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Global Wood News Optimism and realism for 2021

Optimism and realism for 2021

As this extraordinary year draws to a close, we face 2021 with optimism but also with a tight stock situation which we must manage to the best of our ability.

Our mills are well supplied with timber from our forests, and we hope that conditions in the forests remain favourable to harvesting. But despite our best efforts, stocks of sawn timber remain historically low: 27 percent lower at Södra than this time last year, for example. 

For redwood, we need to go back to 2007 to see stock levels in Sweden as low as they are today. For whitewood, the situation is better, but still critical. One reason for redwood stocks to be as low as they are now is that production has been forced over to more whitewood because of the bark beetle.

The market situation gives us every incentive to produce as much as we can. Despite high levels of sick leave in our sawmills today, production is only marginally less for the whole year so far than in 2019. Production in October in Sweden was seven percent lower than the same time last year: we have been working to catch up ever since the pandemic caused us to hold back for a period earlier this year - before we realized just how strong demand would be. We will continue to devote all our energy to maximum production, but the best we can hope for is to maintain the current balance until next summer.

The demand factors include the fact that house building has not dipped as much as feared, and is expected to grow steadily through 2022. Meanwhile repair and maintenance have been the main drivers. The spike in demand we experienced in summer 2020, based on outdoor projects such as decking, is not expected to be as extreme in 2021. However, the trend for homeworking will continue, so the enthusiasm for home-improvement projects based on wood will remain strong. Our merchant customers have confirmed this: they foresee somewhat lower demand in 2021 than 2020, but still stronger than 2019 which is still a very strong demand.  

A very volatile market this autumn, relatively speaking, is the USA, where prices peaked towards the end of Q3 at record high levels. After that prices dropped for several weeks but have now again recovered significantly. Demand remains very strong in this market with prices still notably higher than in Europe. This continues to have an impact on the European market balance as many European producers are increasing their exports to the USA.

To maximize our ability to supply our customers’ needs, we cannot place too much emphasis on planning ahead. The sooner we know how much timber individual customers expect to require, the better we can plan and do our best to supply what is needed.

With that thought, we wish all our customers a peaceful and happy Christmas, and success, fulfilment and health in 2021.

 

 

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Subjects: Buildsystem, Timber

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Subjects: Buildsystem, Timber

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