The price development in the USA is causing unrest in the market. Once again the “Random Length” pricing system appears to be worse than Russian Roulette and many are now convinced that it is being manipulated? Due to the extreme support packages, construction is in full swing and stocks of sawn timber are not exceptionally high in the USA. Market reports do indicate that stocks in the ports are poorly drained due to a lack of transport capacity, but the overall stock level cannot cause prices to crash like that.
Whatever the case may be, European exporters are slowing down with deliveries to the USA. The largest volume comes from German sawmills. It would therefore be obvious that we can count on better availability from there. However, this does not apply to all regions in Germany. Until recently sawmills had access to a wide range of round wood, especially beetle trunks were available in abundance. This has been changing dramatically in recent months. In large parts of Germany beetle trunks are running out and people are dependent on fresh felling. In particular, in Bayern, Baden-Württemberg, Saxony and Thuringia, legislation is now being imposed to limit fresh felling, as the surplus of beetle strains from recent years has to be compensated. This causes shortages of round wood and the prices for fresh felling skyrocket.
In the short term, ie in August, we will not feel that in the market yet as many markets will consume less due to holiday closures. But from September onwards, normal work will be resumed everywhere. Sawmillers then have to react as US volumes could spoil the price situation in other markets while the commodity is scarce and becoming very expensive.
This week came the first reaction to this situation. Ziegler Holzindustrie has decided to reduce production by approximately 25% for the coming months, see attached press release. Ziegler produces 1 million m3 of sawn wood on an annual basis, so 25 % is right on target. It is expected that other large German sawyers will follow suit.