UK Forestry Market

UK Forestry Market
 
Demand for timber primed for growth

22 March 2017, by Scottish Woodlands

Innovation in the structural timber frame industry can lead to increased demand from housebuilders

 

All indications are that demand for UK grown timber will continue, as innovation, research and technology lead to an ever-expanding presence of timber in the construction sector.

However, to look forward, we must also look back and positive trends since 2012 are clear when we consider that the UK consumption of sawn softwood (Figure 5) is increasing year-on-year (2015 at 9.2 million cubic metres).

With a clear correlation between new home completions in the UK and timber consumption, all indications lead towards a predicted annual increase in UK timber consumption (Figure 5).

The UK Government New Build Dwelling Statistics (Nov 2016) show new home completions at 167,000 for 2015, but set against the UK Government Housing White Paper acknowledging that to meet demand 225,000–275,000 new homes are required, housebuilding can only have a positive impact on UK timber demand.

FIGURE 5

UK sawn softwood consumption and new home completions

 
Figure 5

Source: UK Government Statistics, FAO of the United Nations, Savills Research

UK timber prices

As the Forestry Commission Standing Sale Price Indices 2016 (Figure 6) demonstrate, prices show an upwards trend following the dip that occurred in 2009 due to the global financial crisis.

2017 activity in the sawmilling and wood based panel sectors is increasing and this is positively reflected in the standing sale markets, especially for certified timber, as processors are keen to secure volumes brought forward to meet the increased demand.

The second half of 2016 witnessed a softening in the small roundwood market, due to increased sawmill activity and hence the increased availability of sawmill co-products.

FIGURE 6

Forestry Commission Coniferous Price Index

 
Figure 6

Source: Forestry Commission

This softening is likely to continue through 2017, although the effects may be short lived as the woodfuel sector for the biomass energy market continues to expand much faster, in comparison to other UK wood processing industries (Figure 8).

As Figure 8 demonstrates, the processing sectors are either maintaining or increasing year-on- year consumption, with the exception of pulpmills where a notable decline (around 50% between 1997 and 2015) has taken place due to the increase in the use of recycled paper.

The woodfuel sector has increased its presence dramatically since 2007, from 0.2 million tonnes to 1.6 million tonnes in 2015. This strong upward trend is set to continue as the biomass energy markets grow.

FIGURE 7

Investing in the future: Focus on the processing sector

 
Figure 7

Source: Savills Research

FIGURE 8

UK softwood deliveries to processor sector

 
Figure 8

Source: Forestry Commission

Building blocks

Timber frame housing has the lowest embodied CO2 of any commercially available building material, while delivering up to 33% reduction in energy consumption for a large detached house.

When this is considered alongside the UK commitment to reduce greenhouse gases by 80% by 2050 (Climate Change Act), it seems logical that building low-carbon homes will help achieve this ambitious goal.

The structural timber frame industry holds the greatest potential with all indications suggesting that this will become the building method of choice, due to speed of build, environmental impact and life-time energy and cost performance.

This, coupled with the Government’s commitment in the Housing White Paper to support offsite factory built homes in an attempt to overcome the shortfall in housing stock and produce energy efficient buildings, will see such manufacturing techniques and technologies in the timber industry’ progress even further in the years to come.

Timber frame housing share of all new buildings in the UK rose to 27.6% in 2015 and is predicted to rise to around 32% by 2018. With the number of timber framed units of all types growing by 17% in 2015, compared with non-timber frame housing numbers increasing by 3.8%, and 2016 is predicted to be another year of double digit growth for timber framed houses.

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Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

Nicola Buckingham

Nicola Buckingham

Associate
Rural Research

Savills Margaret Street

 

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