A few weeks ago the world of timber was a very different one. The general mood was dark and dismal due to the recession, with poor demand and surplus supplies. But today, supply and demand seem to be more in balance.
The sawmills of Europe have been forced to lower production dramatically. The result now is a situation in which demand is still low, but exceeds supply, thus causing prices to rise.
The question remains as to whether this is simply a flash in the pan or summer fireworks signalling a general change in the markets. Personally, I am warning everyone to be careful as I do not believe that the markets will start their true and slow recovery until 2010 or 2011, at the earliest. So we are facing a long and hard journey with high risks for all involved.
On the one hand, sawmills are in dire need of higher prices for sawn timber following the great losses of the past months. This may be the last thing our customers in the building and packaging industries can face, but they will have to adjust to it. The reason is the collapse in the supply of sawn timber, which has led to a shortage and long delivery times for various types of product. In addition, there has also been big demand from Japan, the Middle East and also the UK, much of which cannot be fulfilled.
Despite higher prices for sawn timber, supply will not rise because the sawmills cannot significantly increase their production. There is a raw material shortage in central Europe and Scandinavia making production more difficult and also causing prices of round timber to climb.
So, hard times! This is when partnerships are needed. Mutual trust will lead to our success.
