Summary
• German timber exports to the UK rose 42.7% in 2010.
• Ilim’s Wismar mill now has additional logs from Russia.
• Egger is looking to combine German solid timber and OSB sales.
• Rising log prices and low availability is concerning mills.

Last year marked a return of bigger volumes of German timber exports to the UK, with combined sawn and planed softwood exports up 42.7% to 474,000m³ (2009: 332,701m³), according to the German Sawmilling and Timber Industry Association (BSHD).

This made the UK Germany’s sixth largest softwood export market, with easily the largest growth rate of the top six.

The picture in the first quarter of 2011 was a 43.9% growth in planed goods to 39,434m³ (2010: 27,403m³) at the expense of sawn timber which fell 35.5% to 46,057m³ (2010: 71,375m³).

BSHD said the country’s sawmilling industry had bounced back in 2010, with sawn timber output increasing by 7.6% to 17.6 million m³ and planed wood growing 5.3% to 3.6 million m³.

Disappointing exports

But it described exports volumes as “disappointing” at 6.8 million m³, due to high domestic log prices, with no full recovery in sight. Hence it was the domestic German market that drove the increase, with domestic sawn timber consumption growing 8.8% to 18.3 million m³.

Sales volumes of the largest sawmills increased by 25.3% to €3.5bn, with Klenk Holz almost doubling its profits to €13.2m from sales of €363m and output of 2.1 million m³.

Klenk’s first-quarter sales were about 30% ahead of a year ago and it predicts a significant increase for the remainder of the year.

But it and many other German sawmills are serving warnings about current log price escalation, while the European Organisation of the Sawmill Industry says German softwood log supply this year and next will be tight.

Russian supply

Ilim Timber, which last year acquired Klausner’s Wismar and Landsberg mills, has been supplementing log volumes at Ilim Nordic Timber (Wismar) with Russian logs.

“We started to deliver high-quality logs from Russia to Wismar in May, with a current volume of about 40,000m³ for May-June,” Slava Bychkov, managing director of communications, told TTJ.

“In the UK we are supplying about 5,000m³ a month from Germany. We consider the UK one of the most important markets and we will explore the opportunities to develop business there.”

Production at Wismar for the four months ended April 30 totalled 219,000m³, with 153,000m³ produced in the first quarter and 66,000m³ in April.

Panel producer Egger is becoming a player in the solid timber market through its €75m sawmill in Brilon, central western Germany (opened in 2008).

New division

Export volumes of sawn carcassing and CLS from Brilon to the UK are currently low, but Egger sees future potential following the recent establishment of the Egger Building Products division, which combines sales of solid timber and OSB (produced in Wismar and Romania).

“One target for the new division is to use sales and marketing synergies in various markets, combining OSB and timber sales,” said Andreas Reiterer, sales and marketing director of the new division.

“The UK?timber mraket has always been important for our sawmill in Brilon. To underline this we established a sales force in the UK?concentrating on timber products even when the market is in a difficult situation.”

Despite the UK’s current tough economic environment, he believes the market will improve next year and sees better prospects in future housing demand.

“We aim to continue a minimum of a two-shift operation in the sawmill. The critical factor is raw material supply. Being able to buy all forest products due to a fully-integrated site (sawmill, chipboard, MDF/HDF production and direct print laminate flooring), we are in a good position to achieve our goal,” said Mr Reiterer.

Competition for logs

Johannes Schilling, director of southern Germany-based Schilling Holz, said the high demand created by an increase in sawmilling capacities before the economic crisis had left mills “fighting” for logs.

Mr Schilling expects German log prices to go higher, with no expectations for them to fall.

“The economy in Germany is going very well. The wood industry is going a lot better but not as good as the car industry and most of the sawmills are still hesitating to make any investments.”

About 50-70% of Schilling’s production is Euro pallets, with an additional 100,000m³ of solid timber products, mainly CLS.

Italy is Schilling’s most important export market, but the UK is also a big customer, making up 10-20% of its CLS exports. One or two loads leave Schilling for England daily – currently an 11,000m³ annual rate – but it can be much higher, depending on the exchange rate.

“The UK business is OK. We think it will be higher this year,” said Mr Schilling.

KVH prices

Prices for KVH finger-jointed structural timber have been on the increase due to high demand. The strictly regulated product makes up about 50% of the German construction timber supply market and small volumes are being shipped to the UK.

Konstruktionsvollholz, which promotes KVH, now has 27 member companies producing KVH, Duo and Trio beams and it has also established web domains in England, France, Italy and the Czech Republic to make it easier for interested professionals to access KVH’s web portal www.kvh.EU.

It will also be engaged in wide-ranging promotional activities in European timber publications during the second half of 2011 to drive use of the product.

Hardwood log availability is “normal” and production increased last year by 13.8% to 914,000m³, helped by a 15% growth in beech timber exports to 376,000m³.

The big news on beech is Pollmeier’s decision to start production of beech LVL later this year at a €70m new plant at its Creuzburg site, partly as a result of the rise in demand for engineered products.