Europe's top sawmills

Caution is the order of the day

Article by Gerd Ebner (translated by Eva Guzely) | 31.05.2023 - 11:04

Good start of the year deceiving

Things will likely be different in 2023. A good January and February gave reason to be confident that this year could be a more or less successful one, too. However, there has never been a similar drop in demand in the second half of April. As a result, sawmills exercised caution when reporting their production figures for 2023. This year, only those companies that recently built new sawmills or acquired existing ones will see their production volumes grow. These expansions are sufficient for a 1% increase in output to around 43.5 million m³ (see table). However, many companies predict significant curtailments for 2023.

Europe needs overseas markets

This year’s market development shows how important the large overseas markets are for Europeans. If the US market isn’t running smoothly, we have a problem. If the other overseas markets are weak, too, things will get tight. A lot of lumber is now being exported to China – which already has an impact on prices there.

The big sawmill groups have been facing three main challenges since April:

  • Lower prices combined with
  • lower sales volumes,
  • but unchanged (Central Europe) to higher (Scandinavia) log prices

Currently a 40% decrease in sales

The direct year-on-year comparison of sales generated in April 2023 with those of last year shows a decrease of probably 30 to 40%. It is well known that April 2022 was the record month of the year 2022 and that prices as well as demand have seen a downward trend since then. The fact that the gap in year-on-year comparisons will likely narrow in the coming months is not a comforting thought either. The second half of 2023 will be even more challenging.

At the moment, the industry is pulling the proverbial handbrake. Many companies do not worry anymore about how to get back laid-off employees, the reason being that most of the managers of the top companies do not expect any substantial recovery before 2025.

Processed products are faring better

What has been said, or rather written, applies to lumber in particular. Demand situations differ among the various processed products. Demand for cross-laminated timber, for example, is slightly decreasing. It has to be said though that in the case of this product, the additional quantities manufactured in new production sites are having an impact.

Within the Top 20, there were some shifts in ranking, primarily due to acquisitions and sales. The most recent deal was the sale of HS Timber Group to Ziegler Group, which will bring about some changes in both purchasing (“Lex Schweighofer” in Romania; 30% rule) and sales. When it comes to sales, HS Timber Group was very successful in Japan. Ziegler, on the other hand, will probably focus more on the European DIY market.

2022 was characterized by a march north. What Binderholz did years ago was repeated at the end of 2021 and also several times in the course of 2022: Mayr-Melnhof Holz, HS Timber Group, Ziegler and, most recently, Pfeifer Holz acquired companies in Sweden and Finland. In addition, there are the production sites of Binderholz (following the acquisition of BSW) and Rettenmeier (construction of new sawmill to start in 2024) in the Baltic States.

The “sale” of Mayr-Melnhof’s Russian sawmill took place at the turn of the year, and the Hasslacher Group had to follow suit a few months later.

In South Tyrol, there is currently a sawmill expansion and a new construction project underway at X Timber in Eggental and at Sarner Holz in Sarntal/IT. Similar developments are taking place in Switzerland.

Knowledge about global sales markets

The acquisitions in Scandinavia offer the buying companies access to new resources and high-quality lumber for their own further processing. Soft skills are another perk: Companies get sales teams which know sales markets worldwide.

Furthermore, internationalization also creates global market knowledge. The latter mostly shows one thing, i.e. that currently, no market is really going well.

In terms of positioning, the HS Timber Group is particularly global. After decades of being in business, the company knows about the needs and characteristics of markets in Europe, the MENA region, Japan and the US. With Argentina as starting point, the HS Timber Group will focus on the US, Mexico, Europe and the MENA region with a new type of wood.

In April, Binderholz opened the sawmill in Enfield/US with its cutting capacity of more than 1 million m³ a year. According to most recent information, at least one other Central European timber company will start producing in the US as well.

More mergers to come

Most market experts agree that there will be further mergers. Rising interest rates will particularly hit those companies which rely disproportionately on debt financing. “Keep calm and don’t take any financial risks” is a motto mentioned by several market participants.

