Recent movements in international exchange rates have started to impact on the softwood market, particularly in the US where the weakening of the dollar has forced up the price of imports. This is expected to slow down American demand for northern European whitewood and, with other markets dragging their heels, Swedish shippers are planning to increase their focus on the UK.

A number of agents say that mills are showing a greater willingness to consider offers, which appears to be a step away from the bullish stance they have adopted. Sterling’s strengthening against the Swedish krona has helped to mitigate the situation and, although prices in pounds have weakened slightly over the past three to four weeks, the return to the mills in kronor has, in reality, remained relatively stable.

Japanese market

While there are questions hanging over the US market, there is strong speculation that the Japanese market is about to improve, and this is an area that has been developing for both redwood and whitewood shippers. Japanese prices have remained firm even though volumes have dropped during a period of economic difficulty. Now there is talk among shippers that demand is likely to increase and prices are to rise further. Although this news is unlikely to have a general effect on the market, it will certainly buoy up mills that have developed a trading relationship with Japan.

In the carcassing market, whitewood log supplies have improved greatly, and this is particularly true at Swedish sawmills where inventory levels are reported to be rising steadily. But these log stocks were bought at high prices, and current costs are still high, although the shortages that plagued the mills last year are no longer around. This position confirms that shippers can only reduce selling prices in line with currency adjustments without reducing returns. Some cheaper Swedish offers have been circulating for prompt shipment but, in practice, specification is still of more importance than price.

The Swedish home market is fairly weak and, with other European construction markets remaining quiet, the UK is seen as the best market to sell into. A number of Swedish shippers say that UK buyers’ confidence in the forward market has recently been undermined, causing them to hold back from placing further contracts until the position is clearer. They are all anticipating some weakening in the sterling price of dry-graded carcassing, the only question being by how much.

Log supplies have improved in the Baltic states, helped by favourable weather which has allowed felling operations to continue unhampered. Prices are unlikely to weaken as, with a background of expensive raw material and sterling’s mean monthly average actually 1.25% lower against the euro than at last February, shippers have little scope or reason to sell for less. They are more likely to cut back on the production of graded softwood than be squeezed by reduced margins. In fact, rather than dropping prices, Baltic shippers have been trying to push for an increase of £2-3/m3 since the beginning of the year.

Russian cargoes

Prices for unseasoned Russian whitewood cargoes from Archangel have remained unchanged since the last quarter of 2003, and with forward sales continuing firm for the second quarter of this year, the unseasoned ungraded market is showing fewer signs of price pressure for the foreseeable future than dry-graded softwood.

Staying with whitewood, the price of kiln-dried Nordic joinery grades has weakened and shippers have commented on the increased difficulty in selling 22mm sideboards. Demand for cross-cut components used by furniture and bed manufacturers has increased, but new suppliers from Russia are starting to compete against some of the regular Scandinavian producers.

Overall, the market for kiln-dried joinery and dry-graded whitewood is expected to be tough this year and many traders have already started to keep a close eye on their overheads. The ever increasing use of engineered wood products is still gnawing away at solid wood’s market share of joist material, and the distribution network of the various I-beam manufacturers has grown in tune with rising demand. I-beam manufacturers predict a share of 60% of the joist market by the year 2010; if they achieve this figure the prospect for square sawn dry-graded timber in the UK will become most uncertain.

In the redwood market, there have been some delays in the arrival of Russian cargoes as vessels have been forced to seek shelter in European ports from bad weather over the North Sea. Unlike the volumes of unseasoned Archangel whitewood, prices of new redwood shipments are trading at lower levels than for the last quarter of 2003. This drop in price has become quite severe and reflects the fact that too much stock is already on the ground and still seeking buyers. Although many Nordic shippers have secured a good number of contracts for March and April, landed Russian stocks combined with volumes still to arrive are causing uncertainty amongst UK buyers. It is generally accepted that the merchants and importers are by no means over-bought, and if demand increases sufficiently in the second quarter then what could become a major problem should be averted. In the meantime, while demand remains a subject for speculation, agents and shippers alike are experiencing a slowing of the forward market.

In the UK, February proved a quiet month for many merchants, but most have some reasonable orders in the pipeline for March. Quayside terminal operators with landed stock in the right sizes have reported increased sales through January, although February was much quieter than expected.

Last year, decking sales soared from March onwards, and the market became frantic due to late shipments in raw material caused by extreme winter weather in northern Europe. This year’s demand will test the ongoing popularity of the product, as the market is reaching maturity following high levels of media exposure by garden design programmes.

At present there are substantial volumes of decking sizes such as 38x125mm either landed or en-route, so this year demand should be far easier to satisfy.


An issue that will have an increasingly significant impact on the supply chain is environmental accreditation, with a growing number of timber merchants experiencing demand from local authorities and end users for environmentally certified timber and chain of custody information. While a reasonable volume of accredited joinery grade timber is now available, carcassing producers have not generally been in a position to pursue such accreditation and only a handful can offer relatively small quantities of PEFC and FSC verified carcassing.

While shippers in full control of their sourcing will be able to meet the criteria at some point, quay exporters gathering timber from a number of different mills will find it harder to comply with the standards.

There are already question marks in the trade over the validity of cross-border log imports, and this issue is bound to become a hot topic in the not-too-distant future.