One of the big house builders likened the impact of the Brexit vote on his business to ‘dropping a brick in a pond’.

“Initially we had a big splash, people were afraid of being swept away in an economic tsunami and buying stopped in its tracks,” he said. “Then the ripples dissipated. By August we were back to the May/June picture and by October, all was calm again and confidence recovered.”

Bar the fact that some ripples took longer to dissipate, an importer said this analogy fitted the hardwood sector too.

“We saw just some customers pre-referendum building stocks where they could, probably against a fall in sterling, then growing market caution in the run-up to the vote and an abrupt pause afterwards, when everyone was watching the news, rather than doing business ” he said. “But things soon headed back to normal. If you now even out demand, it was a pretty good year, bar a period around the Brexit vote and a few other blips.”

Another importer said the referendum hadn’t affected overall sales at all.

“They were consistent start to finish, a good trading year,” he said. “Customers in all sectors were busy and, right now, Brexit fears seem to be on hold.”

One post-referendum ripple that continued to complicate hardwood trading was the fall of the pound, trading at €1.27 and US$1.42 this time last year and €1.16 and US$1.24 now, with occasional fluctuations widening the value difference further.

“Obviously this caused alarm immediately post referendum, and there was little you could do about it as the market was so febrile,” said an importer/distributor. “I don’t think many importers or agents risked any serious currency hedging because of the volatility – if you could see more than one or two months ahead, you wouldn’t have been in hardwood, you’d have been in the City!” As a result, it was ‘luck of the draw’ how traders emerged from the period of wildest currency movement.

“We continued to pay the rate at time of invoice. So if you bought before the referendum at US$1.50-60 you were rubbing your hands. If it was afterwards at US$1.30 you hung your head.”

The good news was that, while consequent price rises did hit margins to an extent, increases were largely accepted by customers.

“Continuous news coverage of the referendum, the fall in the pound and general uncertainty helped in terms of market acceptance. Customers could see we weren’t acting in isolation or taking advantage – the whole economy was impacted. We also kept them in touch on price movements.” Resilient underlying end user and consumer demand also helped traders pass most price rises on.

“Taking US white oak as an example, you could have paid around £765/m3 in the first half last year, the pound fell and it goes up to £950. That’s a big lump to swallow. But if a customer uses white oak, and their customers are continuing to buy, bar perhaps immediately after the referendum, they have to have white oak. It’s like petrol prices; you don’t like increases, but you grit your teeth and stump up because you need petrol.” In terms of supply, there have been issues with a number of species and sources.

“Across the board, supply isn’t what it was. Producers globally are still not reviving production mothballed in the recession or investing in new mills at the pace world consumption is rising, with China and India especially sucking up ever greater volumes,” said an importer/distributor. “Plus supply of some species is affected by other factors. US white oak, for example, is experiencing increasing demand worldwide, a healthier domestic market and an upsurge in Bourbon barrel staves purchasing.”

European oak supply has also tightened. “It’s partly a knock-on from US white oak shortage,” said an importer. “But there’s also rising demand in Europe, especially for flooring, and more log exports to Asia.” One outcome of this, said an importer/ distributor, is some European suppliers trying to dictate terms.

“We’re traditionally a prime oak market, but suppliers are pressing us to accept so much character and low grade for every cubic metre of prime we buy. We are now taking these to customers, however, with some success for character in joinery and furniture sectors.”

Taking currency fluctuation out of the picture, importers say European oak saw the sharpest ex-mill price rises over 2016, with most reporting an increase around 10%.

There was a general firming across other species, but most averaging 4-5%. In terms of sales by species, there was no dramatic departure from UK tradition. Despite supply issues, US white oak, European oak and sapele remained the dominant three, with meranti a league below, but providing ‘good regular business’.

Among other temperate species, US walnut demand was down on the recent past, but top quality material sold well. American cherry and maple, however, were described as ‘peripheral’.

US ash saw a pick up, according to several importers. “People have predicted its inevitable decline due to emerald ash borer infestation, but we seem to be seeing pre-emptive felling so timber can be sold before it’s affected,” said an importer/ distributor.

Tulipwood remained in strong demand and there was interest in its use in engineered products, backed by the American Hardwood Export Council (AHEC), with the new Maggie’s Centre in Oldham being the first commercial structural application of tulipwood CLT. Two importers also reported a rise in demand for the UK’s ‘perpetual bridesmaid’ US species, red oak.

On the tropical front, predictions that idigbo/framire would fade from the market due to suppliers’ inability to satisfy EU Timber Regulation due diligence don’t seem to have proved correct.

Ipe, which was hit by Greenpeace reports about illegal sourcing in Brazil, is also reported to have made a slight comeback, after suppliers and government addressed chain of custody.

Importers additionally reported rising interest in engineered tropical timber, notably laminated and finger-jointed joinery material and components in sapele and eucalyptus grandis.

“It’s from a low base, but they’re gaining momentum,” said an importer.

“Some customers are still resistant to accept these materials and their standard dimensions, but once they discover the yield and quality benefits, they’re increasingly persuaded,” added a distributor. There was less success for lesser-known tropical species (LKS).

“We’ve seen some interest, but it’s largely for one-off projects,” said an importer.

“They’re still hard sell to end-users. Customers will say an alternative doesn’t perform or machine quite like iroko. You can explain the environmental benefits of using LKS, but if it’s available, they’ll still buy iroko. It may only be when they can’t get it, they’ll try something else.”

Traders said it was too early to predict the market impact of the arrival from Indonesia of the first ever legally-assured-at-source, EUTR due diligence-exempt FLEGT-licensed timber. Most applauded Indonesia’s achievement in getting to licensing stage, but were also initially taking a cautious approach on licensed goods.

“At least until the system is bedded in, we’ll still put them through some due diligence – after all, we do that for FSC and PEFC-certified goods,” said one importer.

There was also concern that, now EUTR and FLEGT licensing are in place, the industry’s ‘sustainability agenda’ could be impacted, with traders and their customers longer-term tempted to stick at proof of legality rather than step up to certified sustainability. That said, several importers reported further growth in FSC and PEFCcertified sales.

Most traders also said it was too soon to comment on the prospects for Timbmet following its acquisition by Meyer owners the The Hadleigh Timber Group. Those that did echoed one importer who saw a ‘strong future for such a big hardwood name, given the right support’.

Looking forward the consensus was that 2017 would build on a sound 2016 and a strong start to the year in January.

“We’ve now got more stability in currency, order books are good, especially in the joinery sector, and Brexit fears seem to be parked for the moment,” said an importer/ distributor. “Pending nothing adverse happening in the world economy, we believe we can set realistic, achievable budgets and secure sustainable growth in the year ahead.”

UK UPS US hardwood imports

UK imports of US hardwood increased by 11% last year despite the post-Brexit 20% fall of sterling against the dollar, according to the latest report from AHEC.

In fact, imports were expected to equal the annual record, hitting nearly 96,000m3 after 11 months.

AHEC says sales did initially follow exchange rates, but the two decoupled after the EU referendum due to ‘robust consumption’ and predictions that sterling would continue its downward trend, leading to more pre-emptive buying June to November.

Positives for continuing strong sales in 2017 are reports of healthy UK construction activity. Giving more cause for caution, however, are high UK US stocks, notably of white oak, and predictions of referendum after-shocks as the UK’s Brexit policy crystallises. The situation is described as ‘finely balanced’.

TTF figures underline market stability

According to the January edition of the TTF Timber Statistics report, overall UK hardwood imports in 2016 were down on 2015 in the first ten months, but just 0.5% at 364,000m3. Imports from Europe fell 6%, and Central and South America 21%, but from North America, Africa and Asia they rose 3%, 19% and 8% respectively. The US reinforced its position as biggest national supplier, taking a 25% import market share.