Timber prices are strong – but have they peaked?

Tilhill  is responsible for sourcing logs for parent company BSW’s sawmills across the country and is keen to encourage owners of forests that were planted around 40 years ago to consider setting the wheels in motion to realise their timber income. Worth a special mention is that, with current high prices, remotely located timber or timber with the need for investment in infrastructure, should not be considered a barrier if the trees are now at the right age for felling.

Peter Whitfield explains: “No one else has the experience of Tilhill  at finding ways to transport and access ‘locked in’ timber in remote places – whether it’s building roads or enabling timber to be transported over water. We know there is a great deal of locked up timber waiting to be harvested, particularly in Scotland. The owners of this timber could be missing out on a peak price market. We just need owners to be aware of the situation and be prepared to make some quick decisions.”

According to Peter, around 40 per cent of sawn timber in the UK is domestically produced with 60 per cent being imported. “With exchange rates making importing timber expensive, and with the current high demand, there is significant stress on the UK supply chain which is making the situation unsustainable.”

The lower volumes and higher price of roundwood and sawmill co-products is a particular issue for both board manufacturers and renewable energy users explains Neil Bond, Fibre Supply Operations Manager for Tilhill Forestry: “Board manufacturers, because of the shortage of virgin fibre, are substituting a proportion of their feed stock with waste wood which is now putting pressure on the waste wood market as well.  In the UK we also have the added complication that, because of disease risks, there are restrictions on importing roundwood.”

Another factor is that four large scale biomass power plants will be coming on line in 2018, which will require around an additional one million tonnes of waste wood fibre each year.

Neil worries that the current situation could force some end users out of business if the price of raw materials rises too high or the supply of materials reduces. Under these circumstances, timber processors and board manufacturers would come under severe financial pressure: “They will be forced to find alternative solutions while those least able to pay the higher prices will have to leave the market.”

On the positive, Tilhill  is seeing some of their forest owners benefit from the high prices and are using the income to invest in more planting.

Peter explains: “One of our new customers owns a forest that was undermanaged. He is now in a situation where the wood has been extracted and that has helped pay for the forest to be rejuvenated. The income from selling the timber covered all the costs which the owner was very pleased about. The danger is if people leave felling too long then the tree size becomes too large for modern sawmills. Prices may also be on the decline by then and the marketability of the timber will have significantly reduced thus missing out on maximising the value of their investment.”

If you would like advice on how to maximise income from your forest or woodland or have timber that is suitable for extraction, please use the ‘Talk to us’ form below or contact your local Tilhill office.