Timber Supply and Demand: How trends will affect merchants in 2014
Timber is an industry that has had numerous ups and downs over recent years. Although slightly lower volumes of timber had been purchased by consumers over 2012-2013, the fact remains that it’s important to keep on top of previous trends in order to ascertain upcoming trends over 2014 and beyond.
Here are some interesting statistics relating to consumption by volume/value over the past few years:
· 2007 (pre-recession) saw the highest amount of wood consumption in the UK. In terms of m³, this approached 18,000. The lowest point occurred mid-recession where consumption fell to 13,000 m³
· In 2012 the consumption rate was considered relatively flat, holding at 13,400 m³
· 2012 saw a 4.6% fall in overall timber and panel value.
· This fall was derived from an almost 2% drop in volume and 3% decline in the average price of timber.
The timber industry as a whole has been affected in some way or another by these trends. Whilst areas such as mainland Europe and Asia have seen an increase in volume over the past few years, the US has been affected to a larger degree with a large drop in volume. However, this is negated by the fact that UK consumption of wood imported from the states comprises less than 2%.
More important is the telling figure of a -5.5% drop in UK volume. For merchants, this presents a significant risk when you consider that UK- produced timber accounts for almost 45% of total consumption.
America has seen less particleboard and softwood production, which has meant a drop in value, whilst Asia has seen an increase in plywood and hardwoods. This has led to an increase in the value of these types.
Trends for 2014 – Supply Not Matching Demand
Although Europe has also seen an increase in Softwoods, the trends are pointing to pressure from suppliers to meet demand through to the end of 2014. Merchants are advised to ensure they have strong partnerships with their suppliers to maintain stable supply routes.
On a positive note, despite recent drops in value in regions throughout the world, the overall demand for timber is steadily rising. This is contributed also in part from the recent news that Canada is struggling to meet worldwide demand at the moment. China, who is a major customer is now having to purchase via Scandinavian routes instead.
How does this affect UK merchants? Consider that the UK construction industry is advancing a substantial pace now. More housing, commercial and engineering properties mean that demand is only going upwards. So we know that a continuous supply of timber for the UK is priority, and the country has traditionally sourced much of this from Europe. More specifically, the Nordic region and Scandinavia.
Furthermore, the recession forced a lot of sawmill closures in these regions. Capacity went down now it’s proving difficult to get it back on par with the demand being made now. This demand is exacerbated by larger countries such as China. Merchants are again recommended to review their supply network to ensure it remains viable and protected.
The bad news in the short term is that prices will most likely be rising due to this. Supply is still well below demand. Which means price increases all across the board.
Safe and sustainable
In times of low supply, regardless of the industry, it opens honest merchants up to risk from illegal supplies. When it comes to timber, it’s vital that you do not purchase supplies without the appropriate security of supply, chain of custody, CE markings and up to date legislation paperwork. Several important pieces of information should be kept and given to keep merchants on the right side of the law. For example, the following should always be completed by merchants when it comes to timber traceability:
1. To identify the operators or the
traders who have supplied the timber and timber products.
2. To identify, where applicable, the traders to whom you have supplied timber and timber products.
3. To keep this information for at least five years and provide it to competent authorities if they so request.
These trends are certainly going to put a strain on resources, which is why it is important that you keep your customers trusting you at all times. By choosing a reputable timber company that maintains a regular supply network, you are safeguarding the industry as a whole, aiding in its continued recovery.
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Image used courtesy of Wikimedia Commons