• UK market demand for US hardwoods fell in 2007.
• Some producers are looking to export markets.
• American white oak remains in fashion.

If all we did was watch the news and listen to the pundits, we might be fooled into thinking that we are already in a deep recession. Not so, according to the UK’s hardwood importers, who report that, while there are certainly both demand and supply issues concerning American hardwoods, 2008 has, so far, not been too bad.

As encouraging as this may be, we are only a third of the way into the year and many importers also believe that things may get a lot worse in the coming months and that the media hype may just start to ring true.

There is no doubt that UK market demand for American hardwoods dropped last year and this is echoed by the statistics which show a 14.6% decrease in the volume of shipments of US hardwood lumber. However, this decrease is in direct comparison with 2006, which proved to be a year of frantic buying in times of uncertainty over future supply sources and possible price hikes. So, the picture painted by the statistics is perhaps more indicative of a return to normality than anything else. Jump to the first two months of this year, however, and the downturn has been extended further, with UK imports of US hardwood lumber falling by 30.9% in volume, as against the same two months in 2007.

While this could be a result of slow buying activity during the post holiday period, it may also be evidence of a real downturn in demand from the UK’s hardwood consuming sectors. Falling house prices, increasing fuel and food costs and a tightening up of credit facilities will certainly have had, and continue to have, an impact on the UK’s furniture, kitchen and flooring manufacturers. Furthermore, increased pressure on the Exchequer is likely to mean less public spending on projects where hardwoods are used.

Changing US domestic demand

At the same time as the UK is beginning to feel the pressure, the US hardwood industry is facing one of its most difficult periods. US domestic demand has changed considerably in the past few years, so that lumber producers are focusing more on exports just to maintain sales. However, they are also looking to reduce their production costs and maximise their profits which, in many cases, means sticking to what they know best and not focusing too much attention on servicing high specification contracts for non-standard items. In plain English, this means that certain UK specifications, such as 10in and wider white oak, are proving hard to come by. Throw into the mix a host of US lumber producers who are new to exporting (or making a return to exporting) and what you have is a flood of offers for standard items at a wide range of qualities and prices.

The result of all of this is that the UK market situation for US hardwoods cannot be summed up concisely. For example, UK hardwood importers speak of somewhat mixed fortunes, reporting the presence of a buyer’s market for standard items and a seller’s market for more unusual specifications. Additionally, they report that business has been fairly reasonable through the first quarter of this year, with demand stable and supply, sometimes hard, but always manageable. With such a large proportion of the UK’s high quality hardwood consumption dependent on the health of the building sector, the uncertainty in the housing market is bound to raise some concerns that the joinery sector can maintain its recent levels of activity.

Despite the apparent slowdown in white oak shipments to the UK in recent months this species remains very much in fashion, especially for joinery and flooring. This change may therefore be more to do with a more cautious approach by importers to stock levels and delays in forward shipments than any significant fall-off in demand.

One should also take into account the continuing demand for oak in both log and lumber form from Asian buyers and especially Chinese importers. Equally, European oak is under similar pressure, with reports of increasing log shipments to China and firming prices.

European competition

Over the past few years UK buyers have increased the amount of European oak they import, especially from eastern Europe where colour selections and special sizes have been easier to source, albeit with price premiums. But given the high value of the euro and increasing pressure from other markets, there are indications that buyers are already turning back to American white oak to ensure they have the stock they need to service demand.

Some of the pressure is being relieved by American red oak, which has seen shipments to southern Europe increase dramatically in the past 18 months. In contrast, buyers and manufacturers in northern Europe seem more reluctant to turn to red oak until they are sure that there is a sustained demand in place.

According to AHEC, which has been campaigning hard to raise the awareness of red oak, there are very positive signs that it is being more widely used. The use of red oak at Northampton School for Boys received a lot of publicity in the architectural and design media.

Further publicity for red oak in the UK is expected later in the year at the internationally acclaimed Guardian Hay Literary Festival for which Oxford-based designer/maker Philip Koomen is producing a range of customised stage furniture in red oak. And AHEC has just learned that Dutch architect Frits van Dongen is featuring red oak throughout the interior of the new Amsterdam Music School, due to open later this year.

Positive reports

The story for tulipwood has been far more positive, with imports growing by 53.2% last year to 22,031m³ and this growth continuing through the first part of this year. Still mainly seen as a cost-effective utility hardwood for joinery and furniture, often painted or stained, there is still more potential to grow demand for this species, if its natural look becomes more widely accepted.

Whichever way we look at it, one view that is shared by all is that no-one really knows what 2008 will ultimately hold. However, what is more certain is that wood is reaching new levels in terms of fashion and market acceptance and its renewability and sustainability will keep it at the forefront of environmental building solutions for a long time.

Another certainty is that the US has a very diverse and accessible resource of hardwood, which continues to grow. Put this together with a hardwood industry that is committed and capable of offering quality hardwood to export markets all over the world, then there is no doubt that US hardwoods will continue to be a key long-term source for hardwood buyers in the UK and elsewhere, whatever the prevailing market conditions.