Meanwhile James Callander have brought into production their new log sorting line as phase 1 of the new Devilla investment and construction is well under way for the new mill at BSW Kilmallie. Both BSW and James Jones continue to introduce new products to their range the latest being incised posts helping to combat recent issues the industry has faced with treatment quality. Unfortunately the fencing season has been poor this year with heavy falls of rain restricting both the commercial and domestic fencing markets. While short periods of good weather soon encourage spikes in sales the overall picture is of an average season.
The area of most concern in the short term would appear to be small round wood, with sawmills still in full production chip supplies are plentiful meaning higher stocks of SRW at roadside. Most particle board users now maximise the use of recycled fibre meaning the market opportunities are limited for SRW. However a number of new investments in the biomass sector are now close to completion. Land Energy at Girvan are in the commissioning phase, RWE at Markinch expect to commission by the year end and Iggesund the spring of next year. Combined these plants will take up a further 800k t of wood raw material per annum a significant proportion of which will be SRW. There is little doubt the much maligned advent of biomass has put a floor in the market, however only at considerable cost in government subsidy.
Meanwhile board manufacturers have found pressure on their export sales as their competitiveness has been eroded by strengthening sterling. In the last year the competitive element has been eroded by approximately 10% as the Sterling/Euro value has moved from approximately €1.10 to €1.25. board mills are well supplied with SRW and are looking to lower prices for the second half of the year.
Exports of SRW continue from the UK to both Scandinavia and mainland Europe, however major wind throw damage across Scandinavia coupled with low demand from the pulp and paper industry means that opportunities for export are restricted and are likely to remain so for the rest of 2012. Likewise there is a significant volume available from wind throw in Scotland following extensive damage in the January gales, much of this volume is just coming to market. Generally this is merely displacing existing programmes so should not have a major effect on prices.
To conclude we have a stable market situation but are faced with potential stock issues in the short term.