Strength of construction market places pressure on supply

Strength of construction market places pressure on supply

BLOG · BY TTF CEO, DAVID HOPKINS · 23 April 2021

Ongoing supply chain disruptions due to the reduced availability of shipping containers, and strong global demand has increased prices and extended lead times for timber products. Now is the time to work closely together to improve forward planning and forward purchasing, with collaboration across the supply chain being the only way to overcome the situation.

The Builders Merchant Building Index yesterday revealed an 18.2% increase in sales of timber and joinery products in February 2021 as compared to February 2020. This is far ahead of all other products, with Total Builders Merchants’ February value sales 2.3% higher than in February 2020, with no difference in trading days.

At the same time our latest timber statistics show that the recovery in import volume seen in the second half of 2020 continued in January 2021 with timber and panel imports 12% higher than in January 2020. The volume of solid timber and panel products imported in January 2021 totalled 895,000m3, a 100,000m3 rise from January 2020’s total imports of 795,000m3.

Amidst Brexit and a pandemic, timber is being imported at high levels comparable to any other in the calendar – with previous years available to view in our Statistics Dashboard. Despite the timber supply chain delivering as much wood last year as it did in 2019, and with a clear projection we will do the same this year, when we are facing increases in demand across the board of this magnitude, it will be difficult to match supply to demand.

It is clear this trend is set to continue, with the CPA State of Trade Survey Q1 revealing 41% of heavy side and 48% of light side firms reported an annual rise in sales in Q1 as compared to 2020 Q1. Keep in mind this was before the full impact of the first wave of Covid-19. Demand will be sustained by general consumer demand, and the extensions to the stamp duty holiday and Help to Buy scheme.

At the same time there remains ongoing supply chain disruptions due to the reduced availability of shipping containers, and strong global demand. As a result of all these pressures, raw material costs remain the key driver of cost inflation – and it should be emphasised timber and steel are not the only commodities experiencing global supply-demand imbalances. There are plenty of other examples across the economy.

We understand the frustration felt by many, both among our membership, and the wider supply chain from this situation. Those merchants and contractors who have consistently used the same wood supply chain should know they are getting their fair share of the available wood supply, as allocations are being made in line with previous purchases.

This knowledge, however, is not always enough to placate angry customers! As always it is important to communicate across the supply chain and to be upfront and honest about the situation, hopefully pre-empting problems your customers may face. All timber suppliers are in the same boat and your customers should realise this. Now really is the time to work closely together to improve forward planning and forward purchasing, with collaboration across the supply chain being the only way to overcome the situation.

TTF will continue to update the market and to ensure groups such as the Construction Leadership Council (CLC), the BMF and STA are kept up to date. In the meantime, we wish you the very best of luck during these tight trading conditions.

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