These are difficult times, but I am optimistic
Every month we interview a hand full of timber experts about the developments in the marker. This month we are interviewing Robert Jansen Sr.
Are there any insights you'd like to share with us about the current state of the market?
The European timber market finds itself in a state of flux, while a significant price increase occurred in the first quarter, for the second quarter we need to consider increases of 25-30 euros higher, but this is partly already calculated into the current prices. At this moment sawmills (e.g. in Germany) are slowly starting to get logs again (which as a supply issue in the past quarter, see March market update). They will likely try to make up for the missed revenue of the previous quarter. There are concerns regarding the future beyond this quarter, but we cannot say with certainty.
Aren't we seeing a lower demand for timber in the market?
Demand declined across Europe, fuelled by sluggish housing markets and a slow down in new construction projects in countries like Germany and the Netherlands. The entire world economy is currently in an uncertain state due to the many geopolitical issues that are happening. This dampens the overall market outlook, despite the long-term trend of increasing wood usage in buildings and construction at large. This year will be a difficult year for many.
You also referred to Finland, what's happening there?
Labor unrest in Finland further complicates the picture. There have been strikes recently, but there are rumours of renewed strikes that threaten to disrupt deliveries (again), adding another layer of uncertainty to an already precarious situation. And this is impacting many countries in western Europe.
And what about the Dutch market specifically?
The number of timber businesses that are quitting is rising. The Dutch market faces a specific challenge due to the absence of Russian wood, traditionally a cost-effective option as the Netherlands is highly dependant on timber imports. Political and ethical views aside, Jansen estimates that a quarter of the European market relied on Russian wood imports, which created a gap that allowed Scandinavian and German suppliers to driving up their prices (due to lack of alternatives). However, one would expect this to lead to shortages, which until now has not happened. Probably due to the coinciding with the lower demand. Swedish producers can still readily meet existing European demand, aided by reduced exports to Asia and for example Egypt, as the Russian timber is finding its way to those markets (where there are no sanctions in place). This poses a problem for a number of importers of timber who's business model was not setup to only trade in Scandinavian or German timber.
Jansen Sr. flags the fact that the US is still importing timber from Russia (also read the uncg appeal), as they capitalise on import tariffs on timber. Additionally the Russian timber is produced at a significantly lower costs (~50% lower), leading to a competitive disadvantage to EU timber exporters to the US despite the tariffs.
What role does financing play for buyers and sellers at this moment?
Financing as a form of security is currently not a concern for many sawmills and importers. However, this is a form of insurance that will cover payment defaults. The new financing options like the one VonWood is offering, is different, because it actually frees up capital for both buyers and sellers to be able to do more with their otherwise tied up cash.
In conclusion:
Jansen Sr. concludes with a sense of cautious optimism. While the present market presents significant challenges, long-term trends and potential solutions offer a glimmer of hope for the European timber industry.
About Robert: He is one of the timber experts at VonWood, as the former CEO of Jansen Houtimport Robert has decades of experience and knowledge in the sector.
In Robert's own words, "The inevitability of digitalisation in our industry is not just a trend but essential for growth. It's time to embrace the future and I’m excited to be part of VonWood's innovative journey, sharing my knowledge to offer better value to both buyers and sellers of timber."
VonWood is at the forefront of digitalising the timber trade. Established with a vision to merge traditional practices with cutting-edge digital and financing solutions, VonWood aims to streamline the timber trade, making it more efficient, transparent, and accessible. Our platform leverages the latest technologies to provide innovative solutions, fostering sustainability and efficiency in the timber industry. With a commitment to excellence and a passion for innovation, VonWood is set to become a leading name in the digital timber trade. To find the right timber for your needs or if you have any questions, you can get in touch with us at info@vonwood.com.
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