About 40 manufacturers and sawmillers attending a December TIMCON meeting in Manchester heard about the “perfect storm” facing the timber pallet and packaging sector, including shortages of wood and strong cost pressures.

TIMCON president John Dye told TTJ that pallet timber price rises of £10-12 per m3 were being levied by sawmillers in January, increasing the price of standard pallet timber to around £145 per m3. Sawmillers at the meeting signalled the likelihood of further price rises in Q2.

A recent Markit/CIPs report cited a rise in pallet timber prices for the fifth consecutive month, while the Poyry index for pallet/packaging timber showed a compound increase of almost 10% for Q2 and Q3 this year.

“The price of pallet timber has really entered into unchartered waters,” said Mr Dye. “I have been in the industry for 30 years and I’ve never seen anything like it. There’s not really a lot we can do as pallet manufacturers. We keep trying to talk with the sawmills. I just hope they don’t get carried away and there’s some common sense.”

Mr Dye said the market situation had changed dramatically since he gave his president’s address at TIMCON’s AGM in May, with the construction sector since experiencing rapid growth and sawmills looking to capitalise by supplying more construction timber into the market.

“It’s very challenging. I just hope we can get some price stability in 2014.

“The mills are in a strong position. They are feeling that they have been under pressure on prices for a few years and they have a chance to start earning some good money again.”

TIMCON estimates that around 85% of timber for pallets now comes from domestic sources, with Baltic and Scandinavian imports declining dramatically.