The buoyant level of activity in the processing sector has led to an ever increasing demand for round wood in all regions of the country. This is inevitably leading to some upward pressure on selling price as slack between supply and demand begins to tighten. This upward pressure is likely to become more noticeable in areas such as Wales and south west Scotland as significant harvesting resource is taken up with removing P ramorum infected larch. The processing capacity in both of these regions is used to a diet of spruce, although some substitution of spruce with larch is taking place, there is inevitably going to be strain on maintaining adequate spruce supply. All sectors of the sawn market are reporting robust sales with significant lead times on many products. The conversations most sawmillers are having with customers for next spring is about continuity of supply rather than price resistance. This applies to carcassing, fencing and the pallet sector. This confidence in a strong market for UK sawmillers is backed up by a continuing strong demand for sawn timber in the US, China and the emerging economies; this translates into a lack of pressure from imported timber on market share and price for UK producers.
Small roundwood continues to be in strong demand, with traditional consumers such as the producers enjoying good trading conditions in most product areas, with the possible exception of mdf where sales remain sluggish. Demand for small roundwood for pellet manufacture, shavings, and numerous bio energy outlets continues to grow both within the UK and to a small but growing extent on the near continent where increasing volumes are moving from the south east England and east Anglia to plants in Belgium. The only sector in the market that appears a little fragile is the round fencing market where the series of difficult spring and early summer weather in recent years has taken its toll on business profitability.
Overall the buoyant demand for product is bringing some fierce competition for standing timber, especially in areas where supply is limited. Spruce in particular is reaching a premium in P ramorum infected areas as sawmillers scramble to secure supplies. Recent sales have been characterised with not just rising prices but a significantly higher number of bidders, this applies in most parts of the country. For the timber grower the message has to be that now is a good time to look to market your standing timber.
Ashley Williams - Deputy Managing Director