18 September, 2020
Will the timber industry turn the corner?
Covid-19 has turned the world on its head and the timber industry
could not escape the carnage. The saviour of primary, extractive
sectors like forestry, farming, and mining, is that they were
regarded as essential services during hard lockdowns, which, at
least, kept them ticking over during the worst of the crisis. The
problem though, is that further up and down the value chain,
many other activities were not seen as essential, and as these
businesses ground to a halt, demand dropped - which affected
the primary producers anyway.
According to Forestry South Africa (FSA), there has been as much
as a 30% decrease in demand for forestry products across the
sector. FSA reported that domestic demand for all products
except pulp has declined because of companies further down the
value chain struggling to find their feet due to the financial impact
of Covid-19. This drop in demand came even though more than
60% of companies operating in the South African forestry sector
were able to continue their activities through the shutdowns, albeit
with reduced staff members and logistical challenges. The one
positive, however, is that the virus doesn't affect tree growth, with
the result that large volumes of raw timber are available should
there be a sudden spike in demand once the economy opens up
in the aftermath of Covid-19.
Despite the adverse impacts of the Coronavirus, FSA says that
suppliers of harvesting, processing and land preparation
equipment used in forestry continued doing business in some sort
of way during lockdown.
Timber iQ visited a sawmill operation in Johannesburg early last
month and spoke to another sawmill owner in the Nelspruit area to
determine just how significant the Covid-19 outfall has been in the
timber industry. Both these companies said that although they had
to shut their doors for a while during the initial hard lockdown,
business started picking up again soon after. When I interviewed
them, they were back in business, firing on all cylinders, and
confident that the market is heading north - and that demand will
reach pre-Covid-19 levels sooner rather than later.
Those sawmills whose primary products are deemed to be
contributing to essential services, like boxes, bins, packaging
material and pallets used for transport and distribution of food,
pharmaceutical products, continued to operate even during hard lockdown. However, sawmills that produce timber for the
construction and shopfitting industries, had to shut down.
According to Sawmilling South Africa (SSA) most sawmills
dramatically cut back production and that the employment
situation in the sawmilling sector is ‘grave'. The treated pole
industry does not seem to be better off. According to Bruce
Breedt, executive director of the SA Wood Preservers Association,
treated pole manufacturers supplying the agriculture market were
considered essential services and continued delivering to order
but in substantially lower volumes. Pole manufacturers supplying
into the construction, fencing and furniture markets closed for the
lockdown, and suffered significant losses. Producers of
transmission and telephone poles continued operating but
demand was down.
Even though it seems that the timber industry has made it through
the eye of the storm reasonably intact, the real impact of the
Covid-19 pandemic and its subsequent economic outfall has not
been determined yet. At the same time the future remains
uncertain as the world markets readjust to the 2020 shock. How
long it will take to recover, is anybody's guess. Let's hope the
timber industry is able to pull itself up by the shoestrings and
return to some form of normal in the next year or two.
Editor of Timber iQ
Source: Timber iQ