Increasing presence in the US
When the domestic EU market is weak, overseas markets are more important than ever. An impressive example of this dynamic is the US business in the first quarter. Although US imports of softwood lumber fell by 2%, shipments coming from European countries grew by 42%, reaching a total of 1.5 million m³. This means that 18% of the softwood lumber imported by the US comes from Europe – more than ever before. And this despite the US price being well below the ten-year average at the moment ...
Europeans need sales in the US and will have more opportunities on the market this year. Canfor, one of the world’s biggest sawmill groups, announced that it will permanently shutter two more sawmills. This shortfall results in higher demand for imports, which can be satisfied by European suppliers, among others.
German exports to the US like in 2022
Exports from German sawmills to the US were exorbitantly high in January. However, this could also have been an error in data collection. In any case, Germany’s export volumes have stagnated somewhat since then. In the first quarter, German shipments to the US no longer recorded year-on-year increases. Meanwhile, Swedish exports have halved.
The price level of 2-by-4 standard lumber is very bad. In April, the average price was just under €210/m³ (free Great Lakes Region, actual size). Although the Lumber Futures forecast a doubling of prices in July, most experts expect no more than a slight increase in the coming four to six weeks – certainly not a significant one.
Construction activity in the US has slowed down, but it has by no means come to a standstill. As a result, exporters still describe demand as “satisfactory”.
MENA region the number one overseas market
In terms of trade volumes, the MENA region remains Europe’s most important overseas market. Last year, 8 million m³ of softwood lumber were exported there, while “only” 4.8 million m³ were shipped to the US – despite the record in trade volumes having been broken.
The MENA region currently offers relatively good prices. However, demand is still somewhat sluggish.
In 2022, Europe exported 2.5 million m³ (-8%) to China (incl. Ukraine, excl. Belarus). In the first few months, Scandinavian and German exporters in particular were very euphoric about the opportunities there – and rightly so, when you look at the trade volumes: Germany exported 126,000 m³ (+183%), Finland 188,000 m³ (+74%) and Sweden shipped 110,000 m³ (+71%) there.
China “full” for the moment
Now, Chinese lumber warehouses seem to be full, and demand has decreased as a result. Prices for higher qualities remain constant (US-$270 to US-$280).
Freight rates for shipments to all overseas destinations have fallen sharply. Those to China are said to be below pre-Covid tariffs. In the US, container shipping is sometimes a competitive alternative to break bulk shipping.
Contrary to China, the sales situation in Japan seems to be improving. Stock levels in Japanese warehouses are falling and demand for Mabashira is growing again. The changes in ownership of the sawmill in Sebes/RO could have an effect even in Japan. After all, HS Timber was the pioneer for European goods in Japan. The new owner, the Ziegler Group, has an entirely different export portfolio. As a result, the lumber trade flow from Romania to Japan could change.
US price: Recovery in summer?
In the first week of May, the US softwood lumber price remained at a very low level. However, the Lumber Futures indicate a possible strong recovery in summer.
At the beginning of May, the US softwood lumber price remained unchanged at US-$360/1,000 bft (2-by-4, Western SPF, KD, #2 & better) according to Madison’s Lumber Reporter. With a currency exchange rate of US-$1.1/€, European exporters earned €210/m³ (actual size; free Great Lakes region), as they did the week before.
While the Lumber Futures for May are at US-$347/1,000 bft and thus below the current price, the Futures for July are currently traded at around US-$700/1,000 bft (€406/m³; actual size, free Great Lakes region), which indicates a possibly strong recovery.