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Global market

Stable market situation

Article by Gerd Ebner, translated by Susanne Höfler | 17.10.2018 - 12:54

Only a few of the 200 participants raised their hands for the first and the third option - the vast majority of the present sawyers and timber dealers forecast a continuation of the stable market development.

This is why Auvinen opened his statement optimistically: "In the recent past, softwood lumber production has not been able to keep up with demand for quite a while. This created an imbalance that boosted prices. Most recently, supply and demand started matching each other better again."

Producer countries of softwood lumber reported increasing productions for 2018 and 2019 to Auvinen: this year still 3.2%, and 2.8% in 2019.

Sweden soon back to pre-crisis level

"If the softwood lumber production in Sweden in fact has gained 2.2%, Sweden is the first country to be back at its pre-crisis level", Auvinen is delighted. "But also in total, the ISC countries merely lack roughly 2 million m³ of production volume to get there", he analyses.

What the EOS president is missing, however, is one thing in particular: Roundwood. He forecasts increasing roundwood prices in the Baltic countries and in Sweden as well as slight declines in Sweden. In Central Europe, prices are sinking. "Roundwood supply is a bottleneck in Europe. This way, production is hardly able to grow anymore. Conversely, the economy in Europe picked up 2% and will only decelerate slightly in 2019", is Auvinen's analysis.

His market assessments:

  • Sales in China saw a dampening for Europeans, but the market keeps growing and timber imports from Russia are increasing. The Chinese GDP is growing just as the country's construction figures.
  • In Japan, constructions show a downward tendency, but imports are continuously stable.
  • Other Asian countries keep gaining importance for the European timber industry. In terms of demand, together they match China's volumes.
  • MENA region: Egypt has recovered to a degree that the Swedes are able to export there what has been lost in China.
  • The United States are already receiving 2 million m³/yr of European wood again. The market is too volatile for Europeans to dare deliver even more. Many still remember what happened in 2006/07. For Germany, the USA are already export country number 1. Demand in the States, however, is high, and construction permits are gaining traction.

Market prospects

Sampsa Auvinen, president of the European Organisation of the Sawmill Industry (EOS):

  • The development of the European economy is stable.
  • Global lumber demand keeps growing.
  • Exchange rates have most recently been of relatively low impact, will however have stronger effects on us in the future.
  • The economic results of European sawmills are good. Investments into production improvements are being made.
  • It is the roundwood availability in Europe that limits further growth.
  • Prices for roundwood and lumber will keep increasing.


Andreas von Möller - president of the European Timber Trade Federation (ETTF):

  1. 2017 was a good year for most of us.
  2. 2018 can be ranked as "quite good" to "very good". In the past few months, however, a slump occurred.
  3. 2019 will still get off with a good start but become more difficult somewhere along the line.
  4. Insecurities are cumulating at the horizon: What is going to happen with damaged wood? What is China's demand situation? Is there a real estate bubble? How will exports to the United States develop? Will Brexit be chaotic? Which impact do trade wars have on our products?  

In detail, Andreas von Möller, president of the European Timber Trade Federation, took a look at European import markets. These keep to be characterized by great confidence. The plus in the door and window sector shows that "the construction sector is doing well". After a good previous year, also this year saw stable growth. "2019 will have a good start - but it will become more difficult", von Möller concluded. "The insecurities are simply increasing: the high damaged wood accrual, the questions of what will happen in China or after the Brexit, and which impact trade restrictions will have on wood demand? I, however, would say: Keep your optimism for the upcoming year."

Von Möller pointed out to producers that global sales are still owed to the "ridiculously low" transport costs. "Something is off if it is equally expensive to ship wood from the Baltic region either to Great Britain or to the US East Coast. Similarly, container prices to China are not sustainable, either." As soon as these price levels are over, also the global "sales party" will come to an end, von Möller anticipates.

Crisis will come for sure - but when?

Risk manager Kärlis Danevics, SEB Bank, highlighted in Riga that the economy is already at an advanced stage in its cycle. "The downswing will come." The famous words: "It will be different this time", have always been the most expensive ones of all history, he claims. The high debt ratios in China and the United States are clear warning signals to him: 150% of the GDP already in both countries. In contrast, the average 100% in the EU seem very stable. Danevics warned of a "severely unhealthy country in Europe whose economic power is bigger than Russia's":  Italy.