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Schnittholz Stapel Nadeholz © Martina Nöstler

economic survey sawmills Q2 2021

Growing concern about supply

Article by Gerd Ebner (translated by Eva Guzely) | 14.07.2021 - 10:15

The Central European sawmills have again given an honest assessment of their current business situation at the end of the second and the beginning of the third quarter. None of them described their business situation as bad, 80% reportedly did well, and 20% are at least satisfied. Compared to the previous year, the number of companies with a “good business situation” has doubled.

Still cloudless

As for the next quarter, the sawmills do not see any dark clouds hanging over their business. 63% expect a positive and 33% a satisfactory development. In the second quarter, nearly 75% of the respondents reported that sales were stronger than usual for the season. 22% described their sales as satisfactory and only 4% as weak. Recently, the level was so high that it is hard to exceed expectations for this quarter.

It can’t get any better

39% expect a further increase in sales. However, more than half of the respondents do not believe that things can get any better. As a result, 53% expect constant sales, and 8% fear a decrease in sales in the third quarter.

As to prices, 42% of the sawmills which participated in the survey expect a further rise in lumber prices over the next six months. 35% expect them to remain constant, whereas 23% think that prices will fall again. The sentiment has changed considerably compared to the first quarter. At the time, practically nobody (2%) expected falling prices, while 90% were correct in their forecast of rising sales prices in the second quarter.

Log prices will continue to rise

The past shows that the sawmills gave an accurate forecast about the development of log prices: Starting in the third quarter of 2020, expectations changed from falling to rising log prices. And that is exactly what happened. Even now, 76% are still convinced that sawmills will face a further increase in purchase prices. Only 14% predict constant log prices.

The sawmill industry’s willingness to invest is currently described as high by an unusually big number of companies (63%). One third of the respondents consider it to be stable. Anyone who knows about the order situation of machine suppliers knows that the sawmills are right about this, too. 

The biggest challenges at the moment *

“Purchase prices, calculation of new projects and the ability to deliver”

“Log exports to China withdraw important raw material from the market and the creation of added value in our country.”

“The biggest challenge is the purchase of wood. We are most worried by the short supply of Douglas fir coupled with an increasing demand. It is not always possible to turn to larch, which is usually available, as an alternative. Big-diameter spruce logs are getting scarcer which is why we have to expand our purchase radius here. Unfortunately, bigger volumes of spruce logs are exported as well.”

“Supply, materials (foil, adhesive), personnel”

“Oak log supply”

“The biggest challenge of the next three months will be to find a price level which allows companies to make calculations that they can rely on for at least one quarter. Both craftsmen and the timber trade need that.”

“Doing justice to regular customers and not upsetting anymore”

“The lumber purchase price for the production of single-use pallets; great struggle to make the necessary adaptations of sales prices”

“At the moment, the biggest challenge is the daily increase in lumber prices. We have to pass them on to customers, since they are the ones who pay for them. But the limit has been reached. There is simply no relation to previous prices anymore. Everything is overheated.”

“lack of skilled workers”

“not enough personnel”

“log supply, finding suitable staff”

“(Hardwood) log supply, passing considerable increases in costs on to customers”

“Reducing the order backlog to a normal (manageable) level and making a correct assessment of the new price level”

“Price fluctuations, insufficient production capacities, lack of workers”

“Big price increases, for example, for all spare parts, diesel, outgoing freight and a sharp rise in the cost of electricity from 2022. These increases cannot be passed on completely. Furthermore, given the strong demand for hardwood, a significant increase in log prices is to be expected from next season. The supply of log wood from the existing purchase radius is probably no longer possible! This leaves us either with significantly longer transport routes or a curtailment of cutting. The real, medium-term problem is to find sufficient and suitable staff! We have been trying to find employees for three months. Even contingent workers are not available. Our workforce is at more than full capacity!”

“The biggest challenge is getting lumber delivered. As a wood packaging company, we are now absolutely dependent on every delivery. Due to the lack of raw material, we cannot make all deliveries. Many sawmills have cancelled their orders and as a result, we have recorded a significant drop in sales which we cannot make up anymore. Due to rising wood prices, many customers have turned to alternative packaging or taken steps to significantly reduce their demand. Deliveries of lumber are becoming increasingly hesitant, so we don’t expect any improvement in the next few months.”

“Supply bottlenecks of our raw material suppliers; constant changes in prices require a lot of time”

“Raw material is in very short supply, but still sufficient.”

“Being able to adhere to delivery times and to find sufficient quantities of long log wood of the right quality”

“Search for staff, technological solutions for automating processes”

“Adhering to delivery dates and delivering the required quantities and products on schedule”

*Collection of anonymous statements made in economic survey