Timbmet comment: Q2 2016

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

The result of the EU referendum hasn’t had any immediate, direct effect on construction beyond delays to the start of some projects. However, we expect volatility in the value of sterling, particularly against the US dollar and Euro to persist. This will affect the cost of imported products and supplier prices. Hardwood timber and machined products are influenced more by the dollar. Softwoods and panel products are affected by fluctuations in the Euro.

Builders’ merchants’ sales of timber and panel products were stronger than expected in the last quarter, 4.7% up on the same period last year. Demand for fully finished product is rising as merchants develop their offering and recognise the attraction of value added solutions to their customers.

The timber window and door market is strong with a pronounced move to engineered products for their greater durability and resistance to warping and twisting in the finished product. The environmental credentials and cost savings from reductions in manufacturing waste make engineered timber an increasingly obvious choice. The national and trade media has highlighted growing skills shortages in construction and the implications for capacity, costs and project completions. As part of a coordinated long term solution businesses are being encouraged to plug the skills gap with apprenticeships. However the skills shortage is having a positive effect on the engineered timber market as merchants and their contractor customers favour timber products that are easier to handle, flawless so they’re easier to work with, and more dimensionally stable.

There is a shift in the melamine sector too towards the premium end of the market. Over the next six months, we expect some of the major producers will be refreshing their ranges to reflect increased demand for timber and textured-effect melamine. This may lead to industry wide stock fluctuations as specific lines are phased out to reflect the shift.

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