Timber forum hears signs of reducing demand and consumer confidence

13 May 2022

Signs of reducing demand and falling consumer confidence were reported at the most recent Builders Merchants Federation (BMF) Timber Forum in London.

The May 3 forum, held at UK Construction Week at ExCeL, saw speakers drawn from the timber, panel products and builders’ merchants sectors explain current market dynamics and the impact on the Ukraine conflict on the supply chain.

A speaker from the panel products trade reported a demand drop in merchanting and DIY sectors in recent weeks, while a softwood industry expert agreed that demand would be curtailed.

Concerns about price inflation and wider geo-political uncertainties were contributing to an unstable economic climate, delegates heard.

These most recent dynamics have followed a buoyant business period for the timber products and builders merchant sector.

John Newcomb, BMF CEO, shared the latest statistics from the Builders Merchant Building Index, reporting that total timber and joinery product sales at builders merchants in 2021 were up 52.1% compared to 2020 – the biggest sales growth of any merchant product category. Compared to the pre-pandemic year of 2019, sales were up by 37.7%.

Price inflation for timber and joinery categories at merchants was +29.3% in 2021.

Merchant sales of timber were still tracking up in January to February this year - +28.4% compared to the same period in 2021, with price inflation of 35.3% - particleboard seeing the biggest increase.

Nick Boulton, head of technical and trade policy at Timber Development UK, reported that the predicted stable market conditions at the start of 2022 were now “clearly not going to happen”.

He outlined the volume and value of timber products imported to the UK from the Ukraine, Russia and Belarus in 2021. Russia represented the largest slice, accounting for 492,538m3 (£158m), followed by Belarus with 7,229m3 (£2.27m) and Ukraine at 6,019m3 (£2.74m).

These direct imports were deemed not that significant.

He said the key cladding product of Siberian larch was on the ground in plenty of volumes in Europe currently, but as time went on that would disappear. He described birch ply as the single biggest issue as far as the UK timber products trade is concerned, with significant volumes originating from Russia.

Another speaker noted Ukrainian oak for engineered wood flooring and finished pallets from Belarus as among those products being impacted.

The timber forum also heard about other issues stemming from the Ukraine conflict – with one plywood shipment having to be re-routed from Tilbury to Dundee, believed to be due to port authorities not willing to accept the Russian crew from the ship. The forum heard that the cargo had to then be trucked down from Scotland to Essex.

Delegates were told that the gap in prices between imported softwood (higher) and homegrown products would widen and that the softwood market was moving from a demand-driven supply imbalance to a supply driven imbalance.

On the panel products side, allocations have been withdrawn and stock levels have returned to normal, but energy and chemical prices were soaring, with some key base chemicals being supplied from Ukraine, Belarus and Russia, raising the possibilities of some factories in Europe potentially needing to temporarily close in H2.

The TTF’s Nick Boulton gives a timber trade round-up at the BMF Timber Forum