After an uncertain start to 2006, markets for the UK forest products industry became increasingly strong, with successive months seeing rising demand across the product range, along with a welcome firming of prices.

Following the Christmas and new year shutdown, those positive trends have continued into 2007. Softwood sawmills across the country are working flat out to meet demand from all markets – a combination that hasn’t been seen for perhaps 10 years – and there are reports that some are struggling to keep up.

The storms were ill winds for many but led to an early start to the fencing season, especially for panels, and trellis panel manufacturers are warning of severe shortages due to their inability to source battens. Demand levels for garden products, decking, carcassing and pallet and packaging material have all continued to increase.

The only undertone of disappointment is that demand is not growing on the back of an overall rise in UK softwood consumption, which appears relatively stable. Instead, this significant change in the market has been driven by tighter supplies of imported material.

Working extra shifts

Overall, the situation is not thought likely to change for some months to come and, in the words of one source, customers have been “beating a path to the doors of UK mills” to fill the gap in their supplies. Mills are working hard – introducing extra shifts where possible – to maintain their service to regular customers while doing what they can to meet demand from new customers.

Good news, therefore, that the commissioning phase of Howie Forest Products‘ new sawmill at Dalbeattie has been completed and volumes have been building up over the past six weeks. It is already cutting three times greater volume than the old mill, which has been sold to an overseas customer, and will produce four times as much when in full production.

At present the focus is on meeting increasing demand from existing customers, but the extra capacity will enable the company to supply new business.

According to the Forestry Commission‘s UK Timber Statistics 2006, the number of sawmills cutting softwood only was estimated at 155 in 2005. With a creditable record of investment that has continued through good times and bad, they have been able to reap the benefit of offering local supply.

The statistics also estimate that, based on total sawnwood production, 76% of sawlog consumption and 71% of sawnwood production was certified timber in 2005 (66% and 63%, respectively, in 2002). That can only be good news in support of industry initiatives to increase market share on the basis of timber’s favourable environmental credentials compared with competing materials.


There is continued pressure to ensure that all UK produced material is certified. The UK Forest Products Association (UKFPA) has provided significant input to recent work – sponsored by The Timber Trade Federation and several other timber industry organisations – which has produced the first of a series of reports on certified material availability in the UK.

Of course, UK mills may offer a much-needed source of material for customers faced with supply problems from northern Europe, but those customers have also been expanding their search for imported wood. One interesting development is the potential re-emergence of Canada – although this will depend on the relative attraction of UK prices compared with those obtainable in other markets, including North America, Japan and China, and is likely to be a gradual process.

At present there are no reported problems with the availability of logs – although at this time of year weather is a major factor and the recent snow may have an impact.

There is, however, always room for more supply and the industry remains keen to encourage private growers to come into the market now. There are still concerns about supply levels after the next few years and, with markets such as the construction sector increasingly recognising the benefits of timber – as well as a more general awareness of the merits of woodlands – the industry believes this is the optimum time for the Forestry Commission to plant more forest and aid the private sector in doing so.

Impact in Wales

The impact of the downgraded production forecast by the Forestry Commission in Wales in now being felt. In spring 2005 the predicted supply was revised downwards from 1 million m3 to around 770,000m3 – a significant 23% reduction at short notice and a blow for companies that had investment programmes based on expected availability. At a time when there was a desire to reduce transport, having to look further afield for logs would add more haulage miles to the road – neither environmentally nor economically friendly.

During last year the industry was looking at how it could overcome this obstacle. More critically, however, it had to get to grips with the Forestry Commission’s new “procurement process” for buying logs from Welsh forests, which replaces the hitherto long-term (five-year) contracts that had worked so well.

Under the new system, customers first have to complete a detailed and complex pre-qualification submission that asks about their business, their plans, how they will work with the Commission to ensure deliveries are completed and how they meet the requirements of the Welsh Assembly. They then receive a detailed assessment of their submission – which didn’t go down well as it smacks of civil servants believing they have the expertise to offer comment on the way people run their businesses.

Detailed information

If the submission fails, the company cannot enter a long-term contract and has to buy at auction. If it succeeds, the process moves to the second ‘tender’ stage, where even more detailed information has to be supplied.

There is considerable frustration and anger in the industry about the way this change has been implemented, with no meaningful prior consultation with customers. The system is considered to be an inappropriate and excessively bureaucratic way to buy wood, and presents a significant burden to businesses of all sizes and especially smaller companies.

When the reduced forecast of availability was announced there seemed to be an expectation by the Forestry Commission that the private sector would step in and fill the gap. However, many private growers in Wales are already committed. For those that are not, the Wales Forest Business Partnership is organising a meeting next week, in response to a recommendation by UKFPA members in Wales.

The meeting will inform growers about the current demand and encourage them to bring their logs to market – but equally importantly will seek to find out what obstacles prevent them from doing so. This feedback may well reveal problems that can be addressed by private or public sector initiatives.

As usual, there is no change in the UK hardwood market. Quality material sells well but temperate species from North America and Europe account for more and more of the total production. The Forestry Commission statistics estimate that the number of UK mills cutting exclusively hardwood fell to 18 in 2005, continuing the decline from 26 in 2001. Production fell to 54,000m3 from 130,000m3 over the period.

Higher sawnwood production means increased volumes of co-products. In normal times this might result in weaker prices, but in fact they are stable or even rising slightly. In addition to demand from panel producers, who remain busy helped by strong Continental markets and consequently tighter availability of imported products, the increasing interest in wood for biofuel adds to demand.

Co-firing consultation

The consultation on the revision of co-firing regulations finished on January 5 and the government is unlikely to rush to respond since the main proposals wouldn’t come into effect until 2009. Several biomass projects will come to fruition this year and the panel products industry remains concerned about the potential impact on its supplies of co-products and small roundwood.

At present, panel producers seem well stocked and there are no reports of pressures on raw material supplies. However, the industry believes that any increase in co-product volumes is likely to feed demand for biofuel, either used by sawmills that are looking to install their own biomass plant to offset the rising cost of energy, or to external biomass or co-firing plants.

There is a definite air of optimism in the UK forest products sector at present and, with the expectation that current high levels of demand will continue for many months, the industry has the opportunity to show its strengths as a reliable supply partner to existing and new customers.