Market overview

As the second quarter came to a close, the market generally remained stable. However, reports of lower-priced offers across different regions, combined with increasing discussion around Central European suppliers, created a degree of uncertainty.

One market source commented that the market continues to be flooded with spruce, affecting purchasing behavior across the continent.

“There are end users telling us every day that they are getting calls from central European suppliers who are trying to steal volumes”, the source said.

Regarding demand heading into the third quarter, activity in Northern Europe was more subdued than in southern regions, where some more activity has been seen, a market contact summarized.

“Northern Europe is difficult. It’s a better situation in southern regions,” the market contact said.

The price fragmentation was also noted in company reports. Södra reported in its results for the first half and the second quarter that “the market for sawn timber was weak during the quarter, mainly in Sweden, the UK (Great Britain and Northern Ireland) and the US, while several markets in Europe noted higher activity.”

There is ample supply of sawn timber from many German and Austrian producers, which have had good access to logs and are offering material at around €10-20 ($11-23) per cubic meter below Nordic levels. The pressure has been felt by Nordic suppliers, some of whom said it is difficult to match those offers in Central European markets.

Overall, price movements in June were limited across all assessed markets, with most prices unchanged from May levels. This is typical of the final month of a quarter, when existing contracts and purchasing programs tend to limit the scope for price adjustments. Demand remained subdued and buying activity cautious across many European markets.

In Germany, France and Benelux, all tracked spruce grades remained unchanged month on month. As a result, prices continued to move sideways.

In the UK, domestic spruce prices were also unchanged in June, with both spruce sawfalling grades holding steady from May levels. Imported pine grades, however, edged lower. The upper ends of the assessed ranges for Pine US 50×150mm and Pine V and VI decreased by €5 per cubic meter, resulting in modest midpoint declines of 0.8-1.1% month on month.

Market outlook

Market participants are entering the third quarter with cautious expectations, noting that demand is broadly stable compared with the second quarter, although some contacts expect volumes to soften slightly.

Some market participants said planed products have continued to outperform construction grades, with the latter facing additional pressure after buyers built inventories earlier in the year in anticipation of stronger demand that ultimately failed to materialize.

Some Swedish producers have reportedly continued to offer low-priced material to maintain production and cash flow, despite concerns highlighted in financial reports that certain sales are being made below profitable levels. How long this situation can continue remains a topic of debate among market participants, though there is little consensus on what would resolve it.

Logistics remain challenging, with restricted truck availability increasing delivery times from the Nordics and raising spot freight costs. Looking ahead to the fourth quarter, visibility remains limited, with any recovery dependent on stronger construction activity, improved consumer confidence and broader economic conditions.
---

---
---
  
Source: fastmarkets.com