As the chart illustrates the UK construction Purchasing Managers Index is still in positive territory although it did dip below 50 earlier this year. Any number above 50 indicates growth in the sector with a current number of 50.8, up from 48.1 in September. This index is a measure of all construction projects and while new build housing is sustaining momentum there has been a noticeable drop off in major new projects feeding through. We await announcements in the November budget that might stimulate new house building projects.
In the small roundwood sector demand is good, and as sawmills reduce capacity the co-product volumes they produce will fall, meaning higher small roundwood demand to replace it. Kronospan are back up and running again at normal levels after their problems earlier in the year. Kent Renewable Energy are currently on target for opening in early 2018 which will provide a welcome new market for the hardwood which has not had a market for many years and has been difficult to manage commercially as a result. Verdo have sold their plants to German company Entrade and both have now reopened producing pellets and briquettes. In Scotland Norbord have successfully commissioned their new OSB line at Inverness, and with the construction equipment now departed, are keen to fill their new log yard before the onset of the Highland winter. Supplies are now being delivered here from across Scotland including regular cargoes by sea from the west coast. Although the new gasification plant at Killin, north of Stirling is slightly behind schedule this will be another new small roundwood outlet which will come on stream in 2018. In addition, the new CHP plant at Cramlington is in the commissioning phase, and will come into full production early next year. Add to this good demand from all of the existing markets and overall the small roundwood picture is good.
So overall the timber market message is one of good demand for raw material from industry, with all the signs being of continued cautious optimism for 2018. Best wishes for a Happy Christmas, and a busy and prosperous New Year!