Sawn timber production capacity in the United States could not meet the extra demand, and Canada could not make up the difference. “It gave European producers the opportunity to increase exports across the Atlantic,” Neuvonen notes. Demand in the European market also remained better than expected. Contrary to initial expectations, the pandemic did not paralyse the economy and new construction. There was even an increase in renovation and home repairs. Bottlenecks in the supply of sawn timber increased prices. After the start of the pandemic, many sawmills limited their production because demand was expected to slow. Deliveries to international markets were complicated by logistical problems. Ports were con- gested and there was a shortage of sea containers. Especially in North America, the supply of sawn timber was restricted by exceptional weather conditions. Forest fires hurt the availability of wood. In addition, major Canadian timber pro- duction areas in British Columbia were affected by floods, which disrupted transport.
Speculative trade is upsetting the market In the United States, the price of sawn timber started to decline sharply from its peak in the middle of 2021, and a couple of months later in Europe. Buyers were no longer prepared to pay high prices, and instead cut back their purchases and tried to operate from stocks. The fall in prices was also driven by an increase in the supply of sawn timber as high prices spurred sawmills to increase produc- tion to full capacity. Production was gradually ramped up during the pandemic, especially in North America. After a sharp decline, the prices of sawn timber started to rise again in key markets at the end of 2021 and continued to rise in early 2022. Koskinen says the rapidly changing situation during the pan- demic has made it exceptionally difficult to forecast price devel- opments in the short term. “In the North American market, price fluctuations of sawn tim- ber are greater and faster than in Europe. Demand is strongly linked to low-rise housing production, which can vary greatly as economic conditions change.”
Global sawn timber demand development
Softwood
Hardwood
Million cubic metres
500
450
400
350
300
250
200
150
100
50
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: AFRY Management Consulting
29
Powered by FlippingBook