• UK hardwood trade is estimated to have shrunk 20-25% this year.
• Gaps are now appearing in UK stocks.
• American white and European oak remain best sellers.
• Prices are firming on the back of production cut backs.
• Tulipwood and ash sales are building market share.
• Some traders report certified timber holding up better.

The only certain thing about the UK hardwood sector currently seems to be its uncertainty. Varying comments from traders on the state of trade underline the volatility of the market and that prospects remain hard to call.

One agent described the first eight months of 2009 as “madly busy”, but since then said the picture had deteriorated.

“It was a case of ‘recession, what recession?’, but we suspect that was down to building projects signed off before the downturn,” he said. “In September things tailed off and we’re now in third gear. Rough sawn has just died. Thankfully hardwood flooring has held up well, but if it wasn’t for that, we’d be bleeding.”

A fellow agent reported “no real sign of recovery as far as we’re concerned”. “Some people say they’ve had a reasonable last couple of months, but we haven’t seen it. Customers say they’ve got stock to see them through Christmas and they’ll see how things stand after that before ordering,” he said. “The estimate now is that total UK hardwood trade for 2009 is down 20-25%.”

An importer/distributor, however, said that, while the post-summer pick-up was slow and the market remained “dull”, for them October showed some improvement.

“Companies were overstocked, but there’s now less hardwood on quaysides and gaps appearing in inventories,” he said. “There aren’t many guys around now holding a lot of volume and, as we’ve pledged to maintain stocks and keep material available for when customers want it, we stand to benefit.”

A fellow importer said business in the last two months was 10-15% ahead of the same time in 2008, while another trader reported some “resurgence” in November. “We’re getting more forward orders and detecting a little more confidence,” he said. “It would be tough if we sat around wondering why the phone’s not ringing, but we’ve been driving the business and most days we’re successful in some form or other.”

RMI vs new build

In terms of market sector, a distributor felt that “balance” had returned in demand between new build and repair maintenance and improvement (RMI), but the majority say that the latter remains healthier.

“As [Kingfisher CEO] Ian Cheshire said in his B&Q results statement, RMI has been helped by the ‘improve not move’ phenomenon,” said an agent. “If people can’t sell, they’re investing in their home instead, especially at the top end. That’s driving demand for oak for staircases, kitchens and especially flooring. A new hardwood floor is seen as the way to add a wow factor to a property.”

Another distributor also felt that the RMI market was underpinning “reasonable demand” from merchant and joinery customers, with the latter riding a “general move back to wood windows and doors”. “But furniture makers are still finding it tough.”

On one point there’s no disagreement: that American white and European oak remain the dominant UK hardwood species.

“European has been especially strong, in fact I can’t recall it making up such a high proportion of our oak total,” said an importer. “More end users seem to be discovering it and sticking with it.”

One agent said that they’d also seen a pick-up in maple – “and that’s the first time I’ve been able to say that for a year” – but most feel the species has been eclipsed.

“Our experience is that specifiers now prefer ash to maple,” said another trader.

Walnut is also reported to be “steady and consistent”, with sales to door producers holding up especially well.

A number of companies also reported an increase in demand for colour no defect (CND) beech and American yellow poplar or tulipwood, with one seeing volumes of the latter up 50% in 2009. The longer-term strategy of The American Hardwood Export Council is to persuade the market to use tulipwood in more upmarket applications, and it is working with Osmose on a project to treat the timber for exterior use. But currently it’s still selling predominantly as a paint grade.

“I think we could see demand for tulipwood for this sort of application increase,” said an importer. “Concerns over sustainability mean the days when we could happily import boat loads of tropical hardwood just to use painted or stained are over. And we see sales of modified wood, notably Accoya, increasing for the same reasons; they’re value for money alternatives that tick the green boxes.”

Meanwhile, latest figures put total UK monthly cherry imports at just three or four containers and demand for red oak also remains limited. “Cherry’s been done to death and red oak is still not part of our hardwood culture,” said an importer.

Another market trend mentioned by several companies, including a Continental supplier to the UK, was increased interest in Siberian larch. “It’s one of those species like cedar – is it a hardwood, is it a softwood? – but, regardless, it seems to be more popular,” said an agent.

Among tropical timbers, sapele has clearly fared best through the downturn. Several traders said meranti has shown some improvement recently, and one that iroko has also “been quite good in the last couple of months” and sipo has revived, “although we’re talking very small quantities”.

Strong decking performance

Meanwhile, a Continental trader said they had been doing particularly well in the UK with tropical decking. “Ipe, the real Rolls Royce product, always holds up, but our strongest performer is massaranduba – for today’s market it offers the best blend of quality and price, and it’s FSC certified.”

At the other end of the spectrum, utile was reported to be doing so badly by one importer that they’re considering dropping it.

Turning to price, some traders are still reported to be “virtually giving timber away”.

“People have been desperate to sell,” said the Continental trader. “The latest we heard was sapele, first shipped to Spain but unsold because of the recession there, now being offloaded ridiculously cheaply in the UK.”

Other traders, however, report that there are signs of prices strengthening generally. One said ipe had increased €30/m³ in recent months and that sapele is firming as well .

“A lot of production has been taken out in the recession, both tropical and temperate, with sawlines closed and mills mothballed, and that’s now feeding through into price,” said an importer. “Because of poor demand, growers have also left timber in the ground to put on another ring.”

According to one agent, price pressure is particularly strong in larger dimension timber.

“Eight-quarter oak has jumped 10%, basically because mills are not putting so much on stick,” he said. “In the current climate they want cash flow and they can get 4/4 out in days, while for 2in boards you’re talking months.”

American ash prices are also being pushed up by the emerald borer beetle infestation.

“Canadian ash is now coming into the equation, but the consensus is the problem is going to raise prices 5-10%,” said an importer.

Higher freight rates due to rising fuel costs and a reduction in available vessels due to the downturn in global manufactured goods trade are also expected to add to price pressure, with forwarders projecting hikes up to 25%.

Generally, traders welcome the upward trend and one said he’d like to see another 10-15% rise across the board.

“But the trouble is, rises so far have been supply led, there’s no demand pull through involved,” said an importer. “And cuts in production mean that when things do pick up, we could see quite a scrabble for timber.”

Looking forward, an agent said that the only thing he would predict about the hardwood market in 2010 is continued unpredictability, but he wasn’t overly optimistic about the immediate outlook. “I’ve got a feeling that scare stories over UK national debt and uncertainty over the election may make the first half a complete non-event.”

An importer was more upbeat, but said the next three months still “held a lot of unknowns”. “There’s a lot of pent-up demand in the housing market, so when it starts to improve, the upturn could be sharp,” he said. “But short-term prospects are unclear. I’m now ordering for February/March. Whether I’m doing the right thing, who knows?”