Curtailments of production, which were forecast for April and May and increasingly observed in neighboring Germany, have not yet occurred in Austria. Wood chips are also being processed again in some places. The only exception can be found in western Austria, where a large pellet mill is operating at limited capacity due to investment measures.
Stand-alone pellet mills, in particular, have recently been making an effort to secure sufficient quantities of sawdust for the coming months. Before the regular contract negotiations for the third quarter, some mills have therefore signaled that they intend to charge similar or, in some cases, higher purchase prices. In some cases, covering purchases at higher prices were also observed. For example, prices of up to €120/t ex sawmill for dried sawdust have been reported in eastern Austria. Accordingly, average sawdust prices had already risen slightly by mid-June. However, even larger premiums before the negotiations for follow-up contracts in the third quarter are being prevented by the oversupply in western Austria with low spot prices.
The willingness to extend or increase prices in the third quarter is surprising given the price trend of the finished product. Pellet sales prices did increase. While loose pellets were sold for less than €200/t ex sawmill in April and May, they are now back to a range of €215 to €225/t. This is considered an inadequate price level given the consistently high prices for sawdust, which exceed €100/t. As a result, pellet mills, especially those which are not integrated into sawmills, must continue to calculate with rigorous precision when purchasing raw material. Otherwise, the already low sales margin could come under renewed pressure.
Less sawdust due to holidays
In May and June, the supply of sawdust decreased compared to April. Cutting remains at a high level in sawmills. Most of them will be operating on the long weekends following May 1st, Ascension Day, and likely after Corpus Christi. The four holidays in May and June alone results in a lower production output, which means that smaller quantities of sawdust will accumulate until the end of June.
Panel producers with little interest in sawdust
Contrary to pellet mills, the panel industry’s interest in sawdust remains low at most factories. Wood-based panel manufacturers in the west, in particular, indicate that they have no demand for sawdust, given spot offers. Buyers at both factories in the west report that sawmills made offers involving prices of €95 to €100/t for dried sawdust. With freight costs ranging from €20 to €30/t, this translates to ex-sawmill prices of well below €80/t for dried sawdust. However, since the panel industry is purchasing very small quantities despite these favorable offers, these offers are not reflected in the June chart.
Relaxed Austrian wood chip market
Most negotiations between purchasing organizations of the pulp industry and sawmills regarding preliminary wood chip contracts for the third quarter are scheduled for the next two weeks. Buyers are calm. Ahead of negotiations, prices for dried wood chips are expected to remain stable at the level of €105 to €115/t, which in some cases has been in place since the second half of 2024. Wood chip buyers see no room for extensive price reductions like those in Germany – where the price level is significantly higher, though. It is assumed that sawmill cutting and thus the available quantities of wood chips will decline. On the one hand, this is due to the seasonal shutdowns in the sawmill industry during the summer holiday season. On the other hand, it is expected that the log shortage experienced by some Austrian sawmills could intensify again over the course of the summer.
In Austria, the lower pressure on procurement costs compared to German pulp and paper mills is due, among other things, to the higher degree of further processing. Thanks to the integrated paper mills, Austrian pulp factories are somewhat less dependent on the global pulp markets, which are currently problematic from a producers’ perspective.
In recent weeks, relevant changes in prices of dried wood chips have only been observed in western Austria. There, prices, which are often at the German level of around €130/t, have been adjusted to the prices in effect in the rest of Austria. This represents a slight downward shift in the median compared to May.
