Hardwood sees strong demand, but sourcing is a primary concern

Reports from the London Hardwood Club luncheon in January paint a positive picture for the industry: demand is strong, and the UK market looks healthy. This is supported by recent statistics that show 2017 as a good year, with sales categorised by at least one importer-distributor as “off the charts”. That doesn’t mean there are no challenges ahead, though.

Buoyed by customers’ interest in the timber, importers have not held back when it comes to ordering in: “the combination of people buying ambitiously earlier, banking on continued rising demand and falling sterling, resulted in higher inventories than they would have liked, and pressure to sell,” one importer said. “We’ve seen some silly offers on big volumes and customers capitalizing. If you can’t supply precisely what they want, they go elsewhere.”

Margins have also tightened due to healthy supply and customers’ resistance to price rises. With Brexit looming, and the possibility that the pound could decline further, that could become a shadow on the horizon. However, for now, hardwood remains a profitable market, with strong underlying fundamentals.

Amongst those fundamentals is confidence in the construction market. The Construction Products Association is forecasting a further 2% growth in private housing starts, and 5% in public. Add to that Chancellor Philip Hammond’s pledge of a £44 billion support package for housebuilding, and there are legitimate reasons to be positive.

A more pressing concern than margins is sourcing. One importer stated: “2018 will increasingly about accessing the timber.” Constraints on a number of sources means that even UK-favourites like sapele are subject to a sourcing squeeze. The importer said:

“Sapele has been dumbed down and it’s very hard to get the sales price it warrants, while supply price is firm.”

Other species, like iroko, are even more pressured, and difficulty at African ports, as well as the weighing down of the South Asian market due to adverse weather conditions, means that it will be a persistent problem in the near future.

Despite these challenges, the prognosis for the UK’s hardwood industry is good: the demand is there, provided you can get the product. An importer-distributor summed up the situation in 2018 as follows: “it will all be about maintaining good supplier relationships to get the timber you want when you want it.”