Timber Market Updates
Well, here we are at the start of 2018 and already we have bad news via the media on the announcement that Carillion have gone into administration. having been given additional projects in the 2nd half of 2017 despite the announcement of profit warnings. We await more information, as the whole affair unfolds, but this is not good news for the government and will only add more pressure to the constant deluge of negatives announced weekly on the progress of Brexit, not least, the latest expletive announcements from President Trump and anything else added into the equation.
In only the 2nd week back from the Christmas break, we find that an independent Scottish sawmill based in Falkirk have gone into administration on the 8th January this month. They are James Callander & Son Ltd established in 1946 who produced some of the best homegrown spruce and pine seen in the UK. Let’s hope that this is not an emerging pattern of company failures for 2018 having seen G & G Timber and Builder merchants in South London also suffer the same only 2 weeks before Christmas in 2017.
The year starts in the softwood timber trade with price increases on both redwood (pine) and whitewood (spruce) as we expected and these increases are now being implemented across the market. Whilst there is still resistance to price increases in some instances, this will fade away in the light of even more expensive wood being threatened across Scandinavia and the Baltics currently at the beginning of negotiations for shipments into the 2nd quarter of this year.
Whitewood in most cases is outsold from Scandinavia to the best bidders from China, Japan and Europe, as well as the increased structural demand from the USA. This has led to increases of some 10% in spruce products and is set to move even higher in the 2nd quarter of 2018 as demand increases.
Terminal stocks now appear to be entirely new in terms of cost, so we have seen carcassing prices rise immediately this new year and further increases threatened for Feb/March. The supply situation in the Baltics looks particularly fraught with problems, due to one of their wettest Autumn/Winters on record. A report from a established shipper is shown below, received only last week.
“Continued rains and lack of frost in Latvia is compounding the log shortage as extraction gets increasingly difficult and last week the Latvian Forest Service declared a “state of emergency”. Whilst this is really to protect smaller logging companies who can’t work and pay bills, it indicates the severity of the situation. It has rained pretty much solidly from September through to December and with even night time temperatures positive, that winter cold is desperately needed. The forecasters are promising it will come next week, whilst the loggers will believe it only when they see it! “
The Chinese and Japanese markets continue to be buoyant, with massive sales of Whitewood (Spruce) set to continue on from 2017. Most Swedish shippers however set up to produce structural carcassing and CLS are more and more attracted to the USA, with prices well above that of the UK, reported in my last blog, which continues to improve in demand at high prices, thanks to President Trump’s tax levy on Canadian forestry.
Stamco Timber have bought good volumes in the 1st quarter of 2018, given the threat of further increases in quarter two. The heaviest increases as stated are in whitewood, where we have had to adopt a different policy for sourcing our overall volume from several shippers due to availability.