In summary: The European softwood market in the summer of 2026 faces a paradox: log prices are reaching record highs, while lumber is struggling to find buyers, which is squeezing mills’ margins and threatening the viability of some industrial facilities.

In the summer of 2026, the European softwood market is facing a striking and alarming paradox: logs are selling at high prices and are in high demand, while lumber is struggling to find buyers. The central problem lies not in a shortage of supply, but in the economic gap between the price of raw materials and the price of finished products—a gap that is squeezing mills’ margins and calling into question the viability of entire industrial facilities.

Raw materials are expensive, and lumber is hard to sell
In Austria, prices for spruce and fir are approaching their 2022 highs, and in the state of Salzburg, they have already surpassed the previous record. Demand for pine and larch remains high, and high-quality logs are selling quickly even amid a stagnant domestic economy. The roundwood market in Austria operates almost independently of the lumber market—a clear sign that demand for high-quality raw materials remains steady regardless of changes in downstream stages.

It is precisely in these downstream stages that the problem arises. Lumber prices are not rising enough to cover the high costs of logs, and mills find themselves in a difficult situation with no easy way out. European buyers are keeping minimal inventories and purchasing on a short-term basis, refusing to take on larger volumes. Mills, in turn, are reluctant to produce goods for inventory without clear demand. The result is a gradual squeeze on margins, which inevitably leads to the disappearance of less competitive production capacity.

In Finland and Sweden, this trend has already taken concrete form: mills are cutting back on production, suspending operations, or openly discussing permanent closures. Northern Europe, the traditional driving force behind the sawmill industry, is undergoing a painful structural adjustment caused by a combination of high raw material costs and insufficient domestic demand.

The Strait of Hormuz and the New Geography of Trade

Disruptions to shipping through the Strait of Hormuz have added a new layer of complexity to a market that is already under pressure. The timber trade to the Middle East and North Africa had to quickly adapt, and traders shifted to alternative routes via Jeddah, Khormakkan, Salalah, and Sohar. Solutions exist, but they come at a higher cost: higher port fees, additional transshipment and storage costs, increased insurance premiums, and container repositioning costs.

For standard grades of spruce and pine, these additional costs can completely erode the profit margin. Saudi Arabia has become the most resilient market in the Gulf region thanks to access via the Red Sea, while the United Arab Emirates has felt the impact more acutely due to its reliance on routes disrupted through the Strait of Hormuz. North Africa—particularly Egypt and Morocco—has absorbed a portion of the rerouted volumes thanks to more convenient access via the Mediterranean and Red Seas, thus becoming a more attractive alternative destination than in normal times.

For European manufacturers, the equation is clear and unfavorable: rising logistics costs are reducing net profitability and putting additional pressure on margins at a time when domestic European demand remains insufficient to absorb the surplus. Volumes that can no longer be profitably shipped to the Gulf countries are being redirected to alternative markets, often at lower prices and under less favorable commercial terms.