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Tropical Timber Market in Europe (1st–15th May 2020)

Europe takes tentative steps out of COVID-19 lockdown

Timber trading activity across the EU continues at an extremely low level as countries emerge slowly anduncertainly from the coronavirus lockdown. Many companies have temporarily closed or curtailed operations,pushed back orders and have been asking for longerpayment terms.A clearer picture of the real impact on European tropicaltimber product imports will only emerge with publicationof EU trade data for the first quarter of 2020, expected inthe next few days.In the meantime, insights on the status of market can begathered from reports of remote meetings of Europeantrade associations and their member companies and ofvarious other agencies. The following observations drawparticularly on a report of the Members of the SustainableTropical Timber Coalition (STTC) Technical Committee,issued at the end of April, supplemented where possible bymore recent information from trade association bulletinsand other sources.

Some continuing timber demand from UK constructionsector

In the UK, according to the Timber Trade Federation(TTF), some importers, distributors and merchants havesuspended business while others are operating at muchreduced levels. Some demand continues from the UK building sector, which has been one of the first sectors allowed to reopen subject to newhealth and safety rules.However, the latest Construction Purchasing ManagersIndex (PMI) for the UK, published by IHS Markit,revealed the sharpest decline since the survey began 23years ago, falling from 39.3 in March to only 8.2 in Aprilas activitydrew to a halt due to the virus outbreak March(a score below 50 indicates contraction).

A big question in the UK timber industry currently is howrequirements for social distancing will impact futureconstruction output. A briefing circulated by Barbour ABI suggests that, even as the lockdown is eased, the numberof workers on UK construction sites could be as low as15% of normal figures in some cases, leading to increasedcosts and build times over the next year.Meanwhile, according to the TTF, DIY sales in the UK areholding up, which is attributed to consumers undertakingrepair and refurbishment projects while off work. Gardencentres in the UK will be allowed to reopen from 13th May in one of a range of measures to gradually ease thelockdown rules as COVID-19 death rates have declined.However, with the numbers of new COVID-19 cases anddeath rates still high, the process of easing the lockdown isexpected to be very slow in the UK. The government has emphasised that lockdown measures may be reintroducedif any signs emerge of a second wave of the virus.UK timber importers say they have asked overseas suppliers to push back orders by 30 to 60 days but there isstill concern about the build-up of landed stocks at ports,with companies unable toaccept cargoes as their ownstorage is full.A TTF members survey published on 1st May, whileemphasising that the UK timber supply chain is wellstocked overall, also showed that garden products andplywood are product categories where there may beshortages. This survey indicated that, compared to lastyear, respondents’ sales fell 33% in March and by 66% inApril, while 69% reported their cash flow had decreasedsignificantly.Some slightly more positive news emerged from the UKConfederation of Timber Industries (CTI) latest survey ofthe state of the industry published on 12 May.

This highlighted that almost all UK timber businesses expect toreopen in some capacity before the end of the month. Thethird of businesses which never closed will be re-joined bythe rest of the respondents, with most (99%) having eitherreopened or planning to during May.The CTI survey also showed that while only 12% of theindustryare currently operating at maximum capacity,there is confidence that businesses can quickly ramp upproductivity. Respondents said that, if quarantinemeasures were lifted, and in light of recent Governmentadvice on returning to work, 54% of businesses said theycould return to full capacity immediately, and a further34% in less than a month.The CTI survey indicated that manufacturing was the mostaffected sector in the timber supply chain, with theserespondents far more likely to have closed for a periodthan sawmillers, merchants or other traders.Wood product manufacturers were also concerned thatlack of access to personal protective equipment couldhamper the return to work.

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