The last time the US price was similarly weak was in April 2020 – when it was at €266.5/m³ due the first shock of the Covid pandemic.
Disappointing year so far
The US price has seen much bigger fluctuations and was on average around €120/m³ higher than the European one in the past five years. In July, though, it fell below the European price level © Timber-Online.net
“We were optimistic about US price and demand trends, but we were disappointed several times this year,” a German timber industrialist commented. He does not rule out the possibility that prices could still rise by US-$50 to US-$100/1,000 bft (€30 to €60/m³) this year. “Given the current log prices, that is not enough to sell goods to the US at a profit,” another market participant complained.
Canadians will pull the emergency brake
In July, the price level for softwood lumber continued to fall in the US. So far, Canadian companies have had more log wood available than expected. Now, however, there are signs of a substantial curtailment of production. Very weak results in the first two quarters will force the Canadian timber industry to make significant cuts in production.
In addition, US duties on imports from Canada will be raised significantly in August. Assuming that the previous basis for the calculations is maintained, duties will rise from around 20% to up to 40% in the worst possