Timber Price Index

The "Grown in Britain" campaign of the early-2010s, which lobbies UK buyers and the public to utilise the homegrown wood material supply chain, and an emphasis on corporate social responsibility, which has seen UK businesses reduce their carbon footprint by sourcing domestic materials for their respective processes, resulted in fundamental changes in downstream attitudes towards material procurement – this supported demand for UK timber, helping to alleviate pressure on prices caused by import competition.

In 2019-20, however, timber prices somewhat stabilised as opposed to collapsed, with the index posting a 13.2% year-on-year decline. According to international forest industry group and leading timber supplier Sodra, excess stock brought in ahead of the original Brexit deadline in April 2019 (i.e., stockpiling activity), continuing uncertainty at the time surrounding the UK's withdrawal from the EU bloc, and supply chain challenges posed by bark beetle attacks throughout central Europe all contributed to timber prices falling somewhat sharply in 2019-20. However, Sodra suggested there was subsequently a risk of timber shortages and supply delays, which would - ceteris paribus - steer prices back up.

In 2020-21 overall, the timber price index inflated by 2% year-on-year. The COVID-19 (coronavirus) pandemic resulted in below-capacity operations among would-be key timber demand markets (e.g., construction), consequent of an exogeneous economic shock - this initially supressed timber prices in H1 2020-21. However, with the pandemic sending ripples through global supply chains, prices for hard-to-source materials were kept high against historical standards. According to a survey conducted by the Federation of Master Builders (FMB) trade association, FMB member contractors highlighted timber as one of the three hardest-to-source materials amid pandemic-induced supply chain disruption. Meanwhile, the ONS Business Impact of COVID-19 Survey (BICS) conducted between 18-31 May 2020 found that 18.7% of enterprises in the UK construction sector surveyed answered "prices increased more than normal", when questioned on how the pandemic had affected costs within their supply chain - this iteration of the ONS BICS also found 11.2% of UK construction sector firms were unable to get the materials they needed during the two-week reference period, due to closures across the supply chain.

As pent-up demand was released following the Spring 2020 lockdown, with critical construction and industrial activity permitted to continue thereafter and irrespective of imposed public health restrictions elsewhere across the economy, limited access to supply chains and extended lead times pushed up timber prices in H2 2020-21 and thereafter. Trade disruption following the UK's post-transition period withdrawal from the EU bloc on 1 January 2021 exaggerated supply chain price inflation in the final Q1 2021 and thereafter, by way of extended lead times for materials (e.g., timber) at the hands of non-tariff barriers. By way of a combination of supply constraints and demand-side inflation, the timber price index inflated by 33.5% year-on-year in 2021-22. Underlying inflation pressures, ongoing pandemic-induced supply chain difficulties and supply chain disruption associated with trading implications consequent of the Russia-Ukraine conflict have resulted in another surge in materials prices heading into spring 2022. However, despite record high price inflation across the economy, supply of timber has recovered from its disruptions earlier in 2021. This has slowed to rise in timber prices somewhat; and prices are forecast to drop in the two years through 2023-24 as a result, including a 2% in the latter year.