These additional damaged wood volumes are accumulating during a time in which processors are expecting decreasing purchase volumes 2019. The pressure on softwood lumber prices is ever increasing.
In February, roundwood prices in Central Europe were still unchanged. The price margin ranges between €74 an 86/sm³; the biggest price splitting is currently present in Austria. The majority of purchases vary between €74 and 86/sm³. But also below that level (for instance in Carinthia) and above (for instance in Styria) a lot of transactions are taking place.
Austrian sawyers are preparing forest owners for another roundwood markdown of €5/sm³ for the Q2. The current price level is already €10/sm³ below last year's value which would make for a total difference of €15/sm³.
In February, the supply pressure has already been high. In this context, the speedy and exemplary processing of windthrow damages in Carinthia and South Tyrol as well as snow break in the Alpine foothills is worth mentioning. At higher altitudes, also the entire northern Alpine arc is said to have suffered snow break. Several people already expressed concern that these individual breaks will add up due to the enormous geographical range.
The additional volumes could come upon a softwood lumber market that is not quite as absorptive as last year's market. Memories of 2007 (windthrow and economic boom) and 2008 (windthrow and faltering economy) come to mind ...
Last year, Austrian sawmills cut up to 10% more than in 2017. This year, growth rates of 0% (see article "Austria's top sawmills of 2018") and 3% (softwood lumber conference 2018) are expected.
The German sawmill industry increased its production in 2018 by 1 million m³ to a total of 23 million m³ (+5%). In the fall of 2018, official bodies still anticipated stable figures for the softwood lumber production of 2019. In a Timber-Online survey, however, leading German companies reported target figures that project an increase around 4%.
If the sector will indeed see another production increase or rather a stable development or even cutting decreases cannot be answered with certainty at this point.
For the German roundwood market, such additional cutting is much needed. Drought damages from 2018 are yet to show their true extent, the base stock of bark beetles is virtually higher than ever before, and storms (nationwide) as well as the wet snow-incident (Bavarian Forest) damaged forests considerably.
The pricing screen for roundwood remained unchanged in Bavaria and Baden-Wuerttemberg in March. The price margin ranged between €79 up to about 86/sm³ for the main damaged wood volume.
A subject in its own right is the price development of pulpwood in Austria where the panel industry already reduced prices. The paper industry is expected to go along with this price cut. Just like with saw logs, the real additional deliveries will follow towards the end of May in conjunction with road blocks.
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