Fluctuations in Lumber Demand in the Global Market

WRI / Fordaq
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Recession has affected the global demand for lumber in 2008 and 2009, which has enabled the worldwide trade of softwood lumber to increase by 25 percent more than the past two years. China, Spain, South Korea and Japan witnessed a significant rise in import volumes between 2010 and 2011, whereas key importers such as US, Egypt, France, Italy and UK reduced imports by between 5-10 % year after year.

The Middle East/North African region has imported 36 % more lumber in 2010 when compared to 2007 due to the growing need of lumber in its construction sector. Even this faced a steep fall because of the Egyptian revolution, riots in Algeria and the civil war in Libya creating confusion and insecurity in this region.

The European sawmilling industry has gone through a bad phase with reduced lumber demand in export and domestic markets, reducing product prices and continued high wood raw-material costs. The consequences were that a large number of saw mills brought down operating rates and a large number of lumber companies encountered financial losses during the previous year.

Lumber prices declined in the Nordic countries since 2009 summer especially during the most part of the latter half of the year 2011 to very low levels. It is believed that the lumber market is improving in a few countries on the continent and in major markets in Northern Africa and the Middle East. This is happening at the same time as log costs are declining, which could be good news for many saw mills.

However, the lumber market is still not strong and regular, hence if the production increases from the present level very rapidly there is a possibility that supply will grow at a faster rate than demand in the future months with reduced prices of products as the end-result.

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