Great uncertainty but opportunities as well

France and Italy hit hard

In March, the French and Italian construction sectors recorded contractions of more than 60%, while other countries, such as Germany, came though this period with a nearly stable development. This year, France’s softwood sawn timber demand is going to reach around 8.2 million m³. As for 2021, a 3% increase is expected. Bergsten puts Italy’s demand at 4 million m³ this year, with imports remaining constant at 3.8 million m³. In 2021, demand is expected to rise slightly. In this context, Bergsten mentioned the “Superbonus 110%”, a stimulus program for the construction sector introduced by the Italian government which gives building contractors tax benefits.

Germany’s softwood sawn timber demand amounts to 19.5 million m³ this year. Even though the construction sector is going to be slightly weaker in 2021, wood consumption is to remain unchanged according to Bergsten. His analysis of the British market was less positive. British imports are going to see an 11% decrease this year, followed by a 4% recovery in 2021. However, the ETTF estimates softwood sawn timber demand to be 10% higher next year.

Growing demand in 2020 and 2021

In 2021, the EU’s overall softwood sawn timber demand could increase by 2.3 million m³. When adding North America, overall consumption is going to rise by 11.1 million m³.

Remodeling one’s own four walls

This year, some trends emerged as a result of COVID-19 and they could continue in 2021, according to Sampsa Auvinen, President of the European Organization of the Sawmill Industry:

• people stay at home more and buy online (strong DIY and packaging segments)
• relocations to rural areas (boost for the DIY segment)
• increasing risk avoidance (home renovations stronger than new constructions)
• people spend less time in the office (increase in digitalization, fewer offices)
• construction activity is slightly decreasing

Central Europe at an advantage

Auvinen talked about the divided supply situation with Central Europe on the one hand where big volumes of damaged wood are accumulating in 2020 as well. In the north of Europe and in the Baltic states, on the other hand, the supply situation is much less good. Auvinen sees a slightly decreasing availability of log wood throughout Europe this year and in 2021. In the short term, Central European timber companies are going to maintain the competitive edge which they gained thanks to the raw material price. In Scandinavia, Sweden can hold its position on the market thanks to the currency devaluation – a possibility which Finland and the Baltic states do not have.

Higher overseas market shares

European sawn timber is going to gain further market shares on overseas markets in 2021. European exports to China and the US are reaching unprecedented levels. Japan and the Middle East are buying constant volumes of European sawn timber. As for the coming months, Auvinen expects softwood sawn timber prices and export volumes to continue to increase, while stock levels are going to decrease further.

Log wood as crucial element of success

For the medium-term outlook, Auvinen drew on Holzkurier’s survey on new construction projects. For him, the question was whether there is going to be enough raw material for all of those production capacities. “Regions, which do not have cheap log wood at the moment, could be among the winners. Last year I said: ‘More than this year is impossible.’ This year, though, we see new record despite a 3% decrease in production. The numbers could continue to rise if US prices remain high. In this case, however, we will soon have a supply problem in Europe.”