GROWTH ON THE HORIZON
The home-improvement trend in North America has significantly increased the prices of sawn timber there and elsewhere around the world. Experts reckon that some of the demand increase may be permanent.
HEIDI HAMMARSTEN, photo MIKKO TIKKA/FOTONOKKA
“The demand for sawn timber exceeded supply from ear- ly 2020 to the first half of 2021, and this trend allowed prices to reach all-time highs. They went off the chart and peaked in late May,” says Russ Taylor of the mar- ket situation in North America in the summer of 2021. Taylor runs his own forestry sector consulting company. However, what goes up must come down, and US prices have plummeted by 75 per cent to reach more modest levels in August 2021. “Producers initially thought that the markets would de- cline due to the coronavirus pandemic, but because people were stuck at home, they started renovating and carrying out DIY projects. At the same time, sawmills decreased their production flows.” Both home builders and renovators could not obtain enough structural sawn timber. He initially estimated that local sawmills will not be able to make up their production losses until later in 2021, but this has already occurred. Up to the end of 2021-Q2, North America has therefore been a fruitful market for imports from the rest of the world. These imports have covered the tight mill capacities in domestic production. Taylor believes the increase in demand will continue at a moderate pace.
“We knew that a price correction will occur, as was ev- ident in early June 2021, but the demand will still remain strong. It is estimated that the demand will grow by an annual rate of about six per cent in 2021 and perhaps at four per cent in 2022. Sawmills currently have full order books and limited capacity.” Insect damage has also been a problem in British Co- lumbia, Canada, where a pest called the mountain pine beetle has taken its toll, causing 40 sawmills in the Interior region to close since 2005. When less and less raw material is available, the number of sawmills also decreases. Addi- tional capacity is appearing only in the southern parts of the United States, where the forests are plentiful. Residential construction, repair and renovation each represent a little more than a third of sawn timber con- sumption in North America. The remaining third com- prises the woodworking industry and non-residential construction. A specific local feature is the strong role of wood in housebuilding. The environmentally conscious trend is also increasing the use of wood in building tower blocks, and new factories producing composite panels from cross-laminated timber (CLT) are being established in North America.
Russ Taylor Experienced forest industry consultant and market analyst, working for his own company, Russ Taylor Global.
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