Through the Timber Industry Brexit Forum (TIBF), Timber companies across the island of Ireland have been combining forces to combat the potential challenges posed by Brexit.
Despite the many potential problems posed across almost all industries by the uncertainty surrounding Brexit, the timber industry has more reasons to be cheerful than most. Reports of positive outlooks have been fuelled by – among other factors – sawmill export growth from 20% to 65% since the beginning of the recession in 2008. While sawn timber is overwhelmingly exported to the UK, it simultaneously avoids any tariffs – a situation most likely to continue, irrespective of any World Trade Organisation (WTO) intervention, should a hard Brexit materialise.
However, the fact remains that the UK is the biggest importer of wood in Europe, consuming over 9 million m³ annually. Trading challenges will therefore nevertheless present themselves in a post-Brexit economy. While Irish timber processors have increased market share against competitors such as Sweden, Latvia and Finland, it is essential that border controls and delays are minimised to facilitate the retention of Ireland’s competitive advantage in servicing the UK market.
For Irish forestry, the short-term future looks especially bright. Certain projections envisage a doubling of the output from Irish forests, potentially stimulating a further 10,000 jobs and contributing a further €2bn of economic activity over the next 10 to 15 years. However, some critics point to the current annual planting target of 10,000ha being significantly less than the previous target of 20,000ha., with even these reduced targets not being met, resulting in calls for greater afforestation levels in order to avoid potential jeopardising of the forest products sector.
Plywood prices expected to push onwards around the globe
Joe Flynn of Wood Concepts offers his view on the 2018 market.
As we move into 2018, panel product sales will show further growth on the impressive figures achieved last year. The growth in sales in OSB, MDF, and chipboard is resulting in saw mills running at full capacity, enabling them to increase prices and impose lead times extending to several weeks. This year will most likely see a continuation of price increases, several-week lead times, and potential shortages.
Many changes are also taking place in the plywood market. Domestic sales in United States are very buoyant. In the second half of last year, sales of Brasilian Elliottis Pine plywood to the American market were stronger than expected, resulting in reduced volumes to Europe in the fourth quarter for the current year quota period. Again, shortages are likely. In China, the Government Environmental agency has been flexing its muscles by shutting down plywood mills and veneer producers in the principal producing areas. Many of the smaller mills are no longer in business. Prices ex-factory are up by 15-20%.
The United States imposed duty on Chinese plywood of up to 193%, and this has resulted in a scramble by American sourcing agents to buy plywood in other producing areas of the world. Already, Malaysian Hardwood plywood prices are up by 15-30%. It is a very interesting start to the New Year. Expect many more surprises to come.