A REVIEW OF THE WOOD MARKET IN THE 4TH QUARTER OF 2020

Growth in demand and prices

One of the main trends observed on the European wood market is the growth in prices caused by the current situation on the US market.

Since June 2020, wood prices have been soaring, and in September they reached a record high level. This is why in the 3rd quarter the majority of sawmills already started reorienting their manufacturing and sales activity towards the US market.

According to the latest data obtained by the German Federal Association of Wood Packaging, Pallets, and Export Packaging Manufacturers (Bundesverband Holzpackmittel, Paletten, Exportverpackung; HPE), about 46% of respondents have reported that wood suppliers are postponing supplies in order to announce an increase in prices. According to another 32% of respondents, wood suppliers have suspended or even cancelled supplies, and about 21% of respondents stated that suppliers have decreased the contract sums.

High demand in construction and DIY

Currently, companies in different industries require an increase in the supply of raw material. Especially high demand is observed in the DIY industry, which is explained by the change in consumer behaviour: due to the coronavirus infection COVID-19 pandemic, many people are forced to spend more time at home.

Besides the DIY industry, higher demand is observed in the construction industry.

Low level of stock and quality issues

Another current trend is low level of stock at sawmills in Central and Northern Europe. Apparently, this factor also indicates a coming growth in prices.

Representatives of the majority of European sawmills have reported a rather low level of stock, which is not typical at this time of year.

Moreover, companies are reporting a lack of “healthy” and quality materials caused by the growth in the numbers of bark-beetle in Central Europe.

The combination of these factors – low level of stock and lack of quality raw material – increases the pressure on the market and results in the growth of timber prices.

Price index

In recent months, the shift in wood price index values has only been observed in the direction of growth.

As of 30 September this year, the German HPE price index has shown growth of 4.9% in the 3rd quarter in comparison with the 2nd quarter. It is worth noting that this is the highest growth value reached in just one quarter since prices grew by 5% in the 2nd quarter of 2010!

Similar trends are observed in Scandinavian countries: the Swedish price index (Svenska Förpackningsföreningens kostnadsindex) values have been growing each month since January 2020, showing, according to August data, +12.5% for timber, +9.5% for EPAL pallets, and 6.7% for pallet collars.

Conclusion

As you may understand, market situation described above challenges us a lot. Such rapid price increase can’t be balanced only by improving our internal performance and decreasing marginal level, as these are already on the lowest level ever.

To ensure a reliable and continuous supply to You we are therefore forced to review our prices for wooden packaging delivered to you. 

Currently we see that prices for different wooden assortment grew or will grow for 20-40 EUR /m3, depending on the sizes and  availability on the market.

All our departments are working hard to make the price adjustment process as smooth as possible. 

We truly believe that working together we can manage the current situation. Current price adjustment is absolutely necessary to ensure necessary amount of raw material meeting Your high-quality requirements.

*In case of any questions please contact Your personal Account Manager at any time.