How does all of this affect the 2025 revenue outlook for the timber industry in German-speaking countries? My answer: Driven by raw material costs, price increases for wood products are currently necessary and possible.
2025 market development the opposite of 2024?
In the first two months of 2025, prices showed a dynamic development similar to that in 2024. However, there was no further upturn at the start of the construction season last year. “In 2024, demand was okay in terms of volumes. Prices, on the other hand, were too low to generate profit.” This was the assessment many market participants gave. Could there be an improvement this year? 2025 might be the opposite of 2024: with better prices, but lower sales volumes.
Looking at building permits alone, single-family home construction will see a recovery in 2026 at the earliest. Things are looking somewhat better in public and commercial construction. In those sectors, the timber industry already performed well in 2024, and further growth is expected this year. In Austria, public construction (kindergartens) and the tourism industry are drivers of demand. In Germany, a lot of wood products are used in the renovation segment. The small number of new construction starts and the low willingness to buy on the part of consumers remain issues in Germany and Austria. At least, timber construction can gain market shares in the declining multi-story residential construction segment (2024: -20% for buildings with three or more apartments) of both countries.
Uncertainty drives up US prices
Due to the tariff chaos in the US, the outlook for European exports is currently better than it was in 2024. The price level for European lumber is €90/m³ higher than in the same period of 2024 – not because demand has grown so strongly, but because there is a lot of uncertainty on the market.
Europe is supplying a lot – too much?
“Europeans are shipping so much across the Atlantic that the East Coast market is slowly getting saturated,” a market insider explains, who also confirms that the price increase in the US is not the result of higher demand.
In markets like Great Britain, Japan, and even in the MENA region, Central European producers will soon be able to benefit from the price increases implemented by producers in Sweden and Finland. Reports of record price after record price for log wood keep coming in from (southern and central) Sweden – and yet spruce/fir logs are still scarce. Supply is better in Finland, but log prices there are high, too. All of this helps Central European producers export their main grade products.
The price increases in the US have nothing to do with a recovery in demand.
Scarcity of certain log qualities
Log wood for certain products and markets, such as lower-quality grades for the MENA region, non-visible quality lamellas, CLT and for the middle layers of panels, are scarce in German-speaking countries. After many years with substantial volumes of damaged wood, this represents a major change compared to the recent past.
At the end of the first quarter, the upward price trend has slowed somewhat for several wood products. However, several large companies have announced further substantial increases for the second quarter.
€400/m³ and €600/m³?
Central European producers have announced price increases of €20/m³ for glulam lamellas in the second quarter. Scandinavian producers are even planning to raise prices by 10%, i.e. by around €30/m³. Over the past 19 years, the end product glulam has been more expensive than the lamellas by a factor of 1.9. That would be just over €600/m³ for visible-quality glue-laminated timber.
The situation is similar for solid structural timber (KVH). Following increases in raw material prices, the end product may cost €400/m³. For glulam and solid structural timber, these price levels were last recorded in June and July 2022.
So far, higher raw material costs – not demand –have been driving up prices. The delivered products are currently filling warehouses and are not being used in projects. A more precise assessment of the market in 2025 will only be possible after Easter. Then, we will see whether this year will really be better than 2024.
The prices that will be charged in Q2 are not excessive. They barely offset the higher costs.
