After several seriously challenging years, there’s a growing belief that the international softwood industry may finally be turning an economic corner.

This was the headline view that came out of the International Softwood Conference (ISC) in Edinburgh on October 17-18, an event which John White, chief executive of co-host the Timber Trade Federation (TTF), summed up as exuding a "definite sense of collective optimism".

Leading industry speakers, economic and market commentators at the conference acknowledged that improvement remains patchy. Some western European economies are still struggling, or experiencing only a tentative or fragile pickup. Indicators for others, however, point towards increasingly strong emergence from the downturn, with the upswing in the UK and US cited among the most robust. And the general ISC consensus was one of cautious confidence that, although the softwood sector may have undergone structural changes in the recession and progress for some remains slow, business overall is on the road to recovery.

Held in association with the European Timber Trade Federation (ETTF) and European Organisation of the Sawmill Industry (EOS), the annual event attracted around 150 delegates from softwood companies and industry organisations across Europe.

Generally, the role of ISC host alternates each year between a national timber trading and a sawmilling industry organisation, but this year the TTF and Confor shared the duties. The conference itself was also preceded by a factfinding tour covering the UK timber supply chain. This included visits to the state-of-the-art sawmills of BSW Timber at Fort William and James Jones & Sons at Lockerbie, and the athlete’s village site being developed for the 2014 Commonwealth Games in Glasgow by timber frame specialist Mactaggart and Mickel.

The aim of the joint-hosting approach, said Mr White, was to underline the range and diversity of the UK timber sector and its growing degree of vertical integration; "our continuing global importance as a timber trader, and increasing strength as a producer".

"We also wanted to underline the increasing level and depth of collaboration across the industry, with the TTF, Confor and other leading organisations working ever more closely through the Timber Accord," he said. "It’s the sort of cooperation that is key for the timber sector overall to underpin recovery and to defend and build market share in competition with well-resourced and cohesive rival materials industries."

The Conference opened with a panel discussion chaired by Mr White, which underlined the still varying pace of the international market upturn. Stephen King, TTF president and commercial director of SCA Timber Supply Ltd, said the UK recovery was gaining traction and feeding through to timber.

"We’ve seen a definite uplift in demand to the point of potential shortages in some specifications and inflationary pressures in the supply chain," he said.

George Webb, group purchasing manager of Norbord Europe Ltd, also highlighted positive conditions in UK sawmilling.

"The industry has undergone dramatic transformation in recent decades, with major and continuing investment increasing its share of the UK domestic softwood market from 10% to 42%, and also seeing a move into more value-added production, such as I-joists," he said. "It has, of course, benefited from the weakness of sterling, which has made imports less competitive. The downturn has also distorted the picture, in that the sector has taken a larger share of a smaller overall pie, but it is now well positioned to capitalise on the upturn and is looking at a great future."

Andreas von Möller, ETTF president and managing director of German timber trader Jacob Jürgensen, said the outlook in parts of the Continent remained more cautious and described the industry picture across Europe as a whole as complex.

"The building sector in a number of countries continues to contract, so construction timber is looking for a market," he said. "Some economies also still lack that click of confidence the UK seems to have had."

Through the worst
Overall EU building permits this year were still 10% lower than 2010, he said, and January to June sawn softwood exports and imports were down respectively 3% to 21 million m³ and 9% to 13 million m³. However, he concurred that the EU overall is probably now through the worst of recession. "There’s a belief that, slowly and silently recovery is coming and we will see stronger improvement from 2014."

This belief was borne out by figures in the ETTF and EOS market survey, which forecast softwood production in ISC participant European countries rising 3 million m³ to 109 million m³ in 2014, and consumption 2.3 million m³ to 76.3 million m³. The report also predicts North American output and consumption increasing around 3 million m³ and 2 million m³ to 95.7 million m³ and 83.2 million m³ respectively.

Måns Johannson, CEO of Vida Timber and EOS president, said European softwood sawmilling was currently still hampered from increasing output significantly by log shortages, but also confirmed "consumption is coming back a little". At the same time, he said that the strategic industry shifts made since recession hit in 2008, notably the reorientation of Nordic producers towards the Middle East, North Africa and China, were likely to be permanent fixtures, to a lesser or greater degree.

