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2019 review and outlook for 2020

Worldwide success with Central European sawn timber

Article by Günther Jauk (translated by Eva Guzely) | 13.01.2020 - 09:02

From 2007 to 2013, Austria’s seven biggest timber companies accumulated 137 million € of losses. Excess cutting capacity was at 20% and it was hard to find investments. In 2019, when Timber-Online analyzed the balance sheets of the same companies, but for the period 2014 to 2018, the situation was completely different. The “Big Seven” generated a profit of 638 million €. As usual in family-owned companies, profits are reinvested. At the moment, it is hard to keep track of the various investments in the sawmill industry or in the processing sector. The reasons for this remarkable recovery are particularly advantageous circumstances, such as the favorable log situation and booming world markets – most of all China and the US – which helped to stabilize sawn timber prices for a long time.

In 2019, there was a similar situation in purchase and sales, and at the end of last year, sawmills could look back on a successful year despite decreases in sales and prices starting from midyear.

A similarly positive development is expected this year – especially on overseas markets. Reinhard Binder, CEO of Binderholz, sums up this development with a clear statement: “In 2020, we are going to generate more turnover in the US than in Italy.”

However, there should be a positive trend on domestic markets as well. Industry experts expect a mostly dynamic development of the construction sector in the DACH region, of which glued timber producers are going to profit, too. The demand for main assortments is judged as high already at the beginning of the year.

Apart from successful sales channels for high-quality main assortments, CLT has become a good way to “get rid of” damaged wood over the last years. Lower quality assortments are ideal for the middle layers of this solid structural product – and every year, demand is growing by more than 10% in the DACH region.

Solid structural timber (KVH) is also relatively “tolerant” when it comes to damaged wood. Increasingly, a second quality class seems to establish itself – an unofficial “visual quality” one might say, for which some customers are prepared to pay more. This would be a welcome development for a product which sees by far the biggest ups and downs in prices in a yearly cycle. Parallel to the accumulation of damaged wood, prices almost exclusively fell in 2019.

In 2020, we are going to generate more turnover in the US than in Italy.

Reinhard Binder, CEO of Binderholz

Sawn timber for personal use

The mood at Ligna was rarely – or possibly even never – as euphoric as in 2019. The majority of exhibitors spoke of “a flourishing business” and “well off timber companies”. In line with that, visitors reported planned investments in all areas. Many of those announcements have already been confirmed.

Investments are not limited to processing anymore (see above), but are also made in the sawing segment. From 2020 to 2022, at least nine sawing lines, each with a capacity of 250,000 to 500,000 m³ a year, are planned in Austria and Southern Germany. From 2009 to 2018, there was not a single such investment in Austria.

With many of those big projects, processing indirectly plays a central role. Since available main assortments are increasingly scarce, the future supply of a company’s own glued timber production line is the main reason for investment with a few projects.

Another reason is that even chipper lines have to be replaced after 30 years. Then, the question arises whether to shut down the sawmill or invest in a new line. At the moment, many companies have the necessary funding for the latter, and wood is urgently needed for processing – as last year showed.