Ukraine War & Supply Pressures

David Hopkins, CEO of Timber Development UK, offers an insight into what may lie ahead for the timber supply chain during the second half of 2022.

TThe beginning of 2022 saw most timber merchants’ shelves fully stocked with timber following the supply challenges that we all experienced in 2021. And yet we started the year aware that a number of possible barriers to trade lay ahead, even before the war in Ukraine began. Rising global fuel costs are having a significant impact on manufacturing and prices across the board, with many of these costs inevitably being passed down the supply chain to merchants and tradespeople.

We’re also still experiencing the impact of a widespread shortage of HGV drivers, and despite government attempts to fast-track new drivers coming into the industry, we expect that this will continue until at least the end of 2022. Add to that the impact of new customs regulations that came into force on 1st January 2022 as a result of Britain’s departure from the European Union, and it was already clear that, despite the return of timber stocks on the ground, the next 12 months would be far from plain sailing.

Now, as the impact of Russia’s illegal invasion of Ukraine continues to have an impact on supplies of certain products, we know there are some uncertain months ahead for everyone.

Prices remain high

Timber prices remain high this year after significant increases during 2021. The average price of sawn and planed softwoods in May, June and July 2021 rose by 55%, 65% and 88% respectively compared with 2020 levels, and there has been little fall away from these peaks so far in 2022, despite stocks on the ground mostly returning to prepandemic levels. Given the high price of fuel and manufacturing, we do not expect prices to fall significantly for the rest of this year. Timber is globally traded and the UK is, effectively, competing with other markets including the EU and the US for timber imports. Increased demand from one country or region will inevitably impact on the supplies available to another, and prices are always affected by that balance between supply and demand. The US repair, maintenance and improvement (RMI) and private housing markets are booming and this is likely to mean greater competition for wood supplies this year – inevitably either driving prices higher or, at the very least, keeping them at current levels.

It is possible that current consumer concerns in the UK around the rising cost of living and falling consumer confidence may cause demand for private RMI work to fall slightly as people choose not to spend money unless absolutely necessary. Whether this may help to offset or at least slow down any price rises only time will tell.

The impact of Russian sanctions

The war in Ukraine and subsequent sanctions are already affecting the timber supply chain. UK and EU sanctions have banned the imports of timber from either country – a move that PEFC, FSC and Timber Development UK all strongly support. Ultimately, any timber exported from Russia or Belarus since 8 April is now considered ‘conflict timber’ and cannot be used.

Although the UK imports little timber directly from Russia, the removal of this timber from the global supply chain will inevitably have an impact on supplies of a number of timber products, specifically Birch Plywood, Oak, and Russian Siberian Larch. In some cases, especially for Russian joinery redwood, whitewood and birch plywood, these products aren’t directly imported into the UK in large volumes, but are exported from Russia into the EU, where they are processed and repackaged into Planed All Round Timber and mouldings before onwards delivery – and so may not be immediately obvious as having come from Russian source material. We recommend that any company purchasing timber from the EU takes steps to check the source of these products if you have any concerns.

At Timber Development UK we are working continuously with our members and EU supply partners to identify alternative sources for these timber products wherever possible. There are alternative supply chains for Birch Plywood in Finland, Estonia, Latvia and Poland, though it is unlikely there will be enough spare capacity from those manufacturers to fully make up for the lost Russian supply.

Possible alternatives to Birch Plywood (though these may not match all the properties of that timber) include:

• High-quality European Poplar Plywood • Indonesian and Malaysian Tropical Hardwood Plywood • Canadian Douglas Fir Plywood Poplar • Okume (Gaboon) Plywood.

Businesses looking for new sources of timber should contact Timber Development UK suppliers for help and advice. We will continue to provide regular updates on product supply and demand issues across the timber supply chain on our website at  www.ttf.co.uk

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