Ed Pepke, senior timber trade and policy analyst at the European Forest Institute, said overall European demand may currently remain weak, but the outlook for EU, North American and Russian sawn softwood industries was increasingly positive, with sawn and log prices expected to firm.

"Nineteen EU countries forecast upward housing start trends after six years of stagnation or decline, with the total predicted by Euroconstruct to exceed 1 million next year," he said. "And the National Association of Home Builders forecasts US annual housing starts heading toward 1.6 million in 2015, compared to 1 million for 2013."

Looking forward, he predicted that ‘green building’ would be an increasingly important driver for timber consumption. He also highlighted the ‘phenomenal’ transformation of the UK softwood industry, now Europe’s seventh biggest and, he said, set for continuing growth.

"Although with UK consumption still over twice production capacity, overseas suppliers needn’t worry quite yet that it’s going to be selfsufficient any time soon!"

Looking at the market influence of China, Setra Group marketing and business development director Olle Berg’s said that short to medium-term massive housebuilding would continue to drive softwood import growth.

"And if the US recovery means there’s no additional Canadian timber for China, a gap could open for European softwood," he said.

Giving the North American perspective Marc Brinkmeyer, chairman of Idaho Forest Group, said the US housing sector could avoid a feared over-heated "supercycle" recovery, and that its 110 million older housing stock represented a lucrative repair, maintenance and improvement market for US softwood. He also said the sector’s prospects had been improved since the US and Canada had ended their long-term softwood lumber dispute and the North American industry had joined forces in the Softwood Lumber Board, which was devoting US$20m to marketing. It too was focused on ‘green building’, with one headline-grabbing initiative being the Timber Tower Research Project, a blueprint developed with Chicago architect SOM for a 42-storey block in a new cross-laminated softwood and concrete hybrid build system.

Broader economy
The ISC also heard more positive news on the broader economic front from Yorkshire Bank chief economist Tom Vosa. He said that global GDP growth remained "below trend", but that 2013’s forecast increase of 2.9% would still add nearly US$2.5trn to the world economy. In addition, contrary to expectations that emerging markets would continue to set the pace, a bounce back from developed economies was now forecast.

"An effective end to EU austerity measures is also expected in 2014," he said.

In his concluding reflections on the ISC, BSW chairman Martin Gale said the softwood sector was now looking forward with increasing confidence.

"General improvement in global economic activity is predicted to impact positively on house building and construction softwood," he said. "Forecasts for 2013/14 are cautious, but with significantly improved demand from 2014/15."

Building the future in Scottish softwood
In his ISC presentation entitled ‘Towards a New Timber Architecture’, architect Peter Wilson director of the Wood Studio research centre at Edinburgh Napier University’s Forest Products Research Institute, said a £1.5m, European Regional Development Fund-backed project at the facility was aiming to bring 20 new construction solutions using Scottish softwood to commercial production. These included cross-laminated timber, Brettstapel dowel kam, nailedstacked plank and stress lam post-tensioned bridge systems, floor trusses and external cladding.

EU focused on legality and promotion
On ISC day two, ETTF secretary-general André de Boer addressed the implementation and impact so far of the anti-illegal timber EU Timber Regulation (EUTR), which was introduced in March. He said uniform enforcement was a priority and that ETTF members would be keeping a watching brief. He was critical too of the EC’s late approval of EUTR Monitoring Organisations, which, he maintained, could make many companies’ lives easier in coping with the demands of the Regulation alongside day-to-day business.

He also added that there was early evidence of the EUTR having initial market impacts, and steering EU buyers towards such products as engineered softwood, and away from tropical species perceived as higher risk of illegality.

Meanwhile, Kimmo Jarvinen of the European Wood Initiative gave an update on the ETTF and EOS-backed European Wood Promotion Campaign. This has developed a marketing toolbox for the industry, under the Wood Growing Cities banner, to encourage use of timber in urban construction and development.