While sun-lovers might have reason to complain about the British weather this year, it seems to have had relatively little impact on the domestic timber industry.
Bad weather in the first few months did mean that some sectors had a slower start than expected – and it’s always difficult to recover lost volumes – but overall the year to date has been reasonably good following a successful 2003, and there is cautious optimism for the coming months.
Mills have seen continued demand for carcassing, with a slight reduction in competition from the Baltic states where certain specifications are in short supply and quality issues have been reported in some cases. Sawdust and chips have moved well, while for bark it’s been an ‘indifferent’ year on the retail side but with no problems in the bulk markets.
The fencing season started well, after the delayed start due to poor spring weather, and demand continues at a healthy level. Markets for decking and other garden products are also strong.
The pallet sector has been quite busy, and this has been reflected in demand for palletwood. There have been price increases this year, which are welcome and long overdue since existing levels were unsustainable. Growing demand for pallets that meet the new international ISPM 15 standard is likely to have had an impact. Many large pallet users – particularly exporters supplying markets where ISPM 15 is already in force – have been asking for heat-treated pallets that conform to the standard. Manufacturers have had to either buy-in heat-treated palletwood, or invest in their own plant to heat-treat finished pallets. As other markets adopt ISPM 15 demand should strengthen further.
Harvesting levels
Private growers have been active in putting timber to the market this year, and it is thought that the increase in harvesting seen in 2003 has been maintained. Although there have been isolated problems with specific sizes or in particular areas, there have been no shortages of standing timber offerings and growers say markets have been reasonably stable, with no dramas either way.
There are enough sawlogs to keep the mills busy, and 2004 may end with an increase in supply over last year. Intake of British small roundwood by wood-based panel manufacturers fell by 216,000 green tonnes in 2002 compared with 2001, but showed only a slight fall from 1.499 million tonnes in 2002 to 1.49 million tonnes in 2003, according to Forestry Commission statistics.
The figures seem to support complaints by panel products manufacturers that reports concerning the significant displacement of virgin fibre by recycled fibre have been “overplayed”. They say there has been no reduction in volumes of virgin fibre (small roundwood as well as sawdust and chips from sawmills). There has been a shift in the relative percentages of the raw materials, with higher volumes of RCF intake – 675,000 tonnes in 2001, 932,000 tonnes in 2002 and 993,000 tonnes last year – to meet increased production in response to good demand for panels.
Growers’ perception
Nevertheless, the perception of growers is that domestic demand for small roundwood has slackened. Thankfully, this has been taken up by growing exports to the Scandinavian pulp and paper industry – 61,000 green tonnes in 2001, 133,000 tonnes in 2002 and 217,000 tonnes in 2003. The expectation is that the tonnage will exceed 300,000 this year.
As has been the case for some time, there’s no change on the hardwood side, with quality material continuing to sell well and imported temperate species playing a strong role. There are reports of increasing interest in wood cladding, especially in durable hardwood species, which provides value-added opportunities for the sector.
There is still much talk but little action on wood fuels. Some coal-fired stations are taking chips and sawdust, but the industry thinks that the government could do more to encourage developments – both in larger-scale operations and especially in smaller plants (such as school boilers) using local wood resources.
Electricity prices are markedly higher in Northern Ireland compared with England, Scotland and Wales, so there’s additional incentive to develop alternatives. Balcas is building a combined heat and power plant and associated wood pellet plant at its site near Enniskillen. The pellets will be made from sawdust and woodchips, of which the company has a surplus as a result of increased productivity in its timber processing.
The £9m plant will produce 50,000 tonnes of fuel pellets a year, enough to meet the company’s own energy requirements – through the combined heat and power plant – and also 10,000 homes.
Industry organisation
Good progress has been made with ConFor (Confederation of Forest Industries), which is jointly owned by the UK Forest Products Association (UKFPA) and the Forestry & Timber Association (FTA). As planned, the Forest Industries Development Council was formally closed on September 30 and staff have transferred to FTA’s offices in Edinburgh, the headquarters of the new Confederation.
A huge amount of work has already been done, and the process of development is continuing. There has been pressure from some quarters to speed things up, but the establishment of ConFor is a major step for the industry and it’s essential that time is spent to get the detail right. Members of UKFPA and FTA have already voiced concern about the impact on the service they receive from the associations and are being reassured that there will be no reduction and may indeed be enhancements.
To some extent, ConFor is an act of faith at present and any talk about UKFPA and FTA closing and merging within the Confederation is premature – and in any event will not happen without the full approval of the members of each association.
David Bills, formerly director-general of the Forestry Commission, is the interim chief executive of ConFor and a job specification is now being produced for a permanent incumbent. Should this be someone with political, marketing or timber industry experience and contacts? The latter might not be essential since there will be plenty of timber people on hand to advise and support.
Funding proposal
The proposal by the working group on funding has been refined and now includes a greater role by harvesters, whose contribution will cover themselves (3p/tonne) and that collected from private growers (7p/tonne).
Major softwood sawmills will pay 10p/tonne on sawlog intake direct to ConFor as well as a reduced subscription to UKFPA, while other UKFPA members will maintain their subscription to the association but not contribute to ConFor. Panel processors will pay 5p/tonne on small roundwood intake (the Wood Panel Industries Federation is not joining ConFor at this stage but is supportive and wants to work closely with the Confederation). Discussions are taking place with the Forestry Commission about how it will work with and contribute to ConFor.
The government’s sustainable housing requirement is a big cake and everyone wants a part of it. Already, competing materials are gearing up to promote their environmental credentials. For timber – domestic and imported – it offers perhaps the biggest single opportunity for increased sales.
But to grasp it, the clear message to government must be “wood is the answer” – it doesn’t matter to the government or to builders where it comes from, as long as the material is fit for purpose. That means bringing domestic production and imports together, and co-operation between ConFor and the TTF is happening – but more is needed.
To that end, it’s good news that the Wood Promotion Premium Scheme is moving ahead. Final details should be rolled out to the importing sector within the next few weeks. It will be funded by a levy that will appear as a percentage on shippers’ invoices. Although voluntary, it is hoped that importers will pay and absorb the cost as a business expense.
The softwood industry is expected to take it up first and there are hopes that hardwood and panel products importers will follow. A key point is that money spent on promotion of each of the three sectors will be in direct proportion to the amount contributed by each sector – that’s a legal requirement.
The Premium Scheme will be used to support wood. for good – to which ConFor will also be making a major contribution – and has the potential to raise a considerable sum. Up to £4m has been mooted, with £1-1.5m expected in the first year.
