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© Martina Nöstler

10th global log & lumber conference

Sawmills dominate the market situation

Article by Gerd Ebner (translated by Eva Guzely) | 24.06.2020 - 10:16

In his introduction, von Möller reminded participants of how great times were before the COVID-19 pandemic:

  • constant increases in European softwood lumber production from 2013 to 2019 with volumes reaching a record total of 111 million m³ last year – with the biggest producer Germany where additional capacities are planned
  • a good to excellent softwood lumber demand, low stock levels and slightly rising prices
  • export flows continued to grow

I’m optimistic for all market players in Central Europe – with the exception of forest owners.

Andreas von Möller

“Containerization” of global trade

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Production in construction in Europe: In March, the influence of COVID-19 is clearly visible in France and Italy. Until February, almost all countries recorded increases. In the EU-28, the overall volume grew by 11% in the years from 2015 to 2019 © Eurostat

According to von Möller, the marked increase in exports is also due to improved logistics. He sums it up in one word: containerization. Furthermore, truck and train capacities were for the most part sufficient in the past years. Throughout Europe, construction permits saw a 40% increase since 2015. With the outbreak of the coronavirus, confidence in future developments deteriorated sharply. “Until February, there was an upward trend everywhere, which was unfortunately followed by a sharp decline,” analyzed von Möller.

For the month of March, von Möller expects falls in demand of around 40% in France and Italy. In all countries, where lockdowns were implemented, the furniture industry was hit particularly hard. At the same time, sales in the DIY and timber trade sector grew almost everywhere – with the exception of Southern European countries. “The packaging industry is doing fine, too. It can hope for another record year,” predicts von Möller.

With the corona lockdown, there was quite some chaos in logistics chains. Containers were always in the wrong place, and trucks had to wait for up to 60 hours at the borders.

 

Q1 was good and surprisingly, so was Q2. I expect Q3 to be stable. However, nobody can make forecasts regarding Q4 yet.

Andreas von Möller

Sawmills dominate

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© Holzkurier.com

As to Central Europe, von Möller sees softwood sawmill operators as dominating the market situation (“in the driver’s seat”). They have access to cheap log wood and good sales channels. In the medium term, however, the accumulation of damaged wood is going to change the traditional order on the softwood market.

In 2019, Germany set records in the production, sale and export of softwood lumber. So far, the COVID-19 pandemic was unable to harm this record level because, among other things, construction sites were always open. According to von Möller, the sector is optimistic because stock levels are low and lumber prices remain stable.

UK on the way up in 2021

Great Britain was and is a big question mark for European timber sales. An uncertain beginning of the year was followed by the lockdown, which brought all construction sites in the country to a standstill. “I expect a 25% fall in demand this year. If the stimulus packages introduced by the government have an effect, the market could recover by 26% in 2021,” predicts von Möller. “A sharp decline this year and a marked growth in 2021” also sums up the situation in France, Spain, Italy and Belgium.

The repercussions of the pandemic are thus much less serious in Northern and Central Europe than for the rest of the continent. “The strong economies are dealing in a better and faster way,” comments von Möller. Summing up, he describes Q2 as having been much better than expected and predicts a stable development in Q3. However, nobody knows what Q1 is going to bring.