Weather and increased demand combine to create steepest price hikes since the 1970s
Shortages of wood from mainland Europe are about to push up the price payed by the UK construction industry, experts have warned.
The shortages are being caused by a number of reasons, including increased demand from Russia and storms in Sweden. The resultant rises are thought to be the highest since the 1970s.
According to Finnforest, which supplies timber products to builders merchants and other consumers, redwood prices have already risen by about £20/m3 and further rises of 15-20% are expected during the second half of 2006.
Nick Davenport, procurement director at Finnforest UK, said: "The trade has not seen anything like it for 35 years. We have a market that cannot satisfy current demand and will be unable to meet requirements for the remainder of the year. This will inevitably lead to a steep escalation of prices."
His views were echoed by materials giant Wolseley, which already faced a 5% rise in timber prices in May.
A spokesperson from Wolseley said: "A number of price increases are likely to hit the market over the coming months due to shortages of timber, increased legislation in forest countries and higher price levels available outside the UK."
We have not seen anything like it for 35 years. The market cannot satisfy demand
Nick Davenport, Finnforest UK
The main problem is softwood, because about 70% to 80% of wood used in the UK is imported, and about the 80% of that is softwood.
Finnforest has predicted that the shortages will continue into 2007 and that the increased raw material costs will be passed down the supply chain and hit builders.
John White, chief executive of the Timber Trade Federation, said: "These prices will have to be passed on. We have not seen an advance in pricing in the past 25 years or so. It is a simple equation of supply and demand. It will affect the big builders merchants."
The warning comes at a time when the industry is already under pressure from energy price hikes. UK manufacturers are paying up to five times more for energy and gas than rivals in Europe.
Why is there a shortage?
- Demand for timber across Europe has increased
- Production across Scandinavia has been cut back
- Log availability in Scandinavia has been reduced following a mild spring
- The clampdown on illegal logging in the Far East has shifted demand to softwood panels, consuming softwood resources
- Private forest owners in Finland and central Europe have been holding out for higher log prices