4HK_sales indicator 1 06 2018.jpg
© Holzkurier
sales indicator june 2018

The end of the road?

Article by Gerd Ebner (translated by Eva Guzely) | 05.07.2018 - 10:47

Price stability with one exception

4HK_sales indicator 2 06 2018.jpg

© Holzkurier

Despite high season, neither sawn timber nor processed wood product prices have been raised in June. Raw-planed wood is the exception to the rule. This product is less important for sawmills’ product ranges, yet its price increased by 6 €/m³ to 248 €/m³ on average (delivered at frontier).

On the one hand, thicker logs tend to be delivered to sawmills because of the presence of damaged wood. On the other hand, quality deteriorates. Additionally, the current supply as well as the market situation make it possible for sawmills to fully exploit their cutting capacities. As a result, few sideboard assortments are scarce at the moment, very thin and narrow boards being the exception.

A change in demand

Better supply put an end to the soaring machined sideboard prices which were stable at 149 to 156 €/m³ (delivered at frontier Austria/Italy) in June. Nonetheless, they fell by only 1 €/m³ compared to their all-time high of March 2011. The last months have seen a dynamic development of prices (+12% compared to last year). Clients who opted for long-term contracts profit from lower prices, whereas prices for short-term contracts. are considerably higher.

“The structure of prices is not okay. The differences are too big”, complains an interviewee with regard to the Italian market where some wood products for construction are less expensive than those for packaging.

German suppliers, who would have liked to raise sideboard prices in Italy again for the third quarter, have not succeeded yet. Thanks to their being close to full capacity, they can afford to wait for changing market conditions.

Less sawn timber available

The various types of sideboards are also good examples for two other trends of the past few years. Cross-laminated timber, for example, is a product whose production requires enormous volumes of sawn timber, which then don’t reach the market, be it in the timber industry itself or because of fixed supply contracts with CLT manufacturers.

Globalisation: Market access for all

The situation of machined sideboards is a good example for the changes the market is undergoing. Today, serving exotic overseas markets is not a problem anymore, not even for medium-sized sawmills. With a multilingual salesperson and some experience in logistics, it does not take long to tap markets like South Corea or Vietnam. Also, conditions tend to be more lucrative compared to Europe. All of this changes the supply and price formation on traditional main markets like Italy.

When it comes to sideboards, the current situation is textbook example. Only five years ago, there would have been a marked decrease in prices in Italy instead of a stable situation, especially when enormous amounts of log wood fuel cutting in Central European sawmills.

KVH raw material prices under pressure

One product which saw some pressure on prices already in June is raw material for solid structural wood (KVH). Big and medium-sized German sawmills offered it for 1 to 5 €/m³ less. As of yet, though, the market price has not changed.