Supply in the driving seat

Along with other suppliers, we have experienced a loss of production due to the lack of sawlogs, exacerbated by typical winter weather that hinders harvesting and transportation. These conditions should improve from April, but the overall situation has led to tight demand-supply ratio for spruce, while pine supply remains sufficient. Therefore redwood should be seen as a good option for customers seeking to boost their timber stocks. 

The impact of Russia's inability to export to Europe has been somewhat mitigated in the past few years by a simultaneous downturn in the economy and building activity. However, as the market begins to recover, the absence of Russian timber may become more apparent. Prices are expected to respond to these supply constraints, with significant log price increases putting pressure on sawmill profitability.

Looking ahead, the market is expected to remain tight, with limited production capacity due to ongoing log shortages. Consumer confidence is slowly returning, thanks to lower interest rates, and this will stimulate increased building activity. 

The situation remains volatile, however, particularly in the US market, where tariffs and duties could significantly impact prices. In another important global market, China, demand continues to be supressed by a struggling real-estate market.

In summary, the supply-driven market will continue to see increasing prices. Customers will need to adapt to these conditions, and flexibility in wood choices will be crucial for maintaining a stable supply. In the meantime, we are doing all we can to maintain supply by paying higher prices for sawlogs and other measures to support our members (see Wood Supply Manager Kim Gunnarsson’s report in this newsletter).