“Several large Central European companies suffered triple-digit million losses in 2023. This year, we started out with lumber prices that are 30 €/m³ lower. If prices don’t go up quickly now, there could be a bitter end,” as Markus Sandbichler of Sandbichler Holz puts it drastically. “Already last year, prices were €15/m³ too low for most companies to be in the black. So now, prices have to go up by €60/m³.”
For months, buyers have been making it a sport to make everyone go lower in their offers. Now it’s time to say no.
€60/m³ plus 8% inflation still necessary
Markus Sandbichler © Gerd Ebner
The timber merchant sees room for increases: “Last year, the price for main products was €290/m³. Now, it’s only €260/m³. You can’t sell your products at that price when you have log wood for €125/m³ in the log yard. Transport has become more expensive, sawmill by-products are selling at lower prices, and inflation was at 8% again. The current prices are not even close to acceptable,” Sandbichler criticizes. He calls for more courage. “Sellers have far too little confidence. Something has to change, otherwise they will go belly up. Raw wood for solid structural timber still costs between €240 and €255/m³, when it actually should cost between €280 and €300/m³. In terms of volumes, demand is there, so manufacturers could raise prices by the necessary €60/m³ now. It mustn’t happen anymore that fresh formwork products cost less than €200/m³.”
Sandbichler is sure that some sawmills will no longer be able to operate in an economically viable way, if prices are not raised in March.
In 2023, an additional €15/m³ would have been enough to be in the black. In 2024, an even bigger average increase will be necessary.
Laminations for glulam with a successful price jump
“I sell dry formwork products for €220/m³ and pallet wood for €235/m³. So far, little has been happening here. Glulam is a good example of what is possible. The price for visible quality has risen by €60/m³; that of non-visible quality has even gone up by €100/m³,” Sandbichler says, giving some examples. He wonders why glulam prices have been successfully raised while that does not seem possible for solid structural timber. According to Sandbichler, the increase in log prices since September is fair and the right thing to do. “Forest owners were in the dark red until 2021. It’s simply not right that we demand lower log prices again because we’re selling our products at too low prices.”
At the moment, hardly any company has an order lead time of more than three days.
Hardly any order backlog
Example of an order not every company can take on: The range of dimensions ordered is increasing, while the volumes are becoming smaller © Holzkurier-Archiv
At the moment, the intermediate trade sector either has full warehouses or its buyers are very hesitant to stock up on anything because it is difficult to predict price trends. As a result, manufacturers have rather short order lead times. “Orders currently keep sawmills busy for three days rather than three weeks,” Sandbichler says, whose suppliers are mainly German and Austrian small and medium-sized sawmills. “For them, it’s a little easier because they are flexible enough to be able to handle the micro-orders involving various dimensions that are widespread at the moment,” Sandbichler analyzes (see chart).
For Sandbichler, demand in the DACH region, the Czech Republic, Hungary and the BENELUX countries is sufficient for the current production level. He deliberately excludes Italy from this list, though, since he already sees falling lumber prices there.
Chaotic prices
Sandbichler has been active in the lumber trade since the 1990s, but he cannot remember a time when there were “60 different prices for one product on the market” as it is the case now. According to him, some large companies seem to sell products “at almost any price”, which he explains with their need to maintain liquidity.
According to Sandbichler, commercial and multi-story buildings are drivers of demand, as is the renovation sector. “So far, 30% of goods have been used for the construction of single-family homes. “This segment is very weak right now and will be in 2025, too,” Sandbichler predicts.
