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TIMCON warns timber shortage will push up pallet prices

11 December 2013

2014 will begin with extreme and unseasonable pressure on the availability of timber for pallets and packaging, according to delegates at this month’s general meeting of the Timber Packaging and Pallet Confederation (TIMCON).

At the meeting, approximately 40 delegates from the UK, Ireland and mainland Europe, from pallet and packaging manufacturers and major sawmillers, took part in an open forum on developments and trends in the market.

Reports suggest that stock is at an all-time low at some sawmills, which were also running at capacity and supplying timber first to the construction and fencing sectors, where historically the mills benefit from higher added value and improved log yields.

The recovering UK construction sector, coupled with booming demand for premium priced timber from markets in regions including the Middle East, Africa and China, has created "the perfect storm” for the pallets and packaging and other forest-based sectors, according to one member. Supplies coming from overseas continue to tighten, members said, with imports from Baltic (for pallets) and Scandinavian (for packaging) providers declining significantly.

Approximately 85 per cent of timber for pallets is now coming from domestic sources.

Stuart Hex, general secretary of TIMCON, said: "There is an extremely serious situation developing with regard to the availability of timber for pallets and packaging at a time of the year when we traditionally have a good amount of wood on the market and price stability. We have increasing reports of shortages from members and for this reason expect strong upwards pressure on costs.”

The recent Markit/CIPs report on UK manufacturing highlights an increase in the price of pallet timber for the fifth consecutive month.  The latest Poyry index for the price of pallet and packaging timber showed a compound increase for quarters 2 and 3 of almost 10 per cent. Hex said TIMCON members were reporting further rises during quarter 4 - a fact he expected to be reflected in official figures when released in January.

"In the short term, this unfamiliar seasonal shortage of timber is likely to have an unwelcome effect on prices. However, this is also indicative of a long-term trend that we are concerned will impact significantly on our industry,” added Hex.

"TIMCON will continue to observe developments in the market and report back regularly to its members.”

The TIMCON meeting was held in Manchester in the first week of December. Other presentations at the event included an overview of the annual Timbertrends report by Nick Moore, which highlighted 1 per cent growth in the use of new pallets and a 4.7 per cent increase in repaired/reused pallets.