The 72nd International Softwood Conference has been held in Taormina , Italy, from 16 to 18 of October in a very warm and beautiful location welcoming more than 200 delegates from all the World.
Thanks to Federlegno Arredo and its president Claudio Feltrin , together with the subgroup Fedecomlegno and its president Alessandro Calcaterra and Massimo Micali from Agelegno coordinating with EOS and ETTF federations , masterfully conducted by Keith Fryer from UK.
From left: Morten Bergsten (ETTF) , Alessandro Calcaterra (Fedecomlegno) , Massimo Micali (Agelegno) , Bruno Mirrione (Mirrione Legnami) , Angela Lembo (Federlegno) , Marcello Lo Castro (Lo Castro Legnami)
The little 500 below was an interesting illustration of this conference. The market has shrinked except India which is powering ahead and some countries in the MENA region.
The conference started with an overview of the EU macro economy, building industry and smarket for softwoods.
Macro Economic Background EU
The economist Marco Fortis gave an overview of the economies in the EU. Germany is suffering a worrying downturn which unfortunately is mainly structural. The strong increase of energy costs (linked to reduction of cheap Russian gas and transition to green energy) and the decline of population will continue to impact negatively German growth moving forward. Because of the importance of this market the economies of Northern Europe & Eastern Europe are affected as well.
The 2025 outlook is positive as interest rates are expected to decline.
Building Industry EU & Wood in construction
The building industry is stagnating in most of Europe. Germany again is seeing the strongest decline of building activity with the lowest housing starts and building permits ever recorded. Housing starts in Spain on the other hand are very strong. Southern Europe in general is doing better. All countries except germany expect the activity to improve in 2025
Wood is continuing to gain market share in EU construction. Data showed that building permits where wood is predominant moved from 18,7% in 2019 to 22% in 2023. New regulations linked to the Green Deal will continue to push this evolution. The recent evolution of sawn timber prices relative to alternatives is also underpinning this evolution. The next graphic illustrates the evolution of raw materials costs in construction in Sweden:
Medium term the industry could be limited by the availability of raw material. The solution discussed where to have products using less m3 of wood per m2 of housing, making more use of recycled wood and diversifying the species used in housing.
Situation of Logs affecting margins in Sawmilling
Raw material availability is declining and increasing in prices. Prices of logs at record high levels in Scandinavia. According to Gerd Ebner prices of spruce logs are now around 100 Euro/m3 in most of Europe. This situation is not going to improve moving forward due to the labor market, regulation and transportation costs. The beetle plague in Europe increase spruce log harvest considerably in the last years but the harvest will start declining in the next years and especially at the end of this decade.
Sawn timber prices have not followed the upward trend of round wood. Sawmills also have much higher labor and energy costs. The combination of falling sales prices and higher input costs has led to a strong decline of margins with most sawmills currently losing money.
Production and Markets for European Softwood Lumber
Production of softwoods in Europe declined to the same level as in 2015 (-12% compared to 2021). Austria seems to be the only maajor producer which has been able to keep production levels constant in the last 6 years at about 10 million m3. Production is expected to rise modestly (+4%) in 2025 as markets expand.
The ETTF estimates for 2024 a total consumption in EU of 41 millions m3 with an increase in 2025 of 1,1%. This is half of consumption in North America (80Mil m3). The outlook for 2025 is positive except in Germany.
In 2020 exports of EU sawnwood stood at €6 Million. In 2021 and 2022 these exports exceeded € 9 Million arriving at €9,5 Million. In 2023 exports bottomed at 6,35 Million and are expected to decrease further in 2024.
From Jan to Aug 2024 USA imported from EU 2,35 Milion M3 (-17%) and China 11,7 Million M3 (-6%).
In the rest of Asia the market share of EU sawmills grew 6% to 2,30 Million M3 in these last 6 months , mainly to South Korea, India and Taiwan.
H1 Exports to North Africa reached 2,64 Million M3 (-6%) while exports to the Middle East were at 1,78 Mil m3 (-7%).
The plunge in Europe of Russian imports was more then compensated by declines in consumption. But as consumption rises again this could have a strong impact of prices.
EUDR
The conference briefly touched on this topic. The regulation will be postponed 12 months but there is no news about a "light version". In discussions with various participants the main issues raised were the lack of implementation details. A question which still generates confusion is if mills will need to have the precise forest origin per lumber board or will be able to give multiple possible geolocations. Most mills we spoke to see no way to have 1 geolocation point for each unique board.
We will publish next week excerpts from the conference covering other regions of the world