EU plywood prices on the rise, due to increased demand and limited supply
Plywood prices are rising sharply in the EU on the back of buoyant demand across the region and supply issues in a range of key exporting countries. There is also an increasing tendency to order more just-in-time, little and often to hedge against the risk of the present ‘market bubble’ bursting.
That summarizes recent feedback from leading European plywood importers and distributors on trade and market trends. One leading player described market dynamics over the last six months as ‘increasingly tricky’. It had reached the point where, due to constrained supply and competition for what supply was, the company is now effectively rationing product.
“There’s certainly no need for advertising currently – everything we’re bringing in is already sold,” he said. “In fact, we’re allocating product to a waiting list, with loyal, long-term customers obviously at the front of the queue.”
Adding to market challenges, importers say they have had to become even more selective in choice of the suppliers, as a response to what they describe as an increasingly stringent and more uniform application of the EU Timber Regulation (EUTR).
“This and our own increasingly strict corporate social responsibility policy and stress on minimizing reputational risk means that, where we previously had 10-15 suppliers, we now have just four or five who we know we can rely on to consistently satisfy our due diligence requirements,” said another importer.
But clearly that potentially exacerbates availability issues when supply is tight. Descriptions of price rises resulting from this combination of market pressures range from ‘significant’ to ‘seismic’. A UK importer said that in the last six months they’ve seen prices for Malaysian and Chinese tropical plywood increase 25% and 20% respectively, while Brazilian elliottii is up 30%.
A continental European buyer said they’d seen an even steeper hike in the cost of elliottii pine plywood since last June.
“Then, we were paying US$240/245 per cu.m fob for standard 20mm C+C, now we’re at US$330,” they said. “We’ve been cushioned to an extent by the weakening of the dollar, which nine months ago was at EUR 1.06 and is now EUR 1.23. But even so, a rise of US$80 per cubic meter is a lot to take on board – and if the dollar strengthens, we’ll be in for even stiffer rises. Larger customers with a more global perspective understand the situation and accept they have to pay more, but efforts to pass on at least some of the increases to smaller businesses are meeting with resistance.”
The main driver for EU demand of both tropical and temperate hardwood and coniferous plywood is the continuing construction growth across much of the EU, particularly, according to one international importer/trader.
The latest report from Euroconstruct Forecast 2017 shows that the construction growth in its 19 focus countries at 3.5%. The report added that it was the first time there had been an ‘across the board’ increase in activity in all countries since 1989, and that growth in a basket of construction market measures was at its highest since 2006.
The result, say suppliers, is healthy demand for everything from shuttering/formwork plywood, to top end structural and exterior grades.
Furthermore, Euroconstruct predicts that the EU building sector will see another 6% expansion by 2020, with civil engineering projects, refurbishment and maintenance sectors taking over from residential and non-residential building in providing most market momentum.