European companies' plywood margins are good, but supply a struggle

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ITTO/Fordaq
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The good news from the majority of European hardwood plywood importers interviewed March 2021 was that they were making money. They reported demand ranging from firm to booming across the market, from the construction and DIY sector to merchants and furniture makers.

Moreover, customers were willing to pay a healthy price. “If you can’t make a good margin in the current climate, you never will,” said one importer.

Another reported their customers ‘accepting the real value’ of plywood and timber generally. “Traditionally most view plywood as a stack it high, sell it cheap commodity, but the market situation is such now that they’re having to pay more like its true worth” they said.

“There’s strong demand and less opportunity to play suppliers off against each other. We’re experiencing less negotiating from customers and less bad debt. It’s definitely a seller’s market.”

The less good news for importers is the manufacturing and supply situation. Demand is growing globally, while output is constrained by a range of factors. Notable among these is manufacturers either running short of staff due to Covid-19 and still operating pandemic safe work practices or taking time to gear up production as lockdown rules are relaxed.

The result is extended lead times, importers only being able to obtain a percentage of usual order volumes and gaps in some specifications.

Manufacturers’ prices also continue to climb and while, to date, the market seems to have been able to absorb them, some fear there is increasing danger of the market overheating.

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