Europe’s Top 20 manufacturers of softwood lumber | 2022/target 2023
Ranked according to target production in 2023 (in 1,000 m³)
Rank 2022 Rank 2023 Company Headquarters Sawmills Production 2022 Target production 2023 Diff. in %
1 1 ←→ Stora Enso ¹⁾ FI 16 5,540 5,430 –2
2 2 ←→ Binderholz ²⁾ AT 17 4,430 4,280 –3
7 3 ↑ Pfeifer ³⁾ AT 9 2,400 3,100 29
3 4 ↓ Vida Wood SE 12 2,750 2,900 5
5 5 ←→ SCA Timber SE 5 2,200 2,200 0
6 6 ←→ Rettenmeier Holzindustrie DE 5 2,300 2,100 –9
8 7 ↑ Moelven Group NO 15 2,054 2,085 2
19 8 ↑ Ziegler Group ⁴⁾ DE 4 1,600 2,080 30
11 9 ↑ ante-holz DE 3 1,800 2,021 12
4 10 ↓ Mayr-Melnhof Holz ⁵⁾ AT 5 2,060 2,000 –3
12 11 ↑ Setra Group SE 7 1,750 1,800 3
9 12 ↓  Södra Timber ⁶⁾ SE 8 1,807 1,700 –6
16 13 ↑ Metsä Fibre ⁷⁾ FI 7 1,459 1,550 6
10 14 ↓ HS Timber Group ⁸⁾ AT 3 1,900 1,500 –21
13 14 ↓ Ilim Timber DE 2 1,650 1,500 –9
18 14 ↑ Versowood ⁹⁾ FI 4 1,500 1,500 0
14 17 ↓ UPM Timber ¹⁰⁾ FI 4 1.538 1.460 –5
14 18 ↓ Fruytier Scierie BE 9 1,568 1,450 –8
16 19 ↓ Holmen Wood Products ¹¹⁾ SE 5 1,500 1,425 –5
20 ↑ Mercer ¹²⁾ DE 2 1,320 1,397 6
        Total 43,126 43,478 1

Info box

1) 2022, 2023: production capacity; 2022 sale of two Russian sawmills

2) 2023: target incl. US sawmills Live-Oak and Enfield 

3) 2022: production in five sawmills; acquisition of Pölkky/FI at the end of 2022

4) In May 2022, Ziegler Group acquired two sawmills in Sweden (cutting: 750,000 m³/year); 2022: 1.21 million m³ target plus Swedish sawmills; April 2023: takeover of sawmill Sebeș/RO from HS Timber Group

5) 2022: sale of sawmill Efimovskij/RU

6) 2023: Holzkurier estimate

7) 2022 production output according to annual report; 2023: Holzkurier estimate; sawmill in Rauma/FI in test operation since autumn 2022, capacity: 750,000 m³/year, investment: €260 million; sawmill in Svir/RU shuttered in March 2022

8) Radauti/RO shuttered in 2022; end of April 2022: acquisition of Luvian Saha (300,000 m³); construction of new sawmill in Belarus stopped in March 2022; 2023: sale of sawmill in Sebeș/RO to Ziegler Group – closing has not yet taken place; new sawmill in Argentina to go into operation in Q4 2023; production: Holzkurier estimate

9) 2022 production output according to annual report; 2023: Holzkurier estimate; 2022: takeover of production site Kissakoski

10) 2022 production output according to annual report; 2023: Holzkurier estimate

11) 2022 production output according to annual report; 2023: Holzkurier estimate

12) 2022: acquisition of Holzindustrie Torgau (HIT); 2022 softwood lumber cutting volume: 2.4 million m³, 2023 target cutting volume: 2.54 million m³. Conversion: 0.55 m³ per 1 m³ of log wood

Quotes from timber industrialists

Whether we can be successful in exports, depends entirely on the log price.

All big timber companies are turning their attention to new markets.

Klausner, Binderholz, Schweighofer – Central Europeans have a history of venturing out and conquering new markets.

The euphoria is over in the MENA region, too. Customers are waiting when prices are falling.

China is being flooded with goods from Russia and Europe.

If private construction loans decrease by more than 50%, the government needs to intervene, for example to by offering soft loans.