Times without revenues

A year ago, Gerald Schweighofer predicted that for the European wood industry 2012 would be "a year of slow-down – or the total crash". Twelve months later, the latter of the two was "very close", as he points out. For 2013, Schweighofer foresees an ongoing economic slump in Europe. "Economic growth is still weak – and this, of course, curbs the demand for wood."

Pessimistic for Levante

Mindful of the recent downturn on the market Schweighofer is also rather pessimistic for the Levant. "They have probably bought too much recently." In Saudi Arabia, too, purchasing has somewhat calmed down in the previous two months. Not to forget the political unrest in Egypt, in the countries around Syria, Iraq, ...
On a brighter note, Schweighofer expects the Japanese market to remain stable in 2013. His company has shipped 430,000 m³ there last year (+23%). 850,000 housing starts "or even more" should provide the necessary demand. He finds it remarkable that "for the first time ever, the Beams are priced lower than the Posts." Glue-laminated products are under increasing pressure. "There are just too many lamina from Scandinavia," says Schweighofer. For Redwood, in particular, prices have hit the bottom.

USA – recovery from lowest level

"Of course we can see some recovery on the U.S.-construction market - but you must keep in mind from what level", says Schweighofer with a rather skeptical look over the Atlantic. To him it is not plausible that we will see one million housing starts already in 2013. He also dismisses the view put forth at the International Conference on Softwood Lumber in October that North America might not be able to produce enough lumber to cater for rising demands. "There is still lots of idle sawing capacity. The Americans are flexible enough to activate it any time", says Schweighofer.
If Klausner Holz really started up his production in Florida in the next few years, it would not be bad timing, according Schweighofer. "That would be a pioneering venture, and I really wish Fritz Klausner well with it." But then again: The working morale of American employees, the US-bureaucracy and the forest owners might pose some serious challenges.
As China has purchased massively from U.S. and Canadian sawing industries last year, Chinese lumber prices will reflect U.S. levels – which means they are likely to increase as well. After the record year of 2011, there was a slight decline in 2012. Next year it will probably be similar.

Long road out of recession

2013 will be a difficult year in Europe, according Schweighofer, "The road of recession is a long and hard one ..." And the Italian market is bound to go downhill in the short run, he adds.
A nearby market with an ever increasing demand for wood is Turkey. Schweighofer intends to ship there as much as 70,000 m³ before end of 2013. This is a market he can reach by trucks from his Romanian mills. "That works quite well. In Turkey, I see very little European wood. This is due to the low price levels there."

Leave wood in the forest to save money

Regarding short term log supply Schweighofer is skeptical: "As long as the general financial situation is so uncertain, everybody will be careful. The wood will remain in the forest, as most are worried about the money. Why should a farmer harvest now? And the wood in the forest is safe, at least it appears to be. "

Clear cost advantage

As far as log prices are concerned Schweighofer shares the view of many that 10 € less per solid cubic metre is needed for sawmillers to achieve a black zero. "In Romania, we are at only 40% of Central European cutting costs – and it’s managable that way", the entrepreneur explains.
The price trend for residual wood Schweighofer highlights as being positive for the sawmills. Short supply and good demand has boosted pellets prices.

Sawmills soon outdated

Schweighofer knows many Central and Northern European mills to be under pressure and some of them to be available for takeover. "They cannot all continue operating. Old mills must be shut down." Schweighofer points out that in recent years, almost nothing has been invested in the Central European sawmill industry. "Apart from the new projects in Germany, there was nothing. Hardly a sawmill in Austria and Germany is still capable of producing 24 hours, as my lines are. Even if the recovery finally kicks in and sawmills will actually be making money, it will take years before the banks will have confidence in the industry again and grant loans so it can be modernized", says Schweighofer, seeing massive problems ahead that have hardly been addressed before.
The Schweighofer timber industry, on the other hand, has invested as much as € 120 million in their own operations in 2012.