“Wood construction is a strong catalyst for long-term sawn timber demand.”
Impacts of war difficult to predict Russia’s attack on Ukraine in the spring of 2022 and the ensuing war have increased uncertainty in the sawn timber markets. Before the conflict, Russia, Belarus and Ukraine annually sup plied the EU market with approximately nine million cubic metres of sawn timber, half of which came from Russia. Since the onset of the war, the EU has imposed a total ban on imports of wood and wood products from Russia and Belarus. “Imports from these countries have accounted for roughly ten per cent of the demand in EU countries,” says Antti Koskinen at AFRY Management Consulting. As a result of the war and the related economic sanctions, Rus- sian and Belarusian sawn timber sales to the EU are now on hold. Koskinen and Morten Bergsten both say the impact of the war on economic growth and consequently on the demand for sawn timber is difficult to predict at this point. “We have heard expectations of weaker growth from individual countries but lack an overall picture. The outlook is hazy.” changes may be caused by exceptional natural conditions, export restrictions and geopolitics. “However, wood construction, driven by sustainable development trends, is a strong catalyst for long-term sawn timber demand,” he says. Bergsten believes that US demand for sawn timber will remain at a high level. “The country’s own sawn timber production is not enough to satisfy demand, and Canada is unable to serve the US timber market as it used to. This will inevitably lead to continuing sawn timber exports from Europe in the future.” In Europe the demand situation also looks bright to Bergsten. “Political decision-makers favour wood construction, but pri- vate investors have also jumped on the construction green wave. In the sawn timber business, the future looks good for the entire value chain, from forest owners to timber sellers,” he says. Bergsten believes that, despite challenges and uncertainties, the timber industry has cause for optimism in the long term. The potential of wood to mitigate climate change is already widely recognised. This means the share of wood as a building material will increase and support demand. “It is possible that sawn timber prices will stabilise at a higher level than before. However, we do not yet know what the new normal will be.” •
limit foreign trade, by which the world trading powers protect their own interests. In November 2021, the United States doubled its duties on wood imports from Canada to 17.9 per cent. Russia’s export bans on raw wood and export duties on low-quality sawn timber are having a strong impact on Asian markets. Regional differences in price formation Europe and North America are the largest markets for sawn tim- ber, but Asia, especially China, has grown in importance year by year. North Africa and the Middle East are also traditionally important to sawmills. Sawn timber prices in different continents tend to follow each other, but there are also regional differences in price formation, influenced partly by different distribution channels. In Europe, the market is driven by wholesalers and sawmill companies’ direct sales to the largest customers. The United States depends heavily on retail chains that sell timber to Do It Yourself (DIY) builders. On the other hand, the Chinese market is domi- nated by large trading houses. The price of sawn timber is primarily influenced by demand from the main wood applications, such as private and public con- struction, civil infrastructure and furniture industry. Demand is also influenced by the availability and price of saw- logs. For example, sawmills have been closed in British Columbia because of the shortage of logs caused by insect damage. New sawmills have been built in the US South, where there is good access to raw material. “In the long term, the price of wood may also be affected by climate change,” Neuvonen adds. Due to warming weather conditions, insect damage has in- creased in Central Europe. Forest fires and floods caused by droughts may also become more common. Prices are seeking a new normal Bergsten expects timber price spikes to continue at least to some extent. Economic cycles come and go. On the supply side, sudden
Morten Bergsten Managing Director of Danish-based Bergsten Timber and Vice President of the European Timber Trade Federation. More than 30 years’ experience in the wholesale and import of sawn timber.
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