And suddenly they’re back: lead times for cross-laminated timber. Most producers are reporting a noticeable increase in demand in recent weeks. In the second quarter, lead times have gone from “virtually non-existent” to six to 16 weeks or even more. Many manufacturers are unable to explain where this sudden upswing has come from, although the thriving public construction sector with kindergartens and schools, commercial construction and modular construction are repeatedly mentioned as segments which are doing well. The single-family home segment, on the other hand, is said to be still dead, apart from a small luxury segment.
In this context, it has to be said that individual manufacturers have significantly reduced their production output in the past six months and that it sometimes takes months to introduce a third shift again – if such a step is even planned in the first place. In addition, some of the newly built production facilities are still in the ramp-up phase and therefore still far from the planned maximum capacity. As a result, the existing supply on the market is well below the theoretically possible capacity and thus fits in a little better with demand, which is currently growing at a significantly slower pace.
A sustainable upswing?
Some manufacturers see this development not just as a short-lived effect, but as a sustainable improvement, as most of the volumes for 2024 have already been sold, numerous requests are being made for 2025, and more and more customers are beginning to secure volumes and prices. Other market participants, however, are looking to autumn with concern, as there is still a lot of space in the order books and the next volume and price wars could be just around the corner. In addition to the customer structure and numerous other factors, these assessments often also depend on the volume to be sold by the individual market participants.
Moderate price increases
Against this background, some manufacturers have recently been able to moderately increase their sales prices, although they are still far from a sufficient level. In conversations with market participants, manufacturers’ comments ranged from: “We won’t be in the black in 2024 either” to: “The price structure is still ruinous despite the recent increases.”
Currently, the Holzkurier’s CLT price index is at 90% and thus 10 percentage points below the pre-Covid base value (January 2019 = 100%). This means that the CLT price index is around 30 percentage points below those of solid structural timber and glulam – and that despite the fact that solid structural timber producers in particular are also reporting that sales prices are too low.
Those manufacturers who have not gone along with every price change in recent months are at a slight advantage now, as they are profiting from the higher prices much sooner than some of their competitors.
As for the third quarter, the majority of CLT producers expect a further moderate increase in prices, although in the market conversations, none of them forecast a sharp rise in prices in the foreseeable future.
The market was never dead
Despite the challenging market situation, some manufacturers emphasize that demand for CLT never came to a complete standstill. On the contrary, it kept growing, albeit at a slower rate. On the other hand, though, there are the huge capacity increases which would have flooded the market over the short term, even if the construction industry’s motor had been revving.
The crucial question is therefore: When will supply and demand be balanced again? Depending on the actions of the individual manufacturers, this could be the case in the near future or only in five years’ time.
In the medium term, experts assume that the market will urgently need each production site to be at full capacity.
