The last 12 months has seen the price of timber rise by more than 30%. Why? Well, there are a number of influencing factors.
The journey from forest to house is one that has gone for many centuries, but the science and efficiency of use have changed dramatically as technology has advanced. Mark Smy and I found out more on a recent visit to one of our suppliers, Eksjö industri AB. We were walked around the saw mill by Peter Elovsson of Eksjo.
Global Demand: The global demand for whitewood has grown vastly over the last few years. The world’s insatiable appetite for timber as a primary material for houses doesn’t wane, mirrored by increased building in the UK, American and Far Eastern markets to name but a few.
Sweden, as one of the globe’s primary foresting locations, has had its troubles over the last 20 years. Huge storms in 2003 and 2005 had a direct effect on log supply and the global financial crash of 2008 contributed to the closure of many smaller, and unprofitable saw mills, some closing permanently and others being purchased by large market players.
Controlled Supply: Swedish log farmers meanwhile have continued to receive good money for the raw material and generations of forest owners have benefited from a healthy sale price for logs. Swedish farmers are more than happy to delay the foresting of some parts of land if the price isn’t as high as they might like. Immediately you can identify a supply issue.
Current Exchange Rates: Lastly, the pound diminishing in value against the Euro has had a direct influence on the conversion rates of SEK to GBP]. The next 12 months, with continued Brexit negotiation, doesn’t indicate that the pound will strengthen sufficiently to influence a reduction in timber costs. A double bubble with supply and demand. To summarise: With supply and demand for timber going in opposite directions, and the pound falling in value against the euro, it should be no surprise that prices have risen in the last 12 months. While we may have seen the worst of the exchange rate changes, rampant global demand and a timber industry strong enough to control supply, we believe timber prices will increase gradually throughout 2018.
Saw mills are fascinating to watch, and we’d like to say thanks to Peter Eloysson of Eksjo Industries, Jeremy English of Crown Timber and Mans Johansson C E O of Vida AB Sweden.
Chief Operating Officer
Robinson Manufacturing Ltd