Nervous suppliers cause timber prices to fluctuate

Timber prices will continue to fluctuate as a result of the panic caused by the tightening of supplies at the beginning of 2007, according to an industry expert.

Mark Bowers, procurement director at Saint Gobain UK Timber Group, predicts that, while prices are currently low, they have reached the bottom of the cycle and the market will continue to oscillate as suppliers react to unfamiliar conditions.

He told CJ that after the supply problems of 2006 and early 2007, merchants sourced timber wherever they could, with much coming in from Canada and Germany after a drop-off in the American market.

This glut meant that prices dropped at the end of last year, and low orderbooks mean producers are cutting prices again.

Bowers said: "Suppliers currently have a surplus of stock, which makes some nervous. They are now de-stocking while the price is low, but new pressures are likely to come through that will mean they end up re-stocking at a higher price, which gets passed on to the user."

He expects prices in the historically stable timber market to continue to fluctuate as suppliers make knee-jerk reactions.

"In constructional timber in the past two to three years, there have been market conditions alien to most of the industry," he explained. "Suppliers don't have the ability to read the conditions and are reacting without thinking it through properly."

With imports becoming more expensive due to dramatic changes in the exchange rate, an increase in worldwide consumption and stricter certification, Bowers believes prices are certain to rise.

He continued: "With this kind of pressure, prices will move up by spring. We may also enter another period of shortage.

"In the long term, prices will continue to rise. The market needs to get used to price fluctuations, but the underlying trend will be upwards."