In 2021, the Austrian timber industry generated its highest turnover of all time, i.e. €10.43 billion. Compared to the year before, sales of lumber and wood products grew by almost 30%, as Dr. Erlfried Taurer, Deputy Chairman of the Austrian Timber Industry Association, announced at the annual press conference. Revenue from exports rose by 29% to €7.28 billion, while the value of imports increased by 21% and reached €5.66 billion. This resulted in a foreign trade surplus of €1.62 billion (+67%).
When asked by a journalist whether profits also reached a record level, Taurer replied that profits were not substantially higher than in previous years. Due to increasing energy prices, wage rises in collective agreements, Covid-related employee absences and problems with the supply chain, Taurer thinks that one cannot call them record profits – at least as far as the engineered wood industry is concerned.
10.6 million m³ of lumber produced
Last year’s lumber production was also close to record-breaking. In 2021, production grew for the seventh year in a row, totaling 10.8 million m³. It is the biggest production volume since 2008 (10.9 million m³). Output was only higher in 2004 when 10.93 million m³ had been produced. In 2021, 6.7 million m³ of softwood lumber (including imports) were available on the domestic market – around 200,000 m³ more than in 2020.
Logging increased by 9.6% to 18.4 million m³ in 2021. The volume of damaged wood has been falling for two consecutive years and only accounted for 6 million m³ in 2021. 57% (10.4 million m³) of the log wood supplied to sawmills came from Austrian forests, while 8 million m³ were imported.
Adjusting the Green Deal
Herbert Jöbstl, Chairman of the Association, emphasized that the Russian invasion of Ukraine is not only causing a humanitarian catastrophe but also has a negative impact on the economy. Russia is one of the world’s biggest lumber exporters, and 10% of European demand for lumber is satisfied by imports from Russia, Belarus and Ukraine. Once the embargo on imports of Russian and Belarusian wood products comes into effect on July 10, there will be a shortage of many products. According to Jöbstl, it is therefore necessary to mobilize Austria’s domestic wood reserves. The potential is there, since currently only 70% of the wood that regrows is being used.
In this context, Jöbstl called on politics for the necessary support. He thinks that it is necessary to rethink the European Forest Strategy, which aims at establishing set-aside areas in production forests. This EU strategy needs to be adjusted in order to tackle the shortages which resulted from the bans on imports. In addition, Jöbstl sees the demand to use more wood, while restricting logging at the same time as a contradiction.
Demands for a compensation for the cost of energy
The Austrian economy as well as the timber industry are suffering from the high electricity prices, which leads to a massive distortion of competition on the European market according to Taurer, who called on politics to provide financial support: “As is the case in 17 other EU countries, the EU state aid law, according to which energy-intensive companies can be compensated for higher electricity prices, should be implemented in Austria, too. Furthermore, taxes and duties, which are payable when costs exceed certain upper limits, could be suspended or reduced. Another option would be to reduce the VAT on energy from currently 20% to 10%.”
A possible interruption of the gas supply would have mostly indirect effects on the timber industry. With an annual consumption of 55 million m³, natural gas only accounts for 10% of the energy used by the industry. However, a disruption in the supply of resources, such as adhesives, would force many processing companies to stop production.
Will there be a sharp downturn?
Dr. Andreas Ludwig, deputy chairman of the Timber Industry Association, reported on the booming construction sector on nearly all markets – and predicted strong demand from the construction sector in the near future as well. According to Ludwig, the increase in production and the focus on the domestic market have had a slowing effect on price dynamics. The market situation has stabilized and delivery times have normalized. Ludwig sees higher stock levels and forward-looking planning on the part of customers as main factors contributing to this development.
As for the fourth quarter, Ludwig emphasized that it remains to be seen whether the sharp rise in costs will have a negative impact on the construction sector. Jöbstl added that in light of high inflation and uncertainty among customers, it is difficult to make forecasts about the rest of the year. This growing uncertainty was also evident in the Holzkurier’s most recent market conversations. At a conference of the Styrian timber industry Markus Schmölzer, President of the Austrian Sawmill Industry, had also reported that demand was already becoming more sluggish.