A “worrysome picture” was painted of the European sawmilling sector in the coming years at the European Organisation of the Sawmill Industry’s (EOS) AGM in Berlin this month.
The meeting heard that positive developments experienced in 2007 would be interrupted in 2008 with a negative forecast for the coming years.
Members heard that the sawn softwood production of 112.7 million m³ in 2007 was forecast to drop by 2.9% during 2008-2009. Half of EOS members are expecting reduced production, with big dips being predicted by Finland and Latvia.
EOS listed the reasons as fear of a lack of raw material, overproduction in previous years, reduced demand due to lower expectations on the European housing market and fewer exports to the US.
It said the gap between falling sawn timber prices and rising raw material costs could not be bridged at the moment.
“This could bring several mills into a difficult situation, where lowering production is not an option as a high production has to offset the high costs,” it said.
The hardwood market is also hitting a recession, the AGM heard, with production reducing by 2% during 2008 and 2009.
“Currently oak is the only species performing well, mainly thanks to a large demand from the wine barrel industry, while all other species reached top bottom values and their demand is reduced almost to zero,” he said.
On a more positive development, Chinese log buyers have turned more towards the Russian and Chinese markets, easing the pressure on the European log market. And a more rosier picture is expected following the next two years.