“At the moment, the solid structural timber market is a money-burning machine,” as one German manufacturer puts it. While he is speaking for some of his colleagues, others give a much more positive assessment of the situation – although no one is completely satisfied with the current price structure. Many talk about a fairly stable sideways movement in recent weeks.
The industry is still struggling with a lack of profit margins. Once the material and production costs are deducted from the sales price, nothing is left at the end. Especially purely solid structural timber bars with a 6/8 cm cross-section are currently a loss-making business, one manufacturer says. One of his colleagues adds that with lists, a wider product range and additional vertical integration, such as joining, it is at least possible to break even.
Unsuccessful attempts at raising prices
Even though sales prices are clearly too low from the producers’ point of view, companies were unsuccessful in implementing the price increases which many had planned in May. As a result, the average price of solid structural timber bars with a 6/8 cm cross-section has remained unchanged at €325/m³ for the third month in a row, with prices ranging from €310 to €340/m³.
The reason for this is the combination of a weak market situation and a relatively large supply – and the situation is unlikely to change considerably in the coming months. While the majority of manufacturers expect that sales prices will remain fairly constant in the third quarter, some are still hoping for the much-needed increase to an adequate price level.
Better order situation
The assessments of the order situation given by market participants are much more differentiated than those regarding profit margin. Some say that the order situation has recently improved and has reached a good or at least satisfactory level. Others report that sales figures are far too weak for the time of year. Accordingly, some manufacturers have already returned to a normal three-shift operation, while other market participants repeatedly take out individual days from the second shift.
Especially the timber construction sector and its renovation and remodeling segments have recently seen some growth, whereas the timber trade sector is rather cautious. It operates on a short-term basis and only orders what is strictly necessary on short notice.
The downward trend is felt even more clearly among prefabricated house manufacturers. In the first quarter of 2024, the number of building permits for single-family homes in Germany fell by 36%. In Austria, the number of permitted single- and two-family homes decreased by 37% in 2023. These developments are hitting the prefabricated house industry just as hard as its suppliers.
New market in sight?
Solid structural timber producers see serial and modular construction as the market of the future. In the coming years, Nokera, Timpla, Gropyus and others will bring huge capacities onto the market. Until then and/or until the market sees a sustainable upswing again, manufacturers will have to grit their teeth.
