Here’s what’s moving the British softwood market

“Softwood will remain a popular choice, despite a very dynamic market”

Ever since business kicked back up after the summer break, the UK softwood market has been changing on an almost monthly basis. What makes this market so dynamic? Below, we explain a handful of the factors influencing pricing and supply:

The Cost of Sea Freight
Home-grown British softwoods have shown parity with rising prices in Europe. That suggests that external factors have driven at least some of the price differentials over the past few months. A likely culprit is shipping. At the end of July, general rates skyrocketed to their highest point in two years. The timber trade (like all other trades that rely on the shipping of goods oversea) has felt some of that effect.

Unexpected Weather in the U.S.
American traders prepared themselves for post-hurricane rebuilding earlier this year, only to find that sales failed to materialise. On-going storms dented construction, and U.S. housing starts have failed to hit predictions. All this means there is a glut of softwood supply in the States – deep discounts have resulted. This has two possible knock-on effects for the UK: first, global sentiment is damaged, as the U.S. softwood market struggles. And second, the possibility that big Swedish and German exporters will push their product back into Europe, as the U.S. becomes less attractive. If so, it will make the UK market less stable.

The China America Trade War
Compounding the situation in the U.S. is the effect from the tariff war between China and the U.S. American traders exported 44% less timber to China in August, after a strong start to the year.

Logistics Issues at Home
Logistics is a major issue at home, with a number of independent drivers choosing to retire rather than reinvest in new vehicles. This reinvestment is necessary for those who want to continue in the role, as tightening emissions regulation comes into force. Add to that the impact of unloading restrictions and road congestion, and trips are becoming less lucrative than they used to be.

The Impact of Brexit
Brexit looms over the timber trade. To be clear, the UK is a major importer and highly regarded as a preferred customer. So there is no doubt that regular shippers are highly committed to the UK. But the question remains as to how easy it will be to trade in timber when we are no longer part of the free market. The Timber Trade Federation has been lobbying parliament over a number of Brexit-related issues.

The Popularity of Wood
Despite all of the factors previously described, there is no doubt that wood remains an extremely popular material. This demand is being driven, in part, by the environmental movement, which is extolling timber’s value as an ethically sound medium. The importance of this support cannot be overstated, and timber is now not only the material of choice for traditional applications (such as house builds and furniture) but is making its way into new areas, such as eco-friendly offices, and even disposable knives and forks! This factor has a huge influence on markets today, and it is largely responsible for the fact that most observers see softwood’s fortunes continuing to improve in the first quarter of next year.