CLC working group signals likely impact of rising energy costs on timber prices13 September 2022
Rising energy costs are likely to affect timber prices in Q4 and Q1 2023, according to the latest statement from the Construction Leadership Council’s Product Availability working group.
Working group co-chairs John Newcomb, CEO of the Builders Merchants Federation, and Peter Caplehorn, CEO of the Construction Products Association, gave the update on a range of building products including timber.
“There are good stocks on the ground of both structural softwood and wood based panels, but stocks at ports are much lower and buyers will need to consider forward purchases to ensure the specifications they require are available through to year end and into 2023,” the statement said.
“Price pressure eased considerably over the summer but log prices remain firm as demand for pulp and paper, pallets and fuel wood is currently very strong throughout Europe. With energy costs rising, forward replacement prices for structural softwood are unlikely to be at current UK levels.”
The working group signalled price inflation remains the biggest issue for the entire industry, while product availability issues remain for aircrete blocks, bricks, gas boilers and anything containing semi-conductors and other electronics.
It said the UK Government’s announcement of a six-month energy price cap for business users would help but said the possibility of factory shutdowns on the continent may lead to shortages of products, materials and components exported to the UK.
Lead times for most roof tiles are said to be improving. Separately, the working group is concerned to hear increasing reports of ungraded and poor battens being stamped as standard.
Uncertainty around energy supply in Europe could also impact raw materials for paints and coatings, which are already affected by raw material shortages. Overall steel supply has improved, but the EU has completely filled their quotas from non-EU countries, including the UK.
“We are saddened to note that the year to June recorded the highest annual level of insolvencies amongst UK construction firms since the financial crisis over 10 years ago, despite strong demand throughout the first half of the year,” it added.
“The key risk going forward, given the substantive rise in insolvencies, is to what extent sharp cost rises and slowing demand over the next six months will exacerbate the rise in insolvencies.”