Sawmill margins under pressure

“The difficult phase that began over three years ago continues,” EOS President Tommi Sneck said on October 22 at the 73rd International Softwood Conference (ISC) in Oslo. The industry does not expect any major changes for 2026. Despite different production trends in the various EOS member countries, margin and profitability problems persist throughout Europe. 

Disillusionment during the summer

In 2025, demand for lumber is 13% lower than it was in 2021 but shows a slight increase of 2.5% compared to last year. Exports have seen moderate growth this year. However, according to Sneck, sentiment has been less positive since the summer: “The industry expects weaker months towards the end of the year.”

Log prices high and rising

In the Nordic countries, in particular, log prices have risen sharply and remain at a high level. Since the lumber sales prices are not keeping pace with this development, profitability remains low. The availability of raw material, especially of spruce, is a major problem, especially in Central Europe.

In the first half of the year, European shipments to the USA increased by 19% to a cumulative value of €620 million, while exports to Japan decreased by 7% to €350 million. Egypt recorded an increase of 8% to €240 million, while European exports to China were down by 37% to a modest €85 million.

Export markets will remain crucial for the European softwood industry in 2026, too. According to Sneck, the 10% US tariffs on European lumber are unlikely to have a serious impact on European producers but could negatively affect global trade flows.

Reduced US imports but higher prices

According to Paul Jannke of the FEA, overseas imports to North America will decrease by approximately 1 million m³ in 2026 and remain stable from then on. At the same time, he expects prices to rise in the US due to sawmill closures in North America.

Sneck also pointed to increasing competition from Russia on global markets. Russian suppliers have a strong presence, especially in China, the Middle East, and North Africa.

Waiting until H2 2026

Over the short term, the situation will remain challenging for the European timber industry. There is said to be hope in 2026 at the earliest, particularly in the second half of the year, but the availability of raw materials at competitive prices will be a crucial factor. Due to the bark beetle crisis and the resulting shortage of spruce log wood, the industry has to reduce its dependence on spruce and focus more on marketing pine wood.

“Politically, 2025 was a turbulent year, but Europe will recover,” Morten Bergsten, Vice President of the European Timber Trade Federation (ETTF), said. He anticipates a 2.5% increase in lumber demand in the EU this year. Globally, demand will amount to 165.3 million m³ this year and increase slightly to 168.9 million m³ (+2.2%) in 2026 – driven primarily by the USA, according to analyses done in Oslo.

A new MENA dimension

The MENA region remains the most important overseas market for European softwood lumber. In Oslo, Erik Eliasson of Norra Timber reported that the shortage of spruce has opened up the market there for pine wood. When it comes to Scandinavian shipments, a board width of 47 mm is increasingly becoming the standard. The MENA markets are particularly important for lower-grade lumber and sideboards but have to adapt to growing demand for further processed products. “The MENA markets are adaptable and outlook for the future is positive there,” Eliasson concluded.

China’s new housing stock vacant

In China, however, there has been a market slump. According to Olle Berg of Setra, 65 to 80 million apartments are vacant there, and construction activity has decreased sharply. Russia now supplies around 70% of the lumber imported by China and dictates prices, which are well below those on the world market. Added to this are US tariffs on furniture, which are putting the Chinese furniture industry under pressure – and, as a result, Scandinavian suppliers of high-quality goods as well.

In the medium term, a possible market recovery depends on government stimulus measures. Cautious optimism is not warranted until after 2026 at the earliest.

Decreasing housing construction starts in Japan

Japanese residential construction remains weak. The weak yen is further increasing the cost of imports. Fredrik Westling (Frossel Timber) does not expect any improvement in the short term. On the contrary, the number of construction starts will likely continue to fall. Although demand for wood in non-residential buildings is increasing, the shortage of skilled workers and a low supply of log wood are hindering the use of domestic wood products.