In July, Holzkurier’s sales indicator remained practically unchanged at 100.5%. However, there are changes in all segments of our sector. Read more ...
“An increase in demand was to be expected, but sawn timber prices rising by 15% from July was not foreseeable,” one exporter said surprised. “With certain dimensions, the price has become secondary. It is primarily about ensuring supply.”
Price jumps a challenge
Despite this generally positive development, the participants would have preferred the “golden mean”. “Instead of jumping from 150 directly to 210 €/m³, it would be better for everyone if the price was at a constant 180 €/m³,” complained one exporter referring to problems with planning purchases and sales. The supply structure has changed for Italian customers, because big timber companies have so many alternatives. However: “Many small Austrian sawmills produce assortments which they can practically sell only in Italy – and many customers in the south know that.” On the other hand, there are mass products and byproducts which are being sold at dumping prices in the opinion of the exporters.
With the Italian market going well at the moment, it is even more painful for them that “there are no carriers available”. Apparently, there are not enough drivers to use all trucks. Additionally, there seem to be “no return transports for certain Italian regions because nobody wants to go there.”
According to one participant, who has been doing business in Italy since 1962, there has never before been a situation in which prices of single assortments exploded like they do at the moment. Solid structural timber was given as an example. For the exporters, the sawmills’ increasing focus on US assortments has resulted in a shortage of raw wood for solid structural timber.
Since many Austrian producers are increasingly producing dimensions which are common in the US, there is a limited supply in “Italian dimensions”. When cutting 2-by-4, common sideboard dimensions are accumulating in much smaller volumes. A possible fall in demand is overcompensated with a considerably smaller supply. If the boom in the US continues in 2021 as well, this trend is going to continue and may even become more extreme. The exporters agreed on the need to be as careful as never before when it comes to payments made by customers. “The number of zombie companies is increasing,” warned one participant referring to customers which would be insolvent without COVID-19 support.
Super year with a surreal demand
From standing still to flying high – this is how the mood is described on the domestic Austrian market as well. “It is going to be a super year with a surreal demand. The fourth quarter cannot change that”, commented one participant. There was and is a strong demand for all construction products. Of all the assortments, which are selling very well, larch was highlighted in particular.
As to glulam and solid structural timber, delivery times are unprecedented. One participant added “OSB, scantlings, posts etc.” to the list of top products. Everything is driven by private consumers. “Investments could possibly be made earlier which could soon be missing.”
In the floor segment, one of the exporters is missing “requests for offers for next year”.
When big companies cut for the US, fewer and fewer 17 mm sideboards are available.
Optimism for 2021
In Austria, the development in 2021 also depends on the winter tourism season. The east of the country, however, is “well-positioned in 2021 as well” independently of tourism.
Reports on business in the Levant region were much less positive. COVID-19-related restrictions, the war in Libya and no flights were among the problems mentioned. When it comes to softwood sawn timber, only the minimum is ordered. While Central European producers would wish for an increase of 30 to 50 €/m³, this would be “too high for customers which is why such increases are not doable”.
Motivating forest owners with money
As to log wood, the exporters believe that the Central European forestry sector needs to be motivated. “At the moment, the flow of fresh wood from forests is stagnating.” The low price level has led to a decrease in harvest. In Northern Austria, an increase of 9 €/m³ is to be expected in the fourth quarter. This would mean that prices could range from 75 to 90 €/m³ by the first quarter of 2021. Price are lower in areas which struggle with bark beetle infestation whereas the exporters see higher prices in Carinthia and Styria.
Please raise the pellet prices!
So far, there has not been any significant rise in prices in autumn. “This isn’t good for the market. Nobody is going to stock up in spring, when prices remain the same until the heating season,” regrets one merchant who announced a rise in November.
The market assessments of the following companies have been taken into consideration: Cappellari, Wolfsberg; Drauholz, Straßburg, Jung, Zell/See; Weiss, Reitdorf; Mühlbauer, Himberg; Frischeis, Stockerau; Holzexporte Schuster, Innsbruck, Teuschler Holz, Bad Waltersdorf, Vesely Timber-Export, Vienna
Trends on the Italian timber market
- Italy is degenerating into a market for byproducts/substandard goods.
- Sawn timber almost non-existent anymore in new constructions
- Decrease in 2020 sales of main assortments (due to supply: lack of fresh and good quality timber; due to demand: fewer Italian processing companies)
- Italy buys a lot of high-quality sawn timber from Russia and Scandinavia – much of the Austrian timber is already processed when it arrives in Italy.
- New constructions are stagnating.
- The percentage of wood in new buildings is increasing
- Decreases in concrete formwork panels and beams
- Housing costs increased only in big cities but fell in rural areas.
- Many investments in tourism in the past decade (e.g. agritourism, hotels); fewer investments due to COVID-19
- Industry is suffering from repercussions of COVID-19: decrease in sideboard demand
- Trend towards payment in advance was possible thanks to this year’s general recovery (What happens with payments if the situation deteriorates?)
- Difficulties in transport: smaller number of trucks for the route Germany/Austria to Italy
Opportunities for timber constructions
- Italian law directly and indirectly encourages energy-efficient and resource-efficient constructions
- In Italy, there are around 4 million of so-called “edifici energivori” (energy-wasting buildings) which have to be demolished/renovated.
- School buildings are heavily subsidized (furniture/construction)
- Cities are to be restructured; big offices are becoming superfluous/trend towards home office
- Affordable housing is scarce.
Market analysis of one of the participants of the meeting of timber exporters