Market situation to remain tense

For softwood sawmills, the start of the new year is characterized by weak demand, low lumber prices as well as high raw material costs and a difficult supply situation. This extremely challenging market situation resulted in the most pessimistic start to the year since the Holzkurier began doing its economic surveys ten years ago. 51% of sawmills described their business situation as bad in the past quarter and 42% as satisfactory, while only 7% reported a good business situation.
As for the current quarter, 42% of sawmills expect a negative and 52% a satisfactory development of their business situation.

Prices expected to rise

Seven out of ten softwood sawmills expect purchase prices to rise in the current quarter, while the remaining one third expect log prices to remain unchanged. Similarly, 65% of respondents expect lumber prices to rise in the next three months, while 28% think that they will remain constant. 7% of the survey participants expect sales prices to fall.

Willingness to invest at a long-time low

The willingness to invest recently fell to its lowest level since the fourth quarter of 2015. At that time, 84% of sawmills rated the industry’s willingness to invest as low. Right now, 80% of respondents share this assessment, as a look in the Datacube shows. 71% of sawmills expect a further deterioration in this area in the first half of 2024, while 28% assume that the willingness to invest will remain the same.

Weak sales

When it comes to sales, assessments made by the surveyed sawmills were somewhat more positive in the fourth quarter of 2023 than they had been in the previous three months, with more than half (51%) reporting weak sales and only 1% describing their sales as strong. As for the current quarter, half of the sawmills expect sales to remain constant, while around one quarter of respondents each think that their sales will rise (25%) or fall (25%).

Production volumes expected to remain constant

In response to weak prices and demand, softwood lumber production in Germany and Austria saw a noticeable year-on-year decrease in 2023. For 2024, the majority of sawmills (72%) plan to keep production output at 2023 levels. 8% want to increase their softwood lumber production in 2024, whereas 20% plan to curtail it.

2025 as a year of hope

The majority of sawmills (53%) only expect a significant easing of the current situation in 2025, with the recovery depending on several key factors:

• the development of interest rates
• the availability of log wood
• incentives created by the government
• the number of building permits issued
• overseas markets

These are the assessments made by the survey participants. It has to be said, though, that further aftershocks might follow after the major economic earthquakes in 2021 and 2022.