At the end of June, in the Holzkurier’s economic survey for the second quarter, 49% of Austrian and German sawmillers described their business situation in the past three months as bad, while it was satisfactory for 40% and good for only 11% of them. The outlook for the third quarter is rather bleak: 68% of the respondents assume that their business situation will see a negative development in the next three months. Only 8% of the sawmillers expect a positive and 23% a satisfactory development.
Decreasing sales
Assessments of sales reflect this pessimistic outlook: More than half of the respondents stated that their sales were weak in the past quarter, while 47% described them as satisfactory and only 2% as strong. As for the next three months, 63% expect their sales to fall, whereas almost one third think that they will remain constant.
These answers are based on expectations regarding lumber prices. 52% of the sawmillers predict falling lumber prices in the next six months, and 40% believe that price will remain unchanged. Respondents also expect falling log prices. To be precise, 63% think that there will be a downward trend until the end of the year, while 21% expect log prices to remain constant.
The sawmill industry’s willingness to invest is also expected to decrease due to the negative outlook. 70% of the sawmillers rate it as low, while 24% of them expect the willingness to invest to remain constant.
When asked about their stock levels, 60% of German and Austrian sawmillers reported normal levels in the past three months and 34% described them as high. As for the next three months, 31% of the respondents expect their stock levels to increase, while 58% think that levels will remain constant.
Excessive capacities
When it comes to the biggest challenges at the moment, many survey participants complain about high log prices and low demand for lumber. The latter can be attributed to the weak construction sector. “Sawmills are not curtailing their production, or they are not cutting back enough,” some respondents say. Other challenges include the shortage of (skilled) workers and high energy prices.
Biggest challenges at the moment*
- Decreasing demand! We curtail production and only produce what we know we can sell.
- High log prices, weak demand, bad press, political uncertainty – adapting to the situation and producing less
- Falling lumber prices while log prices remain constant, reducing our cutting volume, more purchases
- Poor sales opportunities, poor sales prices, strong pressure on prices
- Lack of orders in the construction sector; decrease in exports; decrease in packaging wood; high electricity prices
- Way too few orders, drastic reduction of production times
- Negative development of prices for main products and sideboards. Our hope is that curtailed cutting in the XXL sawmills will give some tailwind to the sale of sawdust and wood chips.
- High log prices while lumber prices continue to fall sharply
- Very sluggish demand – fierce competition on the lumber markets because sawmills are not curtailing their production or only to an insufficient extent
- Marked decrease in demand for hardwood lumber on all markets
- Receiving orders; not ending up in the red; securing log supply for the winter
- Massive slump in the new construction segment
- Negative gross profit because of lumber prices being too low, demand too weak, log prices too high, recession
- Price increases at all levels while prices for our own products are lower
- Weak sales and prices that keep falling
- The ups and downs of log and lumber prices in the past half-year were incomprehensible.
- An excessive cutting capacity can be observed across the board. As a result, only curtailments will help us solve this dilemma. Problem: too much lumber on the market or too little log wood (when the economy is picking up). Important: The raw material cannot satisfy the hunger for wood of the sawmill industry (especially that of large companies) in the medium to long term.
- Demand for lumber too weak and falling prices; at the same time, the log price won’t go down. We are curtailing production and reducing the number of shifts.
- The log wood and lumber we have stored has lost around 30% of its value. Demand is currently very weak. It could become somewhat stronger in September as timber traders and processing companies are currently reducing their stock levels in order to reduce prices. Once the inventories and purchase prices have fallen, it can be assumed that companies will replenish their warehouses somewhat.
* Answers to the question: What are the biggest challenges you are currently faced with and how do you handle them?
