MARKET OVERVIEW: OUTCOMES AND TRENDS OF 2020

Lumber Market Volatility

During 2020, the wood and lumber market experienced dramatic fluctuations caused by unexpectedly warm weather at the beginning of the year, the invasion of bark beetles, as well as by the global pandemic that affected almost all manufacturing industries and significantly changed market supply and demand in Asia, Europe, and the United States.

Under the influence of these and a number of other factors, the prices for wood continued to grow throughout the year, reaching a record high in September.

At the same time, sawmills in Central and Northern Europe report a shortage of healthy and quality materials and low stock levels.

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.

Global Impact of the COVID-19 Pandemic

Undoubtedly, the most significant event that instantly influenced the economy and all spheres of production was the global coronavirus pandemic. As early as the beginning of 2020, when the first wave of coronavirus swept China, the world economy showed the first signs of an impending crisis, such as logistics problems, production delays, etc. Then, in the first half of the year, after the crisis had paralysed other countries of the world, the automotive industry, the mechanical engineering, and the metalworking industry became the industries that were most affected by the coronavirus pandemic. This led to a decrease in demand for packaging (mainly for wooden boxes and pallet collars).

At the same time, the coronavirus pandemic led to an unprecedented increase in interest in DIY and gardening goods.

Impact on the Packaging Market

As a result of the aforementioned trends, as well as due to the global economic crisis caused by the coronavirus pandemic, the automotive industry, the mechanical engineering, and the metalworking industry suffered significantly in the outgoing year. This in turn led to decreased demand for packaging. The most vulnerable segment was the segment of wooden boxes and pallet collars.

Despite this, the pallet segment remained stable throughout the year: in many countries, the situation in this segment levelled out due to domestic consumption and the production of essential goods.

Breakthrough in the DIY Industry

The coronavirus pandemic changed consumer habits and contributed to people finding new hobbies. The results of a public opinion poll showed that under the influence of the pandemic, people began to spend more time at home, preferring to socialise at home or in someone else’s house.

Research shows that this year, people’s hobbies related to home decoration, DIY, and gardening saw increased uptake by 65%.

According to health experts, the coronavirus will stay with humanity for a long time. Therefore, analysts urge manufacturers of DIY and gardening goods to prepare for the fact that customers will be at home for a long time and to produce various goods, creating favourable conditions for shopping in such a situation. According to forecasts, the growth in demand for this group of goods will continue in 2021–2023. Then such demand will stabilise, after which, it is likely to fall.

Social Responsibility and Reputation

An interesting trend, which several international communication companies report at the same time, is consumers’ demand for products of socially responsible manufacturers. When choosing products, including gardening and DIY products, residents prefer green solutions (for example, they prefer wooden boxes over plastic boxes for creating flower beds).

Employers became more responsible and attentive to the brand and reputation as well. Against the backdrop of bad news and restructuring of markets in the face of a pandemic, it was critical for companies to maintain a human face, as research shows.