Supply of many forms of tropical plywood has tightened to such an extent that, if UK demand were to become very much stronger, “we would be looking at empty warehouses”, said a leading importer. Indeed, buyers are being asked to give more thought to the planning of their purchases in the months ahead because of these widespread supply issues and the prospect of ever-firmer prices.

Plywood from traditional Far Eastern sources is proving particularly difficult to source thanks to the clampdown on illegal logging and the willingness of markets other than the UK to pay “amazing” prices in certain instances. Thin panels and marine plywood are said to be in especially short supply.

Virtually no plywood is emerging from Indonesia and, as a result, experts within the trade are reluctant to venture a current price. Meanwhile, most of them placed Malaysian product in the Indo96 list +21 to +25 range, with some adding that certain mills in Malaysia had been seeking to renegotiate contracts. One importer complained: “It’s difficult to get anything shipped, and the situation will get worse and worse.” Another added: “On-grade certified Far Eastern material is like hens’ teeth. The penny hasn’t dropped with some people that there has been a massive change and that material is going to be sold in future at the price it deserves to be sold at.”

Most experts now believe that supply tightness will become the norm. “There isn’t going to be enough plywood to go round,” said one importer. “People are going to have to accept that they are not going to get what they did in the past. Other grades and cores will have to be considered.” Customers would have to revert to “holding stocks of their own and buying forward” because an ever larger proportion of imported plywood was being sold even before it reached the UK, he added.

Even Chinese plywood was said this week to be “not as readily available as it has been” and lead times are understood to have lengthened in some instances. The product remains the cheapest option for UK buyers although mills in China have begun to talk about raising their prices, according to several experts.

Brazilian delays

Supply of Brazilian hardwood plywood has also been squeezed by strike action and subsequent congestion at the main ports, although a regional expert said the situation had improved in recent weeks. “This is a welcome fillip,” he added, “because the market is being starved of good Far Eastern material.”

Having eased over the summer months, Brazilian hardwood plywood prices “are still trying to find a level”, TTJ was told. Elliottii pine plywood prices have also eased and availability is said to be adequate in terms of satisfying generally unspectacular UK demand.

Latest statistics from independent analyst timbertrends confirm that China has continued to grow its share of UK plywood imports – notably at the expense Brazil and Indonesia. In the first five months of 2006, the UK brought in 62,700m3 of plywood from China – 28% more than in the corresponding period last year. By comparison, volumes arriving from Brazil were 26% lower at 50,000m3 while imports from Indonesia nosedived 42.5% to 22,200m3. Deliveries of Malaysian plywood edged just 0.3% lower to 64,200m3 in the January-May period.

Imports of Chinese plywood recorded significant growth in the first five months of the year despite the fact that, overall, UK purchases from the four supplier countries mentioned above actually fell around 10% compared to January-May 2005. Combined, Chinese and Malaysian plywood accounted for approaching 45% of the UK market over the first five months of 2006; as recently as 2003, Indonesia and Brazil were claiming a combined market share in excess of 50%.

Faced with rising costs and stricter log controls, Indonesian mills have been keen to keep their prices firm. But while some importing countries will pay higher prices, the UK is regarded as having affirmed its status as a market swayed largely by price. Even with Chinese plywood, UK importers who have made great efforts to seek out the best and most reliable of the Asian giant’s suppliers remain fearful of losing business to lower-cost competition.


There isn’t going to be enough plywood to go round. People are going to have to accept that they are not going to get what they did in the past. Other grades and cores will have to be considered

According to the European Federation of the Plywood Industry, EU-25 plywood imports edged 0.5% higher last year to 6 million m3. Leading sources included: Brazil (1 million m3); Russia (approaching 850,000m3); China (630,000m3); Indonesia (370,000m3); and Malaysia (170,000m3). By comparison, exports by Europe’s plywood manufacturers totalled 3.2 million m3; leading shippers Finland and Russia sold most of their exports to fellow European countries.

Finland’s plywood producers have continued to experience strong demand. Birch plywood mills are reportedly sold out for the remainder of this year while their spruce counterparts are offering October or November delivery times at the earliest. “People will take whatever they can get hold of,” TTJ was told this week.

With increases of around 4% having been introduced for the third quarter, prices for both Finnish birch and spruce plywood are described as “very firm”.

As for Russian plywood, the large sheet sizes have continued to attract good demand from the UK, with lead times varying between four and eight weeks depending on the specification. Prices have edged a few percentage points higher of late but, for UK buyers, the impact has been largely neutralised by US dollar/pound sterling exchange rate movements. UK market conditions for Russian squares have improved in recent weeks although demand has been described as steady. Lead times for thinner panels are between four and six weeks, while three to four weeks is generally being quoted for the thicker specifications.

Supply of Latvian birch plywood has been squeezed by a combination of mills shutting down for summer holidays and maintenance, and increasing demand. “Demand is slightly exceeding supply and shipments have become slightly extended as a result,” one contact said. Prices had been subject to “steady firming” during the year and were likely to sustain further increases in the fourth quarter, he added.

OSB demand

Reasonably strong summer demand for OSB has given producers the confidence either to consider or actually to implement further price increases. Noting that his lead times were currently between seven and 10 days, one domestic manufacturer predicted a 4% price increase introduced several weeks ago could be followed by a similar hike as early as next month. Another supplier, which introduced its third OSB price increase this year in May, said further price progression was likely in the near future given that the market was in reasonable balance and that European demand – notably in Germany – appeared relatively buoyant.

OSB prices have been influenced to some extent by the upward momentum witnessed among other panel products such as chipboard, while demand has been helped by the environmental issues surrounding the plywood sector. “We have definitely seen moves over to OSB [from plywood],” said a senior producer figure. “But today’s OSB price levels are still not profitable.”

Prices being paid on mainland Europe are generally higher than those in the UK.

An almost 9% increase in Europe’s OSB production was recorded last year, according to the 2005-2006 annual report from the European Panel Federation. The all-time output high of around 3.1 million m3 in 2005 easily outstripped the previous record of 2.8 million m3 set in 2004. However, the UK and Ireland were unusual in European terms in registering small OSB production declines last year. After several years of stagnation, Europe’s OSB production capacity climbed to 3.51 million m3 last year from 3.12 million m3 in 2004 thanks to a major new venture coming on stream in the Czech Republic. UK capacity remained unchanged last year at 320,000m3.

European demand for OSB also established a new record last year in rising 5.7% to 2.5 million m3.