UK plywood trading has been operating in a slower gear than usual for this time of year but the sector is hoping orders will pick up when the weather does.
It has been a busy time in other ways, however, as on January 1 it became mandatory for Timber Trade Federation (TTF) members to carry out third-party testing on species and glue bond.
The new requirement came out of the TTF’s Panel Products Review which identified that some plywood sold as the structural standards EN636-2 and EN636-3 was not fit for structural use. The TTF tests revealed there was cause to be concerned.
“The three classes – 636-1, 636-2, and 636-3 – are all valid technical classes and to the untrained eye they look the same but they have different glue bonds and different lay-ups, which perform accordingly.
Provided you’re honest about what it is and what it can be used for that’s fine,” said TTF managing director Dave Hopkins.
The TTF found some of its members and merchants were using terminology, such as WBP, which is out of date and the wording of some standards left room for loopholes.
“We realised people didn’t understand the standard and if you don’t understand then you’re not producing goods to the right quality,” said Mr Hopkins.
As well as third-party testing, the TTF requires clearer pack marking. All markings listed on the Declaration of Performance should be on the outside of the pack.
“We’re trying to ensure that all these things are in line with the Construction Products Regulation and the EUTR,” said Mr Hopkins. The 636 set of standards is undergoing a five-year review and the TTF has proposed that the word “structural” be removed.
“We don’t want to change the standard but just have structural removed because that’s what’s causing confusion,” said Mr Hopkins.
Now the TTF is using its links with the Builders Merchants Federation to advise timber and builders merchants to ensure only Class 2 and above is sold for structural use. It is also encouraging merchants to buy only from TTF members.
“Merchants choosing to stock plywood with a Class 1 glue bond should exercise extreme caution in staff training, stock handling and stock segregation to avoid products being used in the wrong situation, and potentially failing in application,” said Mr Hopkins.
The TTF is providing information that members can download and give to customers and is also making more guidance about specifying available on Wood Campus. It has issued a table of plywood technical classes to help merchants develop their knowledge, minimise their risks and advise customers.
Some traders have downgraded stocks of untested 636-2 to 636-1 but Mr Hopkins said there was still plenty of legitimate supplies of 636-2 available.
One importer said he would continue to offer the three grades and he expected the majority of customers to continue to buy 636-2. “Some may be able to accept 636-1 but the product will be marked and sold accordingly,” he said.
While this new requirement has been one dynamic in the market, the weather has been another. As always, Easter had a negative impact on sales but it was the prolonged winter weather that really dampened momentum.
One importer was optimistic that the post-winter pick-up was just delayed and demand would strengthen in the coming weeks, but another contact was less certain.
“We’re seeing a tightening in demand in the merchanting sector. The general construction market is quieter than it was,” he said.
Price increases have been steady but he believed this had created a false picture on two fronts.
“Firstly, merchants generally look at sales by turnover, not volume. I suspect many feel sales are going well when, actually, volumes have either remained static or declined.
Second, merchants are probably unaware that they’re heading for some fairly significant price increases.”
He believes the increases were partly a result of the TTF’s new requirement for third-party testing but mainly because globally demand was outstripping supply.
The US and Japanese markets are busy so there is no shortage of buyers looking for product.
Unless the pound continued to improve, prices would have to rise, he warned. If the pound weakened, they would rise “a lot more”.
The quieter period in the UK has coincided with some supply issues.
Indonesian plywood is said to be in short supply as production has been affected by lack of availability of roundwood which hasn’t been helped by the wet weather in the region. Tighter controls on illegal logging have also had an impact.
One importer said that the supply issues and weaker demand had led to “a few silly people discounting material”. While irritated by the practice, he said some companies had to do it because of cash flow, and eventually the market would “put it right”.
In China, the new environmental regulations, which have required producers to introduce several measures, such as replacing oil-fired boilers with cleaner fuels, have affected supply as some mills closed while they made the changes and others shut permanently.
Mr Hopkins said there were plenty of legitimate supplies of 636-2 available and, while the TTF’s measures may have had some impact on supply, the environmental clean-up of Chinese factories would have had a bigger influence.
“There was an impact on stocks but material is coming in now. It will end up being OK but shipments are a bit behind compared with usual,” one importer told TTJ.
One trader said he was happy with demand, however, regulatory changes in China meant that in the several decades he’d been in business, there had never been so many uncertainties affecting Chinese producers. Factories had installed gas-fired boilers as instructed but in some areas there was no gas supply. Glue factories also had to clean up their act so they closed temporarily, which affected availability, and now the new measures have raised costs.
The clean-up had also created a shortage of poplar veneer as the small veneer mills unable to afford gas-fired boilers have closed. Now a new environment tax is planned, which will add further cost to production.
At the same time, the domestic market, once a secondary consideration for Chinese producers, is proving more attractive. The booming furniture industry is hungry for plywood and will buy higher quality product, which demands a higher price and plywood producers don’t have to risk loss of income from the constantly changing dollar/yuan exchange rate.
Although the UK market has been slow to get going, traders are optimistic that demand will pick up, especially once they’ve completed the third-party testing for all their products. “Buyers are now moving stocks and we’ve had more enquiries in recent weeks,” said one importer.
Mr Hopkins is bullish about plywood’s long-term future. “Plywood is a great product and demand is increasing. The future is bright but we have to do our bit to make sure panels are what they say they are.”
