Central European sawmills remain very pessimistic about the business situation in the next three months. In the latest economic survey carried out by the Holzkurier, only 9% of respondents expect a good development, while 37% predict a bad one. So, the pessimists outnumber the rest by 26 percentage points – a result similar to that of the end of the first quarter. The slight improvement in the business situation at the turn of the year is already forgotten now in the third quarter.
Assessments of the second quarter were similar to those of the next one: 12% of respondents described their business situation as good, 52% were satisfied and 37% of sawmills which participated in the economic survey reported a bad business situation in the second quarter.
Log prices constant in the third quarter
Since they are the biggest cost factor, log prices are a crucial factor for sawmills. According to the economic survey, almost 60% of respondents expect prices to remain constant in the third quarter. The number of sawmills which think that prices will rise (16%) is smaller than the number of those who believe that they will fall (24%).
When it comes to lumber, an even more stable development of prices is expected. Two thirds of respondents predict that prices will remain stable in the third quarter, 20% expect them to rise, and 12% believe that there will be rising prices.
Only one in ten with strong sales
The survey found that 10% of the sawmills recorded strong sales in the past quarter. 49% of the sawmills described their sales as satisfactory, and 42% reported weak sales as a result of seasonal factors.
As for the third quarter, 13% of respondents expect an increase in sales, 62% predict a constant development, and 24% think that their sales will decrease.
Stock levels stable
68% of the sawmills which participated in the survey predict stable stock levels, while 19% expect an increase and 15% assume that there will be a decrease over the summer months.
Not the time for investments
The challenging market situation is having a noticeable impact on the willingness to invest: 70% of respondents predict a decrease, while a remarkable 0% expect higher investments.
How much to produce this year?
© Timber-Online
As part of this latest economic survey, we asked the special question: “How will cutting at your sawmill change this year?”
54% of survey participants are not planning any changes compared to 2023. 28% want to reduce cutting, while only 13% intend to cut bigger volumes this year. Of the sawmills which want to reduce production this year, 34% are planning a curtailment of 5 to 10%. 54% are planning a substantial reduction of 10 to 20%.
Biggest challenges at the moment according to the economic survey*
Bureaucracy and implementation of the EUDR:
- We see the implementation of the EUDR as a bureaucratic hurdle without any benefits. We are monitoring the impending implementation.
- EUDR … waiting until someone finally explains how it works
- Staffing, bureaucracy, authorities
Log supply and prices:
- Problematic log supply
- Log prices too high, lumber prices too low, lack of lucrative sales opportunities
- Volatility, log supply from August, increased personnel costs, knock-down prices charged by large companies
- Log supply, curtailing cutting
- Log prices are too high. Sales are not a problem. We hope that the log price will fall and that lumber prices will remain stable, then the second half of the year can compensate for the losses accumulated during the first six months.
- Large companies and their knock-down prices
Lumber prices and sales problems
- Lumber prices are not adequate.
- The current price level of lumber is not satisfactory. We are not making any money.
- Lumber prices are too low compared to those of log wood. Margins, losses, trying to make it through this period... incomprehensibly high production output and knock-down prices, even for products with longer lead times (CLT)
- Very low order intake at barely adequate prices
- The warehouses are full and sales are going slow. We have to further reduce cutting.
- Sales problems when it comes to individual products / general economic weakness --> increased acceptance of special orders --> reduced batch size in production
- Lumber price too low, high costs for wages, interest, insurance and energy
Shortage of skilled workers and personnel costs:
- Acquiring qualified staff is the biggest challenge, I fear that the situation will become even more precarious in the future.
- Finding motivated staff
- Skilled workers; finding qualified staff is the biggest challenge.
- Shortage of skilled workers, too high prices for machines/investments
- Personnel
Logistics and trasport costs:
- Logistics; higher transport costs
- Higher energy costs, higher transport costs, increase in wages = increase in sales prices by 4 to 5% if possible
Market environment and competition:
- In addition to the sawmill, we also manufacture single-use pallets, and the competition from Eastern Europe is very strong here.
- At the moment, we could be sitting on a powder keg that could explode at any time – but that could also be wishful thinking.
- Pessimism on the market
- Large companies and their knock-down prices
Financial management:
- Liquidity management, solution: reducing costs and inventory levels
- Ratio of equity to sales
* Answers to the question: What are the biggest challenges you are currently faced with and how do you handle them?
