TTJ Softwood Update: Market heading more into balance

The carcassing market has continued on the back foot with a reduction in volume business and large site developments have been slowing down. Most housing stages nearing completion have sold out in advance, which shows that the underlying demand from consumers is strong. Developers’ seem to have put new phases on hold in certain areas, and this has caused a noticeable fall in demand for TR26 graded truss material, which is used on nearly all dwellings whether brick and block or timber frame. For the time being, merchants are relying on the smaller contractors for their turnover, where the builders are focused on dormer roof conversions, extensions and one-off houses.

While it is acknowledged that softwood market prices have come off the very bottom levels, gains this year to date have been modest, and are far from reversing the effects caused by the violent crash that occurred during 2022. Taking the long-term view, softwood trading by comparison has always been like a game of snakes and ladders, with periods of hope during an upward momentum, followed by very long snakes taking the market back to despair at the bottom of the board.

The appearance grades in joinery productions have tended to shadow the price movements of the structural market, but without the full extremes of high and low. According to a number of shippers, activity in the redwood market is currently trading below their last five-year average. Some importers have noted a fall-off in the availability of sideboards on offer, which is likely to result in other markets like north Africa, that are prepared to accept lower grades, insisting on a larger share in the more popular sizes and grades.

The exclusion of Russian (and Belarusian) goods from the UK and EU has meant that Siberian larch is now unavailable through legitimate channels. There are reports of some pre-conflict volumes still sitting in some European countries but they are attracting large premiums and there are many in the UK that would not feel comfortable buying anything from a Russian source. The non-availability of Siberian larch has turned specifiers back to other similar durable replacements and importers have commented that western red cedar sales for cladding have strengthened considerably, together with some of the modified wood products such as Thermowood.

On the export side, supplies of planed C24 softwood from Latvia have been tightening as mills have stopped, or reduced production. This is in response to demand and prices that are too low to justify continuing normal production, which would mean losing money on virtually every cubic metre exported. Swedish sellers have been attempting to increase prices but are fighting each other for market share, keeping increments down to a modest level.

In Latvia, producers have not only had to cope with weak demand, but they are also experiencing very high fibre costs combined with short log deliveries. Most importantly, poor length specifications have been an issue, with the all-important 4.8m dimensions missing. Some importers have experienced unsatisfactory specifications arriving from Scandinavia as well, receiving reduced average lengths and only part shipments.

Last year’s imports fell significantly against 2021 and should go somewhere towards bringing the market back into balance. This correction will probably become more visible during Q2 of this year. Importers are buying on shorter-term cycles or even from landed stock, signalling that traders are now regaining some control of their inventories and flushing out any excesses.

The real light at the end of the tunnel lies in the growing strength of wood as an environmentally friendly material. Across government, architects and designers, the C02 reduction and capture from forest to component can be seen to beat masonry and steel fabrication on every level, and the whole world is recognising what an incredible product it is. All the industry is waiting for now is a stabilisation in demand and its true value to be realised.