Price comparison 1976 2024.jpg

Log wood and lumber: What did they cost in 1976, how much should they cost in 2024, could the timber industry have compensated for inflation, and what do these two products actually cost in 2024? © Holzkurier

market analysis

Timber industry far below inflation

Article by Gerd Ebner (translated by Eva Guzely) | 14.03.2024 - 15:05

On average, in the full year 2023, all three products were far below those levels:

  • The log price was €22.9/m³ or 18% lower.
  • As for lumber, there was a gap of €16.9/m³ or 7%.
  • Glulam was also 7%, or €35.4/m³, below the needed price level.

Inflation: minimum target missed

Of course, these are all just hypothetical calculations. After all, we live in a free market economy which is ruled by supply and demand. Nevertheless, it must be the goal of every type of industry to at least be able to implement market prices which match the increase in inflation. Otherwise, companies will already have problems in the short term.

Log price always below inflation

Log wood is the only product whose annual average price has never matched inflation at any time over the past ten years. There were short-lived peaks in some months, for example in May 2022 – but they never lasted a whole year. Every short-term high was followed by a decrease.

The situation is different when it comes to lumber and glulam. Both products were well above their normal price spans from March 2021 to the end of 2022. During that period, the somewhat reduced supply met demand which was partly driven by panic and speculation.

Wood up by 94% compared to 1976, concrete by 280%

PPI DE 1976-2023.jpg

Producer price index of building materials in Germany from 1976 to 2023 © Holzkurier

How well or poorly wood performs in comparison with other building materials is reflected in the German producer price index published by Destatis. When you index all product prices (1976 = 100%), concrete was at 376% in December 2023 and (pig) iron at 256%, while the index value of softwood lumber was only 194%.

Thus, interests of around 2.9% a year have been added to the price of concrete over the course of 48 years. When it comes to pig iron, that rate was significantly lower (2.04% a year). Lumber, on the other hand, has only seen annual interests of 1.4% since 1976.

Log wood for more than €280/m³?

In early 1976, spruce/fir log wood cost around 950 Austrian schillings (the equivalent of €69/m³). In 2024, log wood should actually cost €288.4/m³. In 1976, slats still cost 2,400 ATS (€174/m³). Taking inflation into account, manufacturers should charge €728/m³ today. In reality, however, slats only cost around €260/m³.

This analysis also shows that the price was above the inflation-adjusted mark between May and July 2021. However, the hope that the 2021 price level could become the new normal for the coming years was very short-lived.