Timber Price Rises

You’ve seen it all over the net if you’ve been searching for log cabins, fencing, garden furniture, in fact anything made from timber. You will see banners and big shouts that timber prices are rising and rising sharply – They’re not wrong!

Timber Price Rises

BUT! We saw the writing on the wall and got our orders in for 2014 way before the rises. Ha!

It first happened in 2006 when the prices rocketed and that was a crazy time. They then stabilised and then in the Autumn of 2012 two price rises were posted. This never happens, most rises come in at the beginning of the year.  After 120 years at the top of the game one of the top five players put their prices up – twice!  A scary thing and one to worry about if you like timber.

The problem is the world is growing again. Demand is very high from the States, Canada is running out of timber, in 150 years of supply it is now struggling with demand and especially as it suffered terribly from a beetle attack.  Because of this China is ordering a lot more from Russia and Scandinavia, in fact China’s demand is up 23%.  Scandinavia itself has lost lots of money over recent years and has structurally reduced capacity and may even be doing a deal with Russia if the trucks I pass in that country are a clue.

The UK is demanding a lot more and especially if the talk of 180 000 new homes becomes a reality prices will go up again a lot.

India are up and ordering more, North Africa are up by 18% and the Middle East has doubled its demand since 2009, HUGE figures and a massive leap in demand for a limited product.

As well as the world growing and economy’s recovering three other factors exist which is effecting prices:

  • Inventory – Suppliers have to balance their inventory stock so that little downtime is associated with the supply of the logs.  Their inventories must be managed to meet demand and to keep everything running.  Price is an excellent way to manage the stock and they are using this as their main tool.
  • European Union Timber Regulation came into force in March 2012 which restricts the supply of illegal logging (WWF suggests this accounts for 40% of the timber) can you imagine how much is lost, it’s for the good of course but that’s a lot of wood!
  • Weather – This winter has been very warm, too warm. Yes all the timber has been felled but they can’t get onto the land to remove it, it’s just too wet. This has had a huge impact on the sheer amount available to buy and it’s not a lot in relative terms when compared to the demand.

So, we’re a little smug at the moment and are watching with interest what our competitors are going to do having put our orders in very early and before the rises.

Most competitors hang on to keep cash flow and won’t place orders until as late as possible. Most orders will have been placed in November, December, more will now be ordering but at what cost?  The rises have already taken place.  AND, that’s if they can get the timber at all, what if there is simply not enough? That bit of course is simple, they’ll buy the rubbish that suppliers need to get rid of. Maybe they will be making product from what would be destined as pallets, needs must!

I think we could see some prices of timber products rise as much as 15 – 20% this year and some competitors failing to supply the demand, or better still (for us) products with rubbish timber.

Update: There’s one competitors website we’ve just seen is actively advertising for timber suppliers already.