Nonetheless, Swedish sawmills are extremely satisfied with 2020 and in light of low stock levels on many markets, they are heading towards 2021 with optimism. The impending Brexit, the inevitable slowdown of the economy and the repercussions of the accumulation of damaged wood in Central Europe were thoroughly discussed.
Dream start to 2020, then came COVID-19
After the record results of 2018, 2019 was a year characterized by a much more balanced market situation for Swedish timber companies. This year, it was mainly the Swedish sawmill industry which profited from the lower Finnish production due to strikes. “We were off to a good start in March, but then came COVID-19,” said Fredrik Wallenstad, head of marketing at Moelven Timber, about a market situation similar to that of Germany and Austria.
Wallenstad was proud, however, that Moelven used the recovery in China in the first quarter, and organized containers and “exported to China when the rest of Europe was shutting down”.
“At the beginning of the year, we were worried about the possible overproduction of sawn timber in Central Europe. And all of a sudden, we really had a problem: the total stop of imports in Great Britain,” commented Nielsen, market analyst at Skogsindustrierna. Swedish companies reacted by buying less log wood and preparing for sawmill shutdowns in summer.
Stop during the market recovery
In May, Great Britain resumed imports again and Sweden raised its sawmill production nearly to a normal level. Despite having taken it very early, the country went through with its decision to use the summer holidays in July for a marked reduction in output – something that the industry regretted somewhat. “It was the right decision, though, and helped everyone on the market,” said Johan Padel, CEO of Holmen Timber.
However, opportunities were missed in the US, a market which saw an incredible skyrocketing of prices in summer.
Fantastic domestic markets
All participants are happy the “fantastic situation” on domestic markets in Norway, Sweden and Denmark. As was the case in Central Europe, many houses and gardens were renovated and embellished in the north as well – for which a lot of wood is needed.
This trend has been uninterrupted since the new start in August. Demand for softwood sawn timber is said to be very high and companies are producing at capacity. Nonetheless, their stock levels are low, as are “those of our customers”. This is how the participants of Trämarknaden summed up the situation.
Warehouses are so empty that it will take time to fill them again. In one or two years, however, COVID-19 will lead to a decrease in demand.
Great Britain needs sawn timber
David Hopkins of the British Timber Trade Federation told participants that Great Britain is now in the second lockdown until Christmas. “People are working, though. Contrary to March, the economy is running.”
This year Britain’s timber industry also saw a boom, mainly because of the DIY segment. “In Spring, terraces and fences were built. Now in winter, sales are down. However, we need to catch up because importers’ and resellers’ warehouses are empty. We also expect another boom in spring which is why we need sawn timber.” In the commercial segment, there was hardly any activity in 2020. This could create opportunities for 2021.
Warning for Germany, Austria
After more than four years of negotiations, the Brexit is now close. Since it is basically a No-Deal-Brexit, bureaucracy will increase according to Hopkins. Especially in the first six months, problems are expected in transport and logistics. “Sweden ships its goods in containers to the east coast so there shouldn’t be any major problems here. The situation is different, though, when it comes to German and Austrian shipments. The companies there use mostly lorries and it will be difficult to get drivers. At some point, the situation will normalize somewhat but it will be problematic in the first half year.”
In the medium term, the bark beetle is a problem in Southern Sweden. However, Swedish companies are worried that Central Europe might continue to cut big volumes of damaged wood and thus contribute to a global oversupply when the market is weaker. In the long term, however, spruce from Central Europe could be much scarcer, and influence markets as a result. Then, German and Austrian sawmills would be at a disadvantage due to higher raw material prices.
The host’s question about whether Central Europe first produces too much and then considerably less was answered with a clear “yes” by Nielsen.
Should there be more beetle-damaged wood in Sweden as well, the US would be a suitable market. “In the US, blue stain is not seen as a big problem. Also, it is unlikely that the US will ever be able to fully supply their own market in a sustainable manner,” he concluded.
* Trämarknaden
As an alternative to the traditional meeting of Swedish exporters with their European customers in Karlstad/SE, Trämarknaden was held as podcast on November 19. The participants: Johan Padel, CEO of Holmen Timber, Fredrik Wallenstad, head of marketing at Moelven Timber, Mathias Fridholm, Director of Swedish Wood, and Christian Nielsen, market analyst at Skogsindustrierna. David Hopkins of the British Timber Trade Federation was invited as a special.
