Quarter four saw a continuation of demand softening, which we evidenced in Q3, across the majority of timber products.

Construction is slowing, with housebuilding looking particularly vulnerable. Mortgage approvals in Q4 were dramatically down on previous data, as was Private Housing RMI. The slowing is driven by the interest rate, inflation and supply chain challenges which all affect our industry. Consumer confidence is low, and the media seem intent on keeping it that way.

The timber industry is feeling the effects of this situation. Lower volumes and softening pricing set against a backdrop of high (and often rising) manufacturing costs are leading to downtime in many mills across the UK & Europe. Panels, sawn timber etc. all saw restricted manufacturing during Q4, as demand remained lower than production capacities. The supply chain continued to reduce inventories as softening market demand continued from Q3 and year end inventory targets came into view.

Construction firm insolvencies rose sharply in Q4 and are predicted to be high for 2023, This will undoubtedly put strain on the builders’ merchant sector, as they will no doubt bear a lot of these losses. Careful management of customer overdue payments will be the order of the day….if it isn’t already.

If we look for positives (and we should) then inflation will fall throughout 2023, forecast to end the year below 4%; mortgage rates are falling with the main lenders starting to compete for business again; the Prime Minister seems to have stabilised Government – at least when set against what went directly before him; and house prices are falling to allow improved affordability.

Quarter four was tough, and 2023 will also be tough. The timber industry is used to the fluctuations of changing markets, as a considerable part of the sector is commoditised, so it will weather the storm, as it has done many times before. As timber continues to be the answer to many of the construction sectors environmental challenges, the future looks promising….it just may need to be patient and allow the current market to recover.