The current extreme timber market is seen by many as a temporary situation. What goes up fast, falls even faster… Triggered by extra Corona consumption, prices are driving to unprecedented heights and those who think that the pressure will gradually disappear when Corona comes under control should think about the global wood flows. And yes, China has a major influence on that.
In 2020, the Chinese bought 10 million beetle stems in Germany and another 12 million m3 of fresh felling in Russia. The large surplus of strains in Germany will certainly no longer be available in the same size by 2021. Logprices in Germany are rising very quickly. In 2020, the price for beetle trunks was well below € 50 / m3, which is not cost-effective for forest owners. Conditions for the beetle Liniatus or “Borkenkäfer” have clearly deteriorated for this creature. They don’t like long-term rainfall.
In the meantime, logprices have already risen sharply in certain parts of Germany and the limit of € 100 / m3 has already been ticked with a few contracts. Sawmills take into account that the ceiling has not yet been reached. At this price level, the Chinese will think more about whether the import is still worth it, especially with the current extremely high transport prices, it will be next to impossible. Also, German sawmills will do everything in their power to obtain every log that becomes available. The export prices for sawn timber to large markets are so high that they can still make good profits with expensive round timber.
In addition, there is also new legislation in Russia. If that law is indeed offically passed, the Chinese will lose another 12 million m3 of logs, 22 million m3 are not for the taking elsewhere in the world. The alternative is to buy sawn coniferous wood.
Russia has already taken measures to limit the export of logs. At the time, this was regulated by decree by the ministry of forestry. Usually this was quickly weakened. Now, however, Putin is the driving force and he wants to regulate it by legislation. We now know how powerful and tenacious Mr. Putin is …
Perhaps we are far from reaching the “new normal”. Stocks worldwide are unprecedentedly low and due to weather influences, cutting capacity cannot be fully utilized. So far we have found price increases of € 30-40 / m3 exorbitant, but if we are not careful in the Benelux, the price difference with other markets will become even greater. Although we were to increase by € 100 / m3 in Q2 / 2021, we are still around € 100 / m3 behind several other large markets.
Of course a crazy thought, but one thing is for sure, availability will be more important than price for the time being. It is also possible that this situation will last much longer than many people currently think. Cutting capacity in Russia and Germany will not be able to be increased overnight for 25 million logs. In other words, the difference between supply and demand is getting even bigger!