Completely unexpectedly, the market situation did not improve for most companies after Easter. On the contrary: Prices for key construction products, such as glulam and solid structural timber, have decreased or are under pressure. Alarmingly, the sales indicator fell below the January level (105.8%) in June (105.3%).
In February, a stable year still seemed likely. Then came the Iran crisis. With the outbreak of the conflict, global economic uncertainty grew, and oil-based products and logistics costs increased. The construction industry has not recovered from this shock since.
With the Iran crisis negatively impacting the market since March, the question now is: Can signing a peace agreement reverse the effects? This hope forms the basis for the cautious forecast for the second half of the year.
Ray of hope 1: The Gulf region
Ray of hope 1 concerns the Strait of Hormuz. Formally, it is open again following the signing of the peace agreement. Therefore, container ships could once again enter the Persian Gulf without problems in two to three months. Customers in the region could replenish inventories in the largely empty warehouses, potentially generating a surge in demand.
Ray of hope 2: USA
The second one concerns the USA. There, prices for the important E-SPF 2-by-4 construction lumber (16 feet, KD, #2&better) have returned to a level that makes deliveries from Europe economically viable again. Swedish companies located near windthrow areas are already taking full advantage of this window of opportunity, and Central European sawmills could soon follow suit. Due to very low inventory levels, market participants expect US prices of more than US$700/1,000 bft in the near future (currently: US$672/1,000 bft). Some even predict the highest prices since mid-2022, i.e. around US$730/1,000 bft.
For now, both of these rays of hope are just assumptions. They do not yet provide any real relief to the market. Rather, they describe potential effects we could see over the coming months. In terms of demand for lumber and other wood products, developments have so far been satisfactory in Germany, Austria and Italy. However, volumes that were originally intended for other export markets put pressure on domestic markets. This has already led to falling prices in several cases. On key markets, a recovery is not imminent. Supply of many products has recently exceeded demand.
Production curtailments still insufficient
The only way to really reduce pressure on the market is by curtailing production. There are already some signs for this. Several timber industry companies have already stopped production on one weekday. Also, summer shutdowns are often longer this year. Many of the companies that were usually closed for two weeks have announced a three-week closure for this summer. This should remove capacity from the market. This step is necessary because so far, cutting has not been reduced to the extent that was communicated by the companies.
The favorable pellet price and sawmills operating below capacity have resulted in higher prices for sawmill by-products (see article Wood chip prices will likely rise by €10/t). As result, some sawmills even change their cutting patterns and increase the share of sawmill by-products.
Log price reductions not yet fully felt everywhere
The decreases in log prices are not yet felt by all processing companies. According to a survey by the Holzkurier, spruce/fir log prices in Austria are €10/m³ below the January level. In southern Germany, they are around €6/m³ lower, and in northern Germany, spruce/fir logs cost €1.5/m³ more.
Softwood lumber and glued timber prices have fallen more sharply since January. Consequently, the situation for sawmills remains tense at the end of the first half of the year. Without a further reduction of production, the situation for many product grades is unlikely to improve much in the second half of 2026.
Raw lumber for solid structural timber is a good example. Prices have fallen below €300/m³ in extreme cases. Sawmill inventories are reportedly still very high. A major price increase in the second half of the year will therefore be difficult. The price of lamellas for glulam also fell in June and is now slightly above the €300/m³ mark.
Log wood will likely become scarce
The days of months-long excess supply of log wood seem to be over. Most sawmills still have enough log wood to last them until the summer holidays. However, in northern Austria, sawmills are already intensively searching for log wood in neighboring regions. It should be a few months before harvesting in small private forests resumes. Large forestry companies are cautious with outside temperatures reaching 40°C. Log supply could therefore decline again in the coming weeks and slow production as a result.
The half-year financial statements of many companies will reveal just how difficult the first six months were. Purchasing activities are likely to remain correspondingly modest. Production planning for the second half of the year should also be conservative. As long as lumber prices remain under pressure and processing companies’ inventories are full, there is little wiggle room for higher log prices. After the summer holidays, sawmills’ reaction to a reduced log supply will be decisive. This year, however, the situation could remain more relaxed. Panic buying is not necessarily to be expected, as hardly any company can afford it anymore.
