How far can damaged wood transports go?
In unison, the group speaks of "large volumes that are pouring from Czech Republic into Germany and especially Austria at give-away prices". More diverse were the opinions on the supply from Veneto, Trentino and Alto Adige. "Ex works, the wood is not even that cheap", one expert stated. Others, however, deem it possible even for Styrian enterprises that damaged wood imports pay off.
The quality of the wood at least is very good. Locally large volumes make it necessary to continue processing in the upcoming years. It remains to be seen what the quality will be like then.
Harvesting before the forest dies off
The high snow levels in Western Austria enabled the almost snow-free East to process damaged wood unhurriedly. "Let's cut the forest down before it dies", already seems to be the motto in low-lying areas of the Waldviertel region. Supply is correspondingly high. Pine trees in the Weinviertel region also exhibits heavy damages.
Another dry year would be catastrophic. The sawing, paper and panel industries are all alert.
Roundwood containers to China
To relieve the market, Germany and Austria made first roundwood deliveries by container to China. The group was interested to see if this would turn out to be exemplary for the future and especially how the goods will be received in the Far East.
A hot topic amongst all timber exporters is the freight car shortage especially at the Austrian Federal Railways (ÖBB). Further train station closings most recently caused a stir in the wood industry.
Weather and damaged wood accrual are causing sawmills to produce on a very high level. "They are making good money now. In five to six years, however, there will be a roundwood shortage", was one word of warning.
Italian merchant genius
Italy's economic data for 2019 are not pleasing. The panel of timber exporters, however, was divided on the question whether demand in Italy will actually be lower. It was known to the Viennese experts that pricing was stable up until December. "Thanks to German dumping prices, however, Italy's prices started slipping. And now, side boards show a price difference of up to €40/m³. The customers know: If you have the wrong supplier now, you've got a problem. This is why many don't buy at all currently and rather wait and see. Italians are excellent merchants, they make use of every market change", were the praiseful words for Italy.
Reluctance when prices are falling
"In the end it's always the same. If prices are rising, everybody is buying one lumber package more than they need, and if they are sinking, one less. This reinforces the downward spiral – and we are right in the middle of it right now", one of the timber exporters put it in a nutshell.
"Every timber industry with integrated further processing must produce. If sales slow down, prices are being dumped. There are not many buying countries for glulam and KVH which accelerates this process even more", one of them lamented.
Relapse by five years?
Prices for side boards will soon be 20% lower than last year – resulting in a level that was last seen in 2010. "Last year, the motto regarding many assortments was still: 'This need not be delivered to Italy, there are global alternative markets for that.' Now I wonder where all these buyers are. It rather seems like Italy again is used as a relief market", one Italy expert complained.
As for pellets, producers were still worried in the fall if security of supply for winter was still warranted for all costumers. "Now, in a winter with snow but relatively high temperatures, customers needed fewer pellets and producers worked non-stop. Therefore, pellets supply currently is rather too high than too low", one of the summarized the situation. Declines in the double digits for last season's prices are not a surprise now.
Austria is booming
And the domestic situation? The panel of timber exporters took a look at the Viennese borough Seestadt Aspern to see what's going on: There are cranes everywhere, the Vienna area is booming. The weather allows for non-stop construction in the Q1. The same holds true for Styria: Timber construction companies have a high workload. This boosts optimism for the Q2 and Q3.
Is Brexit a game changer for oak?
A changed market situation could arise for oak. By the end of March, Great Britain is expected to leave the EU. The United Kingdom is a big market for edged goods. Most recently, however, imports shrank significantly due to insecurity, prices dropped between 20 and 25%. The repercussions of this reach as far as Italy which was exporting strongly to Great Britain.
Another oak market tendency is that rustic products are not much asked for any longer. Demand is focused on floor boards of good quality.
What is needed from Eastern Europe are cornices. "Companies that are competent in this, however, hardly exist any more", was a common regret.
Dry oak wanted, but not at all costs
In general, oak lumber stocks are well-filled. Dry product is still selling well - "but not like hot cakes anymore", the market assessment is limited.
As for high grade wood, the group anticipates a stable economic situation and is confident to have sufficient supply. With one exception: High grade spruce wood supply could become tight. This is also true for pine. "There is more than enough goods in bad quality; the high quality is scarce."
"Far too little raw product" was the analysis for larch, "as usual".
No Swiss pine flooding
Swiss pine is still going well. The timber exporters do not forecast a flooding of Swiss pine from Vaia-affected areas. "This delicate damaged wood first has to be harvested and processed before the summer." The fact that the Austrian Federal Forestry Office (ÖBf AG) is now proactively approaching potential Swiss pine customers is interpreted as a slight market nervousness.
Timber exporters have the floor
Now that other markets are going less well, everybody is remembering Italy.
If prices rise, everybody is buying one load extra - if they drop, it is one less.
From previous years, we are not used to the price decline at the beginning of the year. anymore This, however, had been the norm for decades. Nobody should get cold feet now. The situation is less negative than it may seem.
For Europe, it is absolutely price-relevant how the Chinese market develops. If it is not going so well, pressure on overseas markets will automatically build up.
The market assessments of the following enterprises were considered: Cappellari, St. Stefan; Cato Holzhandel, Innsbruck; Frischeis, Stockerau; HCN, München; Jung, Maishofen; Georg Pagnia, Oldenburg/DE; Schuster, Innsbruck; Teuschler, Bad Waltersdorf
