Softwood lumber production AT 1950-2023.jpg

Sources: Austrian Timber Industry Association, Statistik Austria, 2023: Holzkurier estimate © holzkurier.com

holztag 2023

From heat straight to frost?

Article by Gerd Ebner (translated by Eva Guzely) | 25.09.2023 - 13:59

At the event organized by the Austrian Timber Industry Association on September 15, Schmölzer noted that “the usual seasonal upswing did not happen this year.” He sees this as bitter in two ways because the costs for personnel, raw materials and energy remain high or are even increasing at the same time.

Short-time work expected

Holztag_Podium 1_rgb.jpg

Holtag 2023: host Dr. Rainer Eder, Markus Schmölzer, Franz Mühlbauer and analyst Dr. Christoph Schneider (from left) © holzkurier.com

Schmölzer could not give an answer as to when there might be an upswing again. He did, however, warn that “a lack of building permits today will result in a lack of completed projects tomorrow”. Schmölzer therefore demanded: “We need an attractive regulation on short-time work. During the coronavirus pandemic, we did not need it, but we do now.” Companies are slowly running out of the reserves they built up during the good previous years – and it is those reserves alone that have so far prevented major layoffs. “This year and in 2024, however, several companies will probably have to take steps,” Schmölzer predicted. The Austrian sawmills already curtailed their production by 13% in the first half of this year. For the full year, Schmölzer even expects a 20% reduction.

The Austrian timber trade sector is also feeling the sharp drop in demand by the construction sector, as Franz Mühlbauer, chairman of the Austrian timber trade sector, emphasized at the beginning of his speech. He pointed out that trade volumes decreased worldwide in the first half of the year, with the MENA region being the only exception so far. Mühlbauer sees lower freight rates as a positive development. Currently, they are 25% below pre-crisis levels.

Both Schmölzer and Mühlbauer called for a “turbocharger for renovation” in Austria, adding that the percentage of renovated buildings should be doubled, starting from the current 1.5%.

EUDR exaggerated

Mühlbauer hopes that changes will be made to the EUDR. He thinks the regulation is “in principle a good thing, but the form in which it could be implemented is exaggerated. You won’t catch illegal companies by putting all the honest ones under general suspicion.”

Unprecedented rise in interest rates

Economic analyst Dr. Christoph Schneider of the Economica Institute of Economic Research illustrated how the general uncertainty built up over the course of two decades before peaking with the war in Ukraine. Nevertheless, he assessed the US Federal Reserve’s decision to not raise interest rates again as a positive one in the medium term. “There could be a cut in US interest rates in mid-2024 and the same is likely to happen three quarters later in Europe, too. Eventually, this is necessary because interest rates have been rising at a speed that has been unprecedented since World War II.”

According to Schneider, both the construction sector and the industry are shrinking at the moment, which also has major repercussions on the labor market.

Italy with stronger growth

Holztag_Podium2_rgb.jpg

Austria, Italy, Europe: Dr. Alessandro Calcaterra, Davide Paganoni, Michael Pfeifer, Herbert Jöbstl (from left) © holzkurier.com

Addressing the timber industry, Schneider recommended a further rationalization in order to increase productivity. According to him, an upswing will more likely be driven by exports than by a recovery of the domestic market. The moderately positive trend of Italy’s GDP (+0.8% in 2024) is a glimmer of hope.

“Last year’s 20 to 30% decrease in demand for pallets was an early indicator of this year’s problems.” Those were the opening words of Michael Pfeifer, coordinator of the Komitee Österreich-Italien (Austria-Italy committee). Many other products followed suit, “among other things because production volumes were too big in the first half-year”.

US stable, China not a promising market

Holztag_Saal_rgb.jpg

Sold out: The hall in Pörtschach was packed © holzkurier.com

While demand on the global market is decreasing, the US is in a phase of stabilization, as Herbert Jöbstl, President of the European Organization of the Sawmill Industry, analyzed, describing the US as an alternative market and China as unreliable for years to come.

This year, construction starts will likely decrease strongly on important markets, for example “by over 40% in France, more than 30% in Germany etc.”, Jöbstl said, giving a few examples. Sawmills reacted too slowly by curtailing production. As a result, too much wood was “circulating”.

In Italy, the construction sector only saw minimal growth in 2022, as Dr. Alessandro Calcaterra, President of the association Fedecomlegno, told the audience. In the new construction segment, where 60% of timber construction products are used, a 10% decrease was recorded this year. In the renovation segment, the situation is more positive.

Calcaterra appealed to manufacturers to “not devalue the product too much”. He referred to timber trade companies which keep warehouses, saying that those suffer in particular. In the context of high interest rates, Calcaterra called on politics to revive programs involving bonuses for sustainable building.

Another speaker at the Holztag 2023 was Davide Paganoni, President of Paganoni Import, who reported a 13% decrease in demand for packaging products in the first half of 2023.

The hardwood sector, too, is suffering from the sluggish construction sector. Important buyers, such as the furniture and parquet industries, in particular, are feeling the decrease in demand, as Maria Kiefer-Polz, EOS vice-president and spokeswoman for the hardwood industry, analyzed. Nevertheless, the weakness of the global economy has had a positive effect on the hardwood sector: “Smaller volumes of log wood are exported overseas, and forest owners have recognized the importance of local buyers.”

It is hard to tell where exactly the bottom is. I just hope that prices have reached it by now.


Markus Schmölzer, President of the Austrian sawmill industry

While construction volumes are decreasing, the market share of timber constructions is growing.


Michael Pfeifer, coordinator of the comittee “Komitee Österreich-Italien”

Micali is back.


Enzo Micali has returned to Pörtschach after a longer break

You won’t catch illegal companies by putting all the honest ones under general suspicion.


Franz Mühlbauer, Chairman of the Austrian timber trade sector, about the EUDR