Timber market
Price of sawn timber settling at a new normal
MATTI REMES
The record fluctuations in sawn timber prices have shown that predicting the future in global markets is becoming increasingly difficult. New price factors are changing the game.
China in turn boosted its imports of logs instead of sawn timber. “In China, the rise in sawn timber prices was more moderate. This may have been partly because the strong construction boom of recent years has slowed slightly there.” Knock-on effects of the US situation Tuomo Neuvonen says that developments in the US timber mar- ket especially have significantly affected price formation in oth- er markets. Neuvonen is Project Manager at Fastmarkets FOEX, which provides price indices for the forest industry. “2020 was a slow year because of the outbreak of the pandemic. There seemed to be only dark clouds ahead, but the market out- look changed completely in 2021.” After a downtick, construction started to grow faster than ex- pected, driven by the strong performance of the economy, the recovery of employment and low interest rates. House building has also been boosted by the increase in remote working during the pandemic and the need for more space in homes. “President Joe Biden’s record-breaking Covid-19 recovery package also affected construction, which increased the demand for sawn timber.”
Sawn timber prices traditionally fluctuate with business condi- tions, but the record-breaking price swings in 2021 surprised even experienced experts. Antti Koskinen , Manager at AFRY Management Consulting, says he has seen nothing like it in a career spanning more than two decades. “2021 was an unprecedented year for those who monitor the industry.” The price rally has been compared to the upswing caused by the Korean War in 1951, which also led to unprecedented growth in the Finnish sawmill industry. “The 2008 financial crisis also saw sawn timber prices rise sig- nificantly, but not as sharply as 2021,” Koskinen says. The greatest volatility was in the United States in 2021. In May, lumber futures rose above $1,600 per board foot. By late summer, the price had fallen below $500. There were also sharp fluctuations in sawn timber prices in Europe, though not quite as great as in North America. The peak was reached at the end of the summer, a few months after the spike in North America. There was a hard landing in the early autumn.
28
Powered by FlippingBook