Timbmet comment: Q1 2016

Nigel Cox, Managing Director Timbmet is BMBI’s Expert for Timber & Panel Products.

The market for timber and panel products is ahead of 2015.

Housebuilders, particularly national housebuilders, have been building more which has a positive impact on sales of timber and panel products. The recent agreement, or ‘statement of intent’ signed by the Home Builders Federation’s 14 largest housebuilder members and a number of other companies is good news for Britain and construction. The agreement commits big housebuilders to significantly increase the number of new homes they build to meet the Government’s target of building 1 million homes by 2020.

The debate about Brexit has created uncertainty. Businesses are delaying project decisions and investments until the outcome is known. Timber is an international business with products sourced from all over the world, and the uncertainty is also affecting exchange rates. Hardwood is bought six to nine months ahead, and although importers plan for variations, the timber they buy may vary by as much as 5% either way depending on the US dollar or Euro rates. When these prices feed through into the market they have a disruptive effect. This instability is likely to extend some months beyond the referendum.

Increasingly customers want to know their timber and panel products are sustainable. China and the Far East play a big part in timber markets worldwide, particularly in plywood, but concerns about sustainability and its environmental impact are driving the trend towards certified products. We are seeing certified OSB used as a substitute for Far Eastern plywood as deforestation concerns and lack of traceability mean that it’s hard to know where this Far Eastern plywood comes from.

At the other end of the plywood spectrum, demand for Birch plywood continues to grow, particularly throughout mainland Europe. Consequently, this is resulting in supply shortages to the UK, and purchasers will need to be mindful of this when considering future stock levels.

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