reduced UK softwood stocks probably lower than they have ever been with strict allocation in place throughout the entire supply chain.
UK, Scandinavian and European sawmills are all working at full capacity, but European markets have been just as strong and at price levels ahead of those here in the UK so there is no spare capacity or available stock to refill the UK supply chain. Add to this the strength of the US housing market in the run up to the November election and those rocketing lumber prices and it becomes clear that our softwood supply issues are not likely to improve significantly before the end of year.
With importers, merchants and manufacturers all seeking available softwood stocks, strict allocation will continue to be necessary for the foreseeable future putting significant upward pressure on prices. The dilemma is how far ahead are buyers prepared to commit when the demand situation beyond October remains so unclear.
Many of the enquiries received at the TTF this week have been once again asking if Brexit is going to create problems in the softwood supply chain. Ironically, the answer is probably not, but the more important question is whether the level of available softwood supply by year end will be any closer to meeting market demand.