Report from Vida’s markets
Text: Karl-Johan Löwander, CEO Vida Wood
These are uncertain times for the wood products market globally, and as autumn approaches we will get an indication of what we can expect going forward. During the summer, the European and British markets that are so important to Sweden have continued to boom.
Customers still have high utilisation and many of our customers have full order books for the rest of the quarter. “DIY” building slowed down a little during the summer, mainly in the market for treated wood. One of the reasons for this was probably the warmer weather, and also the amount of media coverage prompting people to buy wood in good time to ensure supplies.
Continued high level of activity which is expected to last throughout the remainder of the year. There have been some problems with domestic transportation all year due to Brexit, which led to the UK losing many of its foreign drivers. The transportation situation has gradually improved, but has not yet been completely restored.
The panic witnessed in spring, when people paid almost anything for wood products, is now over. Major buyers have now secured their volumes for autumn and prices appear to have landed at a level that is more in line with those paid in the rest of Europe. At the time of writing, it feels like the market is really holding back with customers having over-purchased leading to large stocks of product.
Prices have dropped rapidly from record highs at the beginning of spring to more normal levels, which are very low compared to other markets currently. In spring there was a major slow-down in the DIY market in the US, which probably acted as the trigger for the fall in prices. We are now seeing that these volumes are gradually normalising again. Consumption is still high in the US and it is expected to continue at a good level.
Activity is still good in the country and Vida has had a record year so far here. It looks like this will continue, which is fantastic. We are in the midst of moving to new premises in Queensland that are located closer to the port in Brisbane. We can receive containers directly from the port here and unload them ourselves into the warehouse. We will also install our own treatment plant at the site later in the year, so as to reduce transportation and become more cost-efficient.
In China the market is very quiet. The Covid situation is probably worse here than it was previously, and port closures and restrictions are causing problems. It does not look likely that China will be a very active buyer during autumn.
In this region the religious holidays are now over but people aren’t fully back after summer vacation yet. Some of the markets currently have large stocks, while a few of the major markets have normal levels of stocks. It will probably be late September before we get a clearer picture of these markets.
We are likely to have seen the best of this economic boom in the sawn products sector. Customers are holding back more on purchasing and have lowered their expectations. Further, the acute shortage we have witnessed during the last 12 months is over for this time.