The timber industry is still struggling to recover from the recession, along with the construction industry it supplies. However, most sawmills are finding ways to weather the economic storm.
These are the observations of Mandy Allpass, account manager at Crickmay, on the state of the timber industry over the past year.
Her comments come as industry experts point out that the large-scale electrification programmes in many African countries provide a large growth opportunity for the local timber and timber-treatment industry.
“Demand for timber in South Africa has been improving, but progress is slow and the past year has been a difficult one,” says Mandy.
The most recent figures show that about 75% of all timber that goes through formal/structural sawmills is sold as structural timber. Of the remainder, about 13% is used in remanufacturing, and 12% for packaging. About 16% of all sawn timber from structural sawmills is treated with wood preservatives.
The lion’s share is sold in South Africa and to neighbouring countries, with only about 0.5% exported overseas to countries such as Mauritius and Reunion.
The volumes of timber dropped during the depths of the recession several years ago, but have been slowly recovering.
Nevertheless, prices remain under pressure.
“Businesses have had to look at cost savings and improved efficiencies as their profitability and survival has been under pressure,” says Mandy. “Mills need to carefully manage fixed costs, because they are not able to improve throughput and selling prices have been under constant pressure.
“This means trying to saw timber, and treat it, as efficiently as possible. Businesses need to get the best value out of their logs, and produce as high a value product as possible, which is not always possible when there is demand for lower value products. It is a fine balance.”
If the economy grows, the demand for sawn timber will grow too. However, there are so many influences – including the price of sawlogs, exchange rates and their effects on remanufacturing, the effect of exchange rates on imports (and exports) and competition from substitute materials – that it is hard to make any predictions, Mandy says.
The industry is holding thumbs that the market will improve.
The demand for treated timber remains high in the coastal areas of South Africa, where most treated timber is being used, Bertus says.
“Despite the economic downswing, we have seen major growth in companies who have challenged traditional thinking, embracing flexibility and new opportunities in their search for value for money,” he adds.