By the last quarter of 2020, timber demand was becoming excessive and record levels continued through Q1, 2021. Timber suppliers are doing all they can to service customers, but the level of global demand is higher than can be fulfilled by existing production facilities and available input supplies across Europe. This applies to both timber and panel products, particularly for structural and other soft wood materials, panel products and hardwoods.
Due to pandemic-driven factors and high domestic and international demand, the formerly-abundant stock levels have not been able to be re-built since the beginning of the pandemic in 2020.
Worldwide, the move to lockdowns and home-based working have shifted market dynamics: unprecedented international demand for house building and home DIY projects, as well as other refurbishments has boomed. The countries in need of materials are prepared to pay higher prices, driving the market levels up. Initial shutdowns of European mills in Europe due to COVID combined with this high global demand for timber leads to big shortages of timber availability.
Moreover, export of wood to China and the USA from Europe has picked up extraordinary speed. Both countries are experiencing a boom in construction with large-scale investment programs, and at the same time US is getting less wood from Canada due to a trade dispute. This has lead imports from the European Union to reach an all-time high in 2020, nearly tripling 2019’s amount. Imports from Europe remained strong in the first three months of 2021, up 37% from the same period last year, USDA Foreign Agricultural Service data show.
The issue is likely to continue as supply is expected to tighten with the progression of 2021: sawmills in Europe would be entering a period of shut-down for repair, maintenance and holidays throughout June & July.
As a result of the current dynamics, the prices for timber are rising at exponential levels. PalletBiz has not been left out of such consequences as our timber partners are struggling with having to offer daily prices for wood, which are yet increasing week over week. Adding to the challenging situation is the increase in price on other materials as well, such as building steel and copper materials. Unfortunately, nobody is in a position to make a statement as to whether prices will fall again, will remain in place, or will rise in the future.
We realize and recognize the severity of the situation for all parties and are doing our best on a daily basis to balance the instabilities we are presented with. We are working within our Global Sourcing & Sales team to ensure supply throughout our network and to leverage from the increasing network strength and geographical position in this respect. Moreover, we strive to remain loyal to our suppliers and partners while at the same time offer the most reasonable conditions for our customers. We have to adapt to the current market situation and we ask all our partners to cooperate with us on this so we can all come out at the other end of the crisis with as little damage as possible.