The UK Softwood Market Friday 6 th October 2017 ISC Hamburg. Context and forecasts for 2017 & 2018 Charles Hopping

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2 The UK Softwood Market Friday 6 th October 2017 ISC Hamburg Context and forecasts for 2017 & 2018 Charles Hopping

3 Principal Themes Brexit Grenfell Tower The rise of UK Production Going forward the figures

4 22 June 2016

5 23 June 2016

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8 UK TTF Brexit referendum question to members May 2016

9 UK TTF Brexit referendum question to members May 2016

10 Key Brexit themes: Payments to EU Sovereignty Immigration

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12 But personalities matter too!

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14 On Both Sides!

15 The Result 51.9% in favour of Brexit 72% Turnout higher than any general Election since 1992

16 The Fallout: No clear agreement on what Brexit means Unrealisable objectives Contradictory Goals Vastly increased uncertainty Tension between UK & EU

17 And then. FROM LEFT FIELD

18 13 June 2017

19 14 June 2017

20 Grenfell Tower Fire 80 deaths when retrofitted Aluminium Plastic composite cladding catches fire Major question about UK building regulations and their enforcement

21 Immediate Causes Fire started in a faulty Fridge Freezer Combustible cladding allowed fire to spread between what should have been separate fireproof apartments Poor design maintenance & management meant stairways became chimneys preventing escape and probably aiding fire spread

22 Systemic Causes Underfunding of UK public housing stock UK Building regulations allow too much latitude Monitoring of Fire performance has become less centralised.

23 The Fallout Major testing of Cladding on high rise buildings has revealed much to be liable to aid the spread of fire A public enquiry to look at: UK Building regulations Enforcement of regulations and subsequent management of buildings Major Changes likely Diversion of funds from other things to sort out the mess! Vastly increased uncertainty about what will happen.

24 Grenfell Tower profit warning sends Mears shares down BBC News 15 August 2017 Shares in housing contractor Mears Group fell 7.6% on Tuesday, having initially lost 11%, after it warned revenues and profits would be hit as a result of the Grenfell Tower fire. Mears said the fire meant its social housing clients would be making sure properties were safe and compliant with rules, delaying plans for work orders. It said this would cut the revenue it had expected to make this year from housing by 30m, to 800m.

25 UK Softwood Production and Use Figures based on Figures supplied by Timbertrends / UK forestry commission

26 UK Softwood Production Volume '000m

27 Source of UK Timber Supply

28 Total UK Softwood Use

29 Use of UK produced Softwood in UK

30 Use of Imported Softwood in UK

31 Market Trends

32 UK Economy

33 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 UK GDP Sterling M

34 UK GDP Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Sterling M $US M M

35 Construction Industry Whole industry figures supplied by Construction Products Association (CPA)

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39 Housing Starts Private 138, , , , ,350 Public 32,155 30,567 33,012 33,672 33,672

40 Likely Trends In Construction Private Housing + Public Housing + Public Non-Housing Infrastructure ++ Industrial - Commercial - Private Housing RM&I - Public Housing RM&I Private Other R&M Public Other R&M Infrastructure R&M

41 NSD Softwood Forecasts 2017 & 2018 September, 2017

42 UK Forecast Headlines 2017 Softwood Import Volume Actual million m3 Forecast million m3 (+ 3.7% over 2016) Forecast million m3 (+ 0.5% over 2017 Forecast)

43 UK Softwood Imports Jan Jun 2017 Softwood imports cumulative % change January - Jun year-on-year comparison: 2017/2016 = + 9.1% 2016/2015 = + 5.5% 2015/2014 = - 0.7% Cumulative volume to January - Jun 000m = 3, = 3,140 Annual volume in 000m = 6,219 Softwood Import Volume Last 4 Years by Month 000m Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 500

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51 Likely Trends In Construction Private Housing + Public Housing + Public Non-Housing Infrastructure ++ Industrial - Commercial - Private Housing RM&I - Public Housing RM&I Private Other R&M Public Other R&M Infrastructure R&M

52 But Remember: These are estimates Weak pound will take out buying power Softwood is very dependent on RMI expenditure Weak pound also improves position of UK producers Housing forecasts could be affected by interest rate rises. Other products are Taking the softwood market MDF moulding & composite decking in particular Weak pound / Brexit & strong European construction markets are already attracting skilled labour away from UK Downside risks outweigh upside ones

53 6 October 2017

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55 Thank you TTF staff for formatting this presentation UK construction Products association for economic and construction industry data UK forestry commission and TimberTrends for information on UK softwood industry and specific softwood forecasts

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57 2 Extra bits why it will be very hard to restore UK/EU relations /uk-vote-on-eu-juncker-s-one-word-brexit-answerto-bbc