UK Sawmill View September 2016

2016 Overview Inconsistent picture – very poor start for some mills with others doing well Overall 2015 mill production was 7% down on 2014 Domestic price increases lagged behind Scandinavian increases Solid if unspectacular fencing season Post Brexit currency movements in particular have boosted demand for domestic C16 timber Most UK mills would identify their primary competition as Irish not imported

Facts and Figures - Sawn Production UK Year Softwood m3 (000 m3) 2010 3053 2011 3227 2012 3361 2013 3536 2014 3716 2015 3449 2016 3500 Est 2014 Softwood m3 (000 m3) England 1091 Wales 354 Scotland 1985 Northern Ireland 286 Total 3716 Source Forestry Commission UK Wood Production and Trade 2015 Provisional Figures – 19th May 2015

Sawn Softwood – Market Sectors Source Forestry Commission UK Softwood Forecast

Source of UK Softwood Removals Source Forestry Commission Forestry Statistics 2015

UK Round wood Production 2005 - 2014 Source Forestry Commission Forestry Statistics 2015

UK Softwood roundwood for Woodfuel Source Forestry Commission Forestry Statistics 2015

Impact of Biomass Major Biomass projects using imported fibre Encroachment into what was traditionally sawmill saw log supply

UK – Forecast Roundwood Availability Source Forestry Commission UK – Forestry Statistics 2015

UK Softwood standing Sales Index Source – Forestry Commission

Roundwood Issues Round wood (sawlog and pallet) – availability remains broadly in line with demand Evidence of some high priced contracts being reneged on Biomass consumers are impacting availability of pallet logs Small roundwood prices have been artificially buoyed up by contractors buying standing sales to maintain harvesting infrastructure Concerns that FSC continue to add cost to certification, this is an ongoing issue for growers

UK Softwood Construction Timber Price Index Source – James Jones & Sons Ltd

Its not all doom and gloom KD Eased Edge is selling strongly and prices have increased Incised and 15 year warrantied posts and sleepers are becoming the norm Fencing season is becoming less seasonal – better for mills Roundwood prices and supply are stable We’re not going to run out of wood

Other domestic issues Round wood supply generally good, saw log prices stable FE switching to selling more timber standing sales Undervaluing and erosion of treatment prices Phytophera in Larch – favourable weather in last 2 years has minimised spread – reduction in Larch availability Irish mills competing for market share in Scotland – have held back price development Changes for UK mills can be very dynamic …….and quick

UK sawmilling can be very dynamic!

2016 - 2017 Prognosis Domestic volume production minimal change in 2016, similar in 2017 Prices have risen, but are very product specific Strong well financed; well invested domestic mills have weathered last 18 months relatively well Incised, warrantied fence posts and sleepers now widely accepted Exchange rates will determine the future