The recent arrival of substantial redwood cargoes is helping to restore UK inventory levels from the shortages which began during the early part of the year.

The increased volume of landed stock has given rise to an improvement in the balance of specifications available, including both centre-cut sizes and sideboards.

This comes as good news for merchants who have been struggling for material to produce planed sections and mouldings, but for some it has come too late as sales are now tailing off and business is becoming quieter.

In spite of the current improvement in supply there are still shortages in wide widths, and 200/225mm boards are still extremely scarce. Furthermore, several Swedish shippers are reporting difficulties in obtaining redwood decking sections for the first quarter and they are expecting another round of shortages for 2007. Even though redwood price increases have slowed down, the mills are closing business for January at another €5-7/m3 up on current levels, and demand from the markets of Mediterranean North Africa and the Middle East is still strong enough to keep price levels firm and gradually rising.

The situation regarding the whitewood market is far more chaotic and, with demand well in excess of supply, prices have been increasing at unprecedented levels, almost on a fortnightly basis.

Whitewood logs are still in short supply in most areas of northern Europe including the Nordic countries, the Baltic states, Russia and Germany where it is reported the mills have reached their allowable annual cutting rate. Log prices are high, and global demand is driving them higher still, making it harder for the local sawmills to afford enough fibre to keep their production viable.

A number of contacts have reported cases where Baltic shippers have reneged on forward contracts; either they couldn’t, or wouldn’t ship without an adjustment to the agreed prices. In some cases the ‘adjustment’ represented between €20-30/m3 and, faced with no alternative supplies, the importers agreed to pay the supplement to get the goods.

Late orders

One of the problems facing a number of UK buyers is that they were late in accepting that global shortages and rising prices were a reality. While other markets such as Holland agreed to pay increased prices at an earlier stage to secure supply, many British traders held back in anticipation of a weakening in the market, only to see cargoes snapped up elsewhere. As a result, the UK is now paying some of the highest prices in Europe for whitewood in all grades and specifications.

Looking forward to the first quarter of next year, there is a consensus among the Swedish mills that whitewood prices will rise again by anything between SKr100-200/m3 which would put the price of dry graded carcassing at a figure of over 35% higher than 2006. Volumes are likely to be reduced because many of the mills have over-sold their productions for this year and will take some time to catch up on existing contracts.

Official forecasts put Sweden’s softwood production at 18.3 million m3 for 2006, but recent trade statistics suggest that the actual figure was less than 18 million m3, with sales (both domestic and export) reaching over 19 million m3. If these secondary figures are true, and production also falls by a further 300,000m3 as predicted, then it is very likely that shippers will be allocating less volume to all markets in 2007.

The whitewood shortages in Europe have proved constricting to agents who, in spite of obtaining high levels of enquiries, have suffered significant downturns in earnings as offers of supply have become few and far between. This has induced many to return to Canada with a view to re-establishing some of the old links that were lost when the plant health issue between Canada and the EU forced them to look for other markets. Several agents report an interest from both the Eastern and Western Seaboards as prices are moving steadily upwards in the UK and mainland Europe.

The main criterion for the mills is that the market should be a long-term prospect as it will involve changes to production systems and specifications, plus re-establishing the logistics of transport and shipping lines.


At present, much of the trade between the UK and Canada is carried out by container traffic, which is suitable for limited volumes as the containers need to be de-stuffed and the goods extracted for conventional road transport and unloading at the importers’ yards. If the volumes were suddenly to increase significantly, then traditional shipments would need to be resumed and cargoes would be potentially much larger than those crossing the North Sea.

Canada’s production for 2006 is estimated to reach around 58 million m3, which is only 5 million m3 less than the entire production of Russia and its adjacent states, Norway, Sweden, Finland, and the Baltic states put together. Given the downturn in the US market, combined with the settlement terms of the US/Canadian lumber dispute with which many mills are dissatisfied, it is now a serious consideration for the producers to come back to the UK market.

There are some differences in presentation between the European mills’ production and many of the Canadians’ production (particularly in the east), which is likely to contain more wane and pin-hole (ambrosia) in the sawn stocks than their counterparts. This is usually completely acceptable under the technical considerations of the grading rules, but UK buyers and users will need to be re-educated on these matters to avoid the inevitable claims and disputes that are likely to arise.

However, the Canadian mills have extensive kilning facilities as many were bought in the mid-90s to satisfy the demand for dry-graded softwood from UK buyers. However, the demand did not materialise at the time and many companies continued pursuing cheap wet supplies from wherever they could buy them, and eventually relations were forged with the Baltic sawmills.

The Canadians’ kilning investments eventually proved invaluable, allowing them to sell more into the US and open up new markets in the Pacific Rim, which gave them a new customer base.

Unseasoned stock

It is ironic that, in spite of the efforts by the UK trade, its official bodies and associations to promote the use of kiln-dried softwood for the past 12 years or more, the demand for unseasoned stock remains significant. The current shortage of this product has led to the highest percentage price rise so far this year at over 40%. Even though the price is catching up with kilned stock, the small gap between the two still induces some merchants to continue the practice of selling it into the building sector where dry-graded should be used.

To summarise the position of the softwood market, redwood prices remain firm and modest increases are expected in the new year, but the pace of price rises has slowed.

Whitewood is still difficult to obtain and prices are still rising sharply. Shippers are continuing to ask for steep increases regularly, and further large jumps are expected to hit in the first quarter.

If whitewood continues to rise at such a level, the question may be asked as to whether redwood will regain momentum, or will the price of whitewood carcassing begin to exceed it?