Weak demand
Demand for both lumber and processed products remains sluggish. As prices are falling, there is little desire to order wood. Additionally, negotiations for the fourth quarter took place in September. The expectations of buyers and sellers differed greatly from each other, more than they did in previous years. In 2020, one round of negotiations was enough to come to an agreement. This year, however, several meetings were needed in some cases.
There are reports of sharp drops in the prices of almost all products. However, the most significant decreases were recorded for the products which saw the biggest price increases in the first half year, i.e. roof battens and solid structural timber (KVH). As already reported several times by the Holzkurier, customers apparently bought much more than they needed in the second quarter. As a result, there were very few new orders in the third quarter. Now, with falling prices, high availability and many offers, buyers only order what they really need.
Sawmills want to cut back
In September, demand for softwood sawlogs was noticeably below the level which is normal for this time of the year. Most of the sawmills have a sufficient supply and are trying to curtail production.
In its September price trend, Holzkurier identified price decreases of €5/m³ in Bavaria, Baden-Württemberg and Austria. Prices now range from €100/m³ in the west of Bavaria to €115/m³, for example in the south of Austria. The pressure on prices is high.
As for the fourth quarter, further curtailments in production can be expected. By reducing accrued vacation time and overtime, sawmills plan to reduce work by one shift in order to take pressure off the lumber market.
Production curtailments are simply necessary. When customers don’t need anything, reducing prices won’t change anything about that either.
Purchasing partly suspended
In Austria, the spruce/fir log price free forest road ranged from €108 to €115/m³ and was thus €5/m³ lower than in August. Demand differed from region to region. However, sawmills from the north to the south of Austria have already partly suspended purchasing. In Bavaria, too, sawmills are already talking about short-time work and drastic production curtailments. Instead of new record prices, decreases of up to €10/m³ were recorded in September, with prices ranging from €100 to €110/m³ for new contracts. In Baden-Württemberg, buyers had to pay €4 to €6/m³ more for log wood than they did in August. According to Holzkurier’s research, prices usually ranged from €106 to €114/m³ in September.
The end of the Forest Damage Compensation Act
On October 1, a crucial regulation defined in the Forest Damage Compensation Act ended. In the forestry year 2021, spruce logging was limited to 85% of the average logging volume of the years 2013 to 2017. Whether the end of this regulation will have an impact and what it will be is hard to predict at the moment, but supply is likely to increase.
Demand for KVH and glulam lower than normal
Demand for the end products solid structural timber (KVH) and glue-laminated timber (glulam) has not yet recovered in September, marking the third quiet month in a row. There was a further fall in prices. In September, glulam prices in Italy and Germany were still above the €700/m³ mark. Nevertheless, a decrease of €100/m³ was recorded compared to August. In both countries, the price is still 75 to 80% above the last year’s level.
