Carsten Kullik, CEO of Kullik & Rullmann © Kullik & Rullmann
Kullik’s main job is to buy what is in demand on the US market: European lumber. He says: “European sawmills deliver the kind of quality that is not too common in the US: sharp-edged, clean, properly planed lumber in exact 2-by-dimensions.” Thanks to these advantages, the “Euro-Spruce”, as European spruce lumber is often called, fetches a slightly higher price than North American lumber.
“Euro bonus” up to a certain price difference
“However, if the price difference with substitute products is too big, you can no longer sell anything,” Kullik explains, using this year’s market situation as an example. “When Southern Yellow Pine fell to almost half the European price in May, Americans turned to buying the blue-stained, moldy, resinous and heavy longleaf pine,” Kullik says, explaining the limits of product loyalty.
This development was not foreseeable, as Kullik emphasizes: “The market is unpredictable. And precisely because it is so volatile, you have to deliver consistently. If you only discover the US when prices there are high, it is far too late.”
2-by-6 now
Kullik gives 2-by-6 as an example of how to adjust to the market. “Nobody produces this dimension when prices are at their lowest. Actually, it would be smart for Europeans to start producing it right then. By the time it arrives at the US East Coast, the market situation may already be better again,” Kullik says and adds: “What is expensive today will be cheap tomorrow – and vice versa.”
Interchangeable mass-produced commodity
In the US, lumber is considered to be an interchangeable mass-produced commodity, meaning that customers do not care who supplies it, as long as it is cheap. “In Germany, a sawmill can earn €15/m³ more for slats when it supplies goods of higher quality. In the US, it’s all about the price,” Kullik explains. “And because the product is so interchangeable, its prices are actually completely transparent.”
What is expensive today will be cheap tomorrow – and vice versa. The best thing to do when 2-by-4 prices are at their lowest is to cut 2-by-6.
Textbook example of supply and demand
If the market slows down and specialist media confirm this, all orders are cancelled. “If anything, customers only buy products to fill gaps. As a result, prices drop fast. Conversely, they also go up again quickly. I’m a US importer and as such, I have to go with the flow.”
Speculation for our standards, normal in the US
The US market is the most capitalist in the world. “If something is in demand, it becomes more expensive – no matter whether it’s a hotel room or a wooden board. Here in Europe, we saw the development of slat prices in 2021 as speculation, but in the US, this is normal.” Summing up, the US market is capitalist, uniform, transparent and unpredictable. Kullik adds: “On top of that, the market is also conservative. 70% of our customers pay by check.”
You have to deliver consistently precisely because the US market is so unpredictable.
No crystal ball
Kullik does not want to give any market forecasts. But surely, everything must be ready for the taking for European exporters now …?
- After being in the blood-red in the first half of the year, Canadian companies are shutting down sawmills.
- Duties on Canadian deliveries to the US have been doubled.
- Forest fires are making it difficult for Canadian companies to secure their supply.
- The hurricane season results in additional demand.
Further interest rate cuts expected
Kullik remains optimistic, but deliberately vague: “Yes, things should go well in September and October, simply because nobody is prepared to keep selling their products at such rock-bottom prices. Demand is there, too. Looking at our customers’ customers, they’re all busy. Just this much in conclusion: I met the leaders of the Canadian sawmill industry at a summer party. They all agreed that things will get really good from the third quarter of 2025. That’s when the upswing should start.
The large Canadian groups don’t expect a substantial upswing before Q3 2025.
