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U.S. became the second largest importer of Swedish lumber after UK in 2022
- Swedish wood products prices to begin rising once
Swedish wood products prices to begin rising once again after their sharp decline in the autumn of 2022. Price growth was not due to increased demand, but to reduced supply. According to a press release dated March 6th from Danske Bank, which provided highlights from its latest quarterly analysis "Forest and Economy"
After a very heavy autumn with lumber prices in free fall, sawmills are now seeing cautiously rising prices. Throughout the autumn of last year, the buyers were waiting for continued price reductions and the purchases were riveted. In the end, the buyers' stocks got too low and everyone started buying at the same time.
“There are many indications that the lumber market has now bottomed out, but we do not believe in a classic economic turnaround with a price rally for lumber. Construction is declining in large parts of the world with lower demand as a result,” said Johan Freij, Senior Forestry Expert at Danske Bank Sweden.
The reduced supply of lumber is due to a number of different factors. Damage from bark beetle has led to a reduced supply of timber in Canada and in Central Europe, but the biggest cause is likely Russia's invasion of Ukraine. In 2021, Russia was the world's second largest exporter of lumber just behind Canada, but according to sawmills, the Russian lumber is now out of the European market. About half of the previous Russian exports of about 30 million m3 went to China, but even there Russian lumber seems to have declined.
“We see signs that Russia is unable to supply the Chinese market, which is increasingly buying lumber from Europe. It may be temporary, but still gives a signal that Russia has problems with the logistics chain from felling to sawmills and shipping,” says Johan Freij.
As in previous periods of low prices, it is Egypt and China that save the deliveries of Swedish lumber and give sawmills the confidence to raise prices when stocks decrease.
Danske Bank also highlights Sweden’s increased exports to the US market. Exports from Europe and Sweden have grown dramatically; and in 2022, the US became Sweden’s most important wood products market, second only to the UK market.
Out in the forest, Sweden now has a completely unique situation for the forest owners. At the end of last year, the majority of sawmills showed red numbers - but instead of price reductions, lumber prices were raised across the country. There is a fight for the logs in the forest from all sides, at the same time that the forest owners cut back on felling after a few good years.