Bringing about transformation with wood: DeSH managing director Lars Schmidt on stage at the German Wood Congress 2023 © Gerd Ebner
In the first two months, demand for lumber was buoyant and could hardly be satisfied due to the limited supply of log wood. From the middle of the second quarter, however, the situation changed significantly. Demand for lumber levelled off noticeably, while more beetle-damaged wood was put on the market.
Damage to forests in the south as well
Source: Statistik Austria, Federal Statistical Office (Destatis), *2023 estimate by the Holzkurier © holzkurier.com
The thunderstorms in the summer, especially in southern Germany, made the existing challenges even more difficult. Jörn Kimmich, whose presidency of the DeSH ended at the German Wood Congress 2023, emphasized that this year saw a shift in damaged wood hotspots from the northeastern to the southern and central areas of Germany.
In the first half of the year, the timber companies curtailed their production due to the supply situation. When the volume of damaged wood started growing, it was nearly impossible to increase production because the market no longer allowed it. Currently, a total production output of 21.5 million m³ is expected in 2023, which corresponds to a 12% decrease compared to 2022.
Increasingly challenging sales situation
Data are “our beer” (our business): The Holzkurier provided the after-hours beer © Gerd Ebner
Carsten Merforth, COO of Mercer International, explained that softwood lumber sales have become increasingly difficult quarter after quarter. The packaging industry was the first to feel the negative effects of the slowing economy. There was no recovery in autumn, neither in the packaging nor in the construction industry. “Now, that we have reached such a low price level, the only way is up,” Merforth emphasized.
As for the first quarter of 2024, the eleven interviewees holzkurier.tv interviewed during the Wood Congress expect demand for log wood to decrease further, which is likely to correlate with the more difficult harvest conditions during this season. The high temperatures, which were recorded this past summer and in early autumn, too, could lead to bigger volumes of beetle-damaged wood next year as well.
Demand with a more dramatic slump than production
It is estimated that German demand for lumber has seen a 20 to 25% year-on-year decrease in 2023 and, due to the lack of construction starts, it is expected to fall further in 2024. Dr. Stephan Lang, who took over the presidency of the DeSH on November 9, analyzed: “Despite all that, I firmly believe that 2024 will be the low point – and that things will pick up again after that.” (Watch the video interview in German here)
German price level too low for Scandinavians
Scandinavians, too, felt the impact of the massive slump in the price level in Germany. “Usually, their products cost €20 to €30/m³ more. This year, however, this was no longer enough because log wood has become much more expensive in Scandinavia, too,” Gebhard Dünser, Managing Director of Binderholz Germany, commented.
Dünser believes that operating profits will be close to zero this year. “This will probably also be the level we have to expect in 2024.”
Decreasing exports, US as a hope in 2024
Germany’s softwood lumber exports recorded an 8% decrease until the end of August 2023. Lang expects a similar decrease in exports in 2024 as well. The US could be the first market to recover. Merforth is astonished by the development of US prices and demand which has remained almost unchanged over the past twelve months. “At the moment, however, there is a slight upward trend. 2024 won’t be a great year in the US, but I expect sales to be stable.”
Manuel Echtle, Vice-President of the DeSH, added that the industry will not be competitive in exports with log prices of around €100/m³. He called for some flexibility on the part of the forest owners.
From too much to not enough wood
Filming the interviews, in this case the interview with Steffen Rathke, spokesman for the hardwood sector (left) © Gerd Ebner
Lang sees a new era beginning after the current crisis and warned that the industry may have problems satisfying the increased demand.
Gangolf Hosenfeld of Gebrüder Hosenfeld is optimistic and sees the end of low demand in 2024. “I expect things to pick up again in 2025,” he said at the Wood Congress. Larissa Kuntz of Elka Holzwerke added. “Something is obviously going wrong when politicians want 400,000 housing units, but probably only manage to build 220,000 in 2024.”
The German forests will change, according to various forecasts. Stephan Lang is convinced that there will still be enough spruce wood in the next ten years but nevertheless called for a more determined effort to replace spruce with other types of wood.
According to Steffen Rathke, DeSH spokesman for the hardwood sector, the German hardwood industry is not competitive on export markets due to higher raw material prices. “We don’t sell much of anything in China anymore.”
Although the situation was still positive in Germany and on export markets in the near East in 2023, Rathke only expects a real upswing about one year after the spruce sawmillers. “If things are looking up for them in 2025, we will probably see a recovery in 2026.”
The industry will likely reach the bottom in 2024, and the outlook for the domestic market is not exactly rosy.
The crisis won’t end unless we manage to overcome our negative thinking.
In general, it is only the hardwood industry’s turn once the house is already built. If the softwood sawmillers are doing well again in 2025, it will be our turn in 2026.
The domestic market was the weakest one this year.
Operating profits will be close to zero this year – the figures that have been published so far confirm that. I expect a similar situation in 2024.
We have never been at so many trade fairs as this year. There will be a lot going on on new markets, such as India or Turkey.
I hope that the crisis will be over in 2024. If governments want to reach their climate targets, we need to build in wood.
We will reach the bottom in 2024. 2025 will definitely be much better.
We cannot go any lower when it comes to lumber prices.
We will come out of this crisis much stronger. We have a great material and great opportunities in the future.
Holzkurier.tv
Eleven short interviews
This year, the DeSH invited the Holzkurier to conduct short interviews with selected interview partners. The videos will be published on holzkurier.tv, our social media channels and on the DeSH’s website in November.
In two days, we interviewed eleven people. While the topics we discussed with them did vary, their statements were surprisingly similar in the end:
- The crisis in the construction industry will last at least another twelve months.
- 2024 will be more challenging than 2023, both for the German domestic markets and for exports
- Once there is an upswing, increases in sales volumes and prices can be expected.
- The timber construction sector will come out of this crisis with a bigger market share than it had before.
- Over the medium term, supply will be the biggest challenge.
The following interview partners came in front of the camera:
- Brigitte Decker-Wilbert – owner and managing director of Holzindustrie Decker
- Gebhard Dünser – managing director of Binderholz Germany
- Manuel Echtle – Vice-president of the DeSH
- Gangolf Hosenfeld – owner of Gebr. Hosenfeld Sägewerk
- Stephan Lang – new president of the DeSH
- Jörn Kimmich – previous president of the DeSH
- Larissa Kuntz – managing director of Elka-Holzwerke
- Carsten Merforth – COO of Mercer International
- Julia Möbus – managing director of the DeSH
- Steffen Rathke – DeSH spokesman for the hardwood sector
- Patrik Rodlberger – managing director of Pollmeier Furnierwerkstoffe
Here, you can find the (German-language) interviews conducted during the German Wood Congress.
