Down instead of up

Anything is possible:

• Log prices might fall due to weak demand or
• they might reach new record levels.

If the latter case becomes reality, the group of timber exporters fears that “there will be no market anywhere in the world where we are competitive”.

Log prices – up or down?

The lack of predictability when it comes to the further development of the market situation was also illustrated by the timber exporters, who gave completely contrary assessments of the development of log prices. In the north of Austria, log wood is in short supply despite a general reduction in the number of shifts. In the south, on the other hand, companies have taken to storing massive volumes of log wood over the past 14 days, and beetle wood is already being put on the market. In addition, the paper industry “will certainly not buy any sawable log wood this year” because of cutbacks in production, as one exporter analyzed.

No monthly increases

Most of those present did not see any substantial recovery when it comes to softwood lumber in the first quarter. The predicted monthly price increases were not implemented. “Up until two weeks ago, prices were at least stable in Italy. However, there have been no new orders coming in for 14 days, and prices have fallen”, several exporters reported.

As for packaging materials in Italy, a decrease of up to €50/m³ was recorded compared to the turn of the year. “We have been pointing out the rising log prices to our customers for months, but with the big companies now lowering their prices, we have lost a lot of credibility,” one timber merchant complained. “What makes matters worse is that Italian demand is down, yet more and more companies are offering their products there.” The offer behavior is linked to the extent to which cutting has been reduced – those who are more reserved, sell goods at higher prices. “The differences between the highest and lowest prices are enormous. That’s another problem,” another participant complained.

No real recovery in sight for Italy

The group of timber exporters was unable to make a forecast for Italy for the coming weeks. “How could there possibly be a recovery in the next four or five months? And then, there is Ferragosto …,” was one quite fatalistic assessment.

In Austria, sales have been described as satisfactory so far. If there is an upturn after Easter, prices could start to rise slightly again. However, no one dared to make a forecast for the second half of the year.

Since all construction products are available, the timber construction sectors in the DACH region are currently more cautious when it comes to purchases. “We are not building up our own stock levels because everything is available just in time,” someone reported. Demand for construction timber has recently weakened considerably.

Pellet prices are rising – but the market may take another hit

As for wood pellets, the situation remains extreme. According to the timber exporters, a veritable price war raged in January and February. Now, warehouses are being replenished to the maximum. As a result, companies are active in loading and prices are rising again from the lows they have been at before. “The purchases are made to increase stock levels. They don’t represent actual demand,” one participant warned. “Customers who are worried about supply security will start to stock up even earlier. What happened in October 2022 could be happen again this year, only three or four months earlier: an abrupt slump in demand. I don’t dare to stock up on anything anymore.”

For Central European sawmills, the situation can be summarized as follows: Prices of sawmill by-products will return to the initial levels of the second quarter of 2022 before long. The cost of labor increases by 10%, that of electricity is said to have increased by up to 300% compared to last year in some regions. At the same time, it was not possible to increase lumber prices substantially. “Since nobody has to worry about insufficient supply anymore, log prices can only go down,” one participant summed up.

In Eastern Europe, customers are said to have learned a lesson from previous years: “I prefer not buying anything rather than sitting on goods that are too expensive.” Many assumed that the ups and downs in prices would be more balanced in the future.