Since cross-laminated timber has become a crucially important product by now, it is high time that its price development was tracked and recorded periodically. Similar to log wood, lumber, glulam and solid structural timber (KVH), the development of the CLT price should be visible at a glance in the future. That is the goal of the Holzkurier’s editorial team.
However, if you ask five industry insiders how much 1 m³ of CLT costs, you will get ten different answers. Everyone will mention a different panel dimension and quality and will attach their own value to various additional services, such as joining, for example. In addition, the majority of large-format elements are billed as part of specific projects, with the size of the building as well as other factors, such as planning services or capacity utilization of the manufacturer, playing a role in pricing. Furthermore, prices usually don’t reflect the current market situation, since it happens very often in the project business that several months pass between the placing of the order and the delivery and subsequent invoicing.
The cross-laminated timber market will continue to grow over the next few years. The cake is getting bigger, but so is the number of market participants who want a piece of it.
Similar price development
Keeping all of this in mind, we spoke to numerous industry experts and looked at the price lists of Austrian and German manufacturers, joinery centers and timber trade companies. Specifically, we focused on prices of large-format raw panels with a thickness of 100 mm and a three-layer structure (wall) and 160 mm-thick, five-layer panels (ceiling), both of them of non-visible quality. The comparison of the lists revealed substantial (not least regional) differences in the absolute values. However, if you superimpose the individual price trends, you can see very similar curves over time. For these reasons, we decided not to publish absolute prices, but to create a price index starting in January 2019 instead.
Flat price curve
In order to be able to put the cross-laminated timber price into context, we also indexed and compared the Holzkurier’s price trends of glulam (Germany, in bulk, free buyer) and solid structural timber (Austria/Germany, in bulk, average of all dimensions).
In the case of cross-laminated timber, the curve is much flatter and often lags behind the developments related to bar-shaped elements. While the price indices of solid structural timber (KVH) and glulam more than doubled in the period January 2019 to mid-2021, that of cross-laminated timber peaked at 152% a few months later and subsequently fell less sharply.
Warehousing not possible
The main reason for this relatively smooth curve is project business. It is very difficult or even impossible for timber trade and timber construction companies to stock large-format cross-laminated timber, which basically eliminates the risk of panic buying and speculation. “Also, our construction projects with their various lead times need a certain price stability,” one manufacturer adds.
Nevertheless, the cross-laminated timber price obviously cannot be decoupled from raw material prices on the one hand and the market situation on the other.
Big projects all over the world
At the moment, many manufacturers are reporting sluggish demand and falling prices. Inquiries regarding smaller projects are very limited in number, and there is fierce competition over bigger orders. In Austria and Germany in particular, where several newcomers have recently entered the market, the situation is becoming increasingly tight (see page 8). As a result, established companies, which have the necessary infrastructure, are focusing more on international projects instead. “There’s enough market, you just have to find it,” as one manufacturer put it in a nutshell.
While some companies have already adapted production or are at least considering to take similar measures, production lines of other market participants are reportedly running at full capacity. Giving bigger (and often public) projects in German-speaking countries as well as international orders as reasons, those manufacturers don’t see any reason to change anything.
The cake is getting bigger, but …
On one point, there is consensus in the industry: The cross-laminated timber market will continue to grow in the coming years. However, growth rates will likely be rather low – at least in the short term – and supply is constantly increasing. In other words, the cake is getting bigger, but so is the number of market participants who want a piece of it.
How long the current market situation will last and how demand will develop in 2023 is difficult to predict, even for experienced industry experts. The pandemic and the Russian war of aggression against Ukraine with all its repercussions on energy prices, inflation, interest rates and supply chains make a realistic forecast nearly impossible. Some market participants are hoping for the situation to calm down by mid-2023 at the latest.
Oversupply expected
Regardless of the general economic situation, it can be assumed that there will be an oversupply – at least in the coming years. “It will take three to five years to see how the market will develop and whether all the capacities that are created now will also be utilized,” an industry insider predicts.
Temporary timber construction boom?
A central aspect, which plays into the hands of the timber construction sector, is the political will to make the construction sector as a whole more ecological. However, the timber industry still has a lot to do in this area. “Arguing that wood is a sustainable resource and that timber constructions store CO2 won’t be enough. The industry still has a lot to learn when it comes to sustainability certification guidelines,” one market participant analyzes, adding that other sectors, which start from a much less advantageous position, have made much more progress in this area.
However, if this homework is done as well and even if only part of what governments want to achieve in this area is actually implemented, the production capacities which are created now will be more than needed.
