Europe’s biggest overseas market is in flux

The sales situation on the most important global softwood lumber markets is predominantly weak (ranked acc. to sales volumes, from small to large):

• Japan: The market recovered slightly in 2024 after a 40% drop in 2023.
• China: Due to the ongoing crisis in the construction industry, the country is mainly supplied by Russia and remains of little relevance to the export of European lumber products.
• USA: The price level is so low that exports from Europe are still hardly profitable.
• MENA region: This region remains the most important market for European suppliers. Despite a 7% decrease in imports in the first half of 2024, sales remain stable after the strong year of 2023.

Young population needs housing space

The biggest driver of demand for softwood lumber in the MENA region is the young population, which has a growing demand for housing space. The region comprises 22 countries with 465 million inhabitants, of which 221 million are under 24 years of age.

In addition, extensive infrastructure projects are underway in the region:

• Morocco is leading the energy transition.
• Egypt is investing US-$40 billion in energy and infrastructure projects.
• The United Arab Emirates (UAE) is investing in ports, airports, high-speed trains and a sustainable city (“Masdar City”).
• Saudi Arabia is pursuing its “Vision 2030” by investing billions in projects such as the futuristic city “The Line”, the industrial city “Oxagon” and tourism regions.
• Major sporting events are also to be hosted and require large sports venues.
• Morocco will host the 2025 Africa Cup of Nations and will host the 2030 World Cup together with Spain and Portugal.
• Saudi Arabia will host the 2029 Asian Winter Games and plans to host the 2034 World Cup.

The MENA region is not only the largest overseas market for European lumber. Europe also supplies 75% of imported softwood lumber there. Russia accounts for 18% of imports, South America for 6% and North America for 1%, as the Holzkurier reports. The region also purchases lumber grades and products which are difficult to sell elsewhere. It is noteworthy that prices in the MENA region are relatively stable. Over the past ten years, they have increased by 23%, while US prices are only 8% above the 2015 level.

One Europe-wide log price

However, supply in the MENA region could change given the rising log prices in Europe. Various events which caused damaged wood to accumulate as well as harvest restrictions in Central Europe are driving up log prices. In southern Sweden, prices have doubled compared to 2021. And while Austria and southern Germany have always been high-price regions, there are signs of a convergence in the log price across Europe, which is currently at around €100/m³. High log prices and weak lumber sales in the first half of 2024 have already led to significant losses, especially for listed companies, as their quarterly figures show.

Summary and outlook:

• Stable market relations between Europe and the MENA region have developed over decades.
• The availability and use of wood in Europe is changing (rising log prices; increasing use of wood in the construction industry).
• One third of European lumber is currently exported to overseas markets, but this could change.
• Per-capita wood consumption in the MENA region is very low at the moment, but is expected to increase as a result of “green building”.
• In the future, the region might not only use wood products for disposable purposes such as formwork or packaging, but increasingly for high-quality and durable applications.
• Due to changes in the global softwood lumber market, the MENA region will need new price levels and alternative material sources in the coming years.