Shortage of log wood drives raw material costs
“Insufficient” refers to the costs which have increased again. In addition to personnel, energy and transport, the timber industry is faced with higher raw material costs in particular. “The price of the raw material is an issue. In 2024, it became clear that there are not enough sawlogs for everyone without damaged wood,” a German sawmiller analyzes.
In the fourth quarter, the higher raw material cost could not yet be passed on to the prices of lumber and further processed products.
This year, production in sawmills and at processing companies was more stable and more adjusted than in 2023. While Austria will see a slight increase this year – after the marked slowdown in 2023, Germany’s cutting volume likely decreased again. The cumulative cutting volume of both countries will be slightly lower this year.
European sales down by 18 million m³ this year
Europe as a whole was faced with a difficult market situation this year. Softwood lumber sales will probably total 65 million m³ and thus remain around 18 million m³ below the level recorded in 2021. This means that decrease in demand amounts exactly to Sweden’s (Europe’s second largest producer country) annual production output.
If we look at the three glued timber products, glue-laminated timber had the best balance between production and demand. At the end of the year, the product’s price has increased by 27% compared to five years ago, i.e. before the years of exaggeration during the Covid pandemic. Solid structural timber has seen much more fluctuation in comparison but this product’s price, too, was 22% higher at the end of the year than it had been in 2019.
CLT: Recent recovery of sales and price
As for cross-laminated timber, though, the situation remains very tense. The first half of the year was characterized by price wars as result of weak demand for the increased production output. This changed abruptly in June. Nevertheless, the weak prices continued to dominate the situation for several months despite significantly better capacity utilization and lead times. 2024 still ends with CLT prices which are around 3% below the 2019 level.
What will Trump do?
The development on the US market was a bright spot in the second half of the 2024. Starting from a very low price in the second quarter, one that many thought was hardly possible, European producers have managed to raise 2-by-4 prices by over €100/m³ or over 40% since July. For 2-by-6 lumber, an even bigger increase was recorded.
A forecast for 2025 must start with a look at the US. A president who is seen as unpredictable even by his fans will take office in January. He has announced many things which could have a massive impact on the timber industry:
- 25% of import tariffs on all imports from Canada and Mexico, 10% in duties on deliveries from all other supplying countries
- End of the war in Ukraine within 24 hours
European exporters might be able to live well with the former. In fact, the strength of the US dollar since the election more than compensated for the 10% in tariffs.
Peace in Ukraine as a chance for economic upturn
A real end to the war in Ukraine could have the potential to bring about a small economic boom as a result of the possible stability in Europe. In addition, a destroyed country needs to be rebuilt.
In the spring, elections will be held in Germany. No matter which government will rule the country, they will probably want and have to promote the necessary housing construction. The same is true for Austria.
Falling price at the turn of the year, upswing in 2025
Possible price weakness in winter could be followed by increases in Q2 – then, investments in construction and lower production output in Canada will have an impact
Let’s return to the forecast for the price trend in the US. Warehouses have recently been restocked. Given the seasonally lower demand, a decrease of US-$50 to US-$60/1,000 bft would not be surprising. However, it is more than unlikely that the US price will plummet to US-$430/1,000 bft, as was the case in May 2024.
Canadian curtailments to come
The reduction of Canadian production and a possible “Trump construction effect” should have an impact starting in March or April. As a result, US prices could rise sharply from the second quarter onwards.
MENA remains strong
What are the sales opportunities on the global lumber market in 2025? (red: bad; yellow: average; green: good) © Holzkurier.com
The MENA region guaranteed good sales this year. The Middle East has been performing better and better recently. Saudi Arabia having been recently confirmed as host to the 2034 FIFA World Cup fits the picture. The Holzkurier’s editorial team expects demand in the MENA region to remain strong next year as well.
Meanwhile, little improvement can be expected in China in 2025, as the country has hardly overcome its construction crisis.
Japan could see a positive development again after another weak year.
Europe has supply issues
And what about Europe? Supply will remain difficult next year. Log prices still show an upward trend.
This pressure will cause lumber prices to rise in early 2025. For the main grades, increases of €10 to €20/m³ are realistic. Sideboard prices usually follow with a slight time lag. There will be less “accumulating goods” at the beginning of the year because many companies will extend their Christmas break to up to three weeks.
In line with the sawmill shutdowns, there will also be fewer sawmill by-products available at the beginning of the year. According to an Austrian market expert, there is no danger of a slump in prices for wood chips and sawdust but also no realistic chance of any big jumps.
Kindergartens instead of single-family homes
This year, the timber construction sector was able to compensated for the lack of new single- and two-family homes by more orders for multi-story, commercial and municipal buildings. Schools and kindergartens will also be built in 2025.
As for CLT, several large suppliers will increase the number of shifts in the first half of 2025. It will soon become clear if and how the market can absorb these additional volumes.
Manufacturers of solid structural timber will have to digest strong increases in the price of the raw boards at the beginning of next year. The pressure on the price of the end product is particularly high.
The glulam sector is also affected by increases in the price of lamellas. Here, increases of €10 to €20/m³ were announced – which will lead to reactions in the price of the end product.
For the Central European glulam sector, the year starts again with the paradoxical situation that Scandinavians are apparently not following suit when it comes to the price increases of Central European competitors. The start of 2025 will therefore be similar to the one this year.
