Product Availability Pressures

As has been reported widely in recent months, the shortage of raw materials entering the UK has seen reduced volumes and increased costs across the board with timber prices increasing.

These problems have been intensified by Brexit, alongside general port and freight movement complications. Also, with timber in short supply across North America in particular, sawmill closure and the effects of Covid-19 lockdowns have slowed production to a snail’s pace, seeing global supply and demand under pressure. In the USA, the price of timber has risen by more than 180% since the Spring of 2020.

A joint statement on UK product availability from the Builders Merchants Federation (BMF) and Construction Products Association (CPA) in early March stated that: “Builders and builders’ merchants alike are being adversely affected by limited availability in a number of important product groups. The continuing impact of Covid is one of several factors behind the shortages and price increases but the overall picture is more complex.”

Talking of timber specifically they said: “Timber is a global commodity and there is an imbalance between global demand and supply that is not likely to be resolved in the near future. The UK must be prepared for higher prices to continue. European production was far lower in 2020 compared to 2019 (Swedish production down 7%, stocks down 27%: Finnish production down 15%). UK imports of softwood during the first nine months of 2020 were also down, by 20% in volume. Production shortages were exacerbated by extremely high demand from the USA – which will continue throughout 2021.

“The Chinese timber market, which was supressed during Covid, is now rising with imports of softwood at their highest ever levels. Furthermore, both the US and China are prepared to pay far more for timber. In the US, the price of a benchmark 4x2 softwood product rose by 149% last year. European mills are back at full capacity, but the increased demand means that customers are on allocation, and the situation is likely to get worse in Q3 following holiday shutdowns in July and August.”

The pandemic has also seen DIY and home projects soar with many retailers running low on stock of timber garden furniture. Shed manufacturer Kybotech is warning consumers that prices will rocket as summer approaches with customers potentially left waiting months for their outdoor building. According to reports in ThisIsMoney, shoppers in the UK could pay up to 50% more for their garden sheds due to the global shortage of timber.

“We’re now in the second year of timber shortages and the impact is beginning to be felt,” said Charles Walton, Kybotech founder. “We’ve had two consecutive warm winters which has meant considerably less timber being felled and resulting in a massive global shortage. Other factors have come into play too which have compounded the problem. Combined they have the potential to push up timber prices by as much as 50% and at some point a proportion of that cost will be passed on to the consumer. At some point and as the shortage worsens, we will be left with little choice but to increase our prices.”

However, the Timber Trade Federation (TTF) reported that softwood is spearheading a ‘timber import resurgence’. Despite imports of softwood falling by 24% in Q1/Q2 of 2020, the volume of softwood imports ended up 3% higher than 2019. This came after 4.9 million m3 was imported between August and December 2020. Hardwood imports, plywood, MDF, and OSB all saw similar trends meaning the cumulative total for all timber imports in 2020 was just 3% lower than 2019.

David Hopkins, CEO of the Timber Trade Federation (TTF), said: “After the first lockdown in March last year the timber industry, just like the rest of the UK economy, came to a near standstill, and the volume of timber being imported fell sharply. Meanwhile, demand increased dramatically, both in commercial construction – which has managed to carry on during the pandemic – and domestic projects, as so many people were forced to spend more time at home and spent their disposable income on refurbishment rather than holidays or other bigger ticket items. It has led to timber becoming one of the most sought after commodities in the UK. The higher levels of import should help ease some of the pressure we have seen between supply and demand, though we do expect the tight conditions to continue well into 2021.”

More at � www.constructionproducts.org.uk � www.ttf.co.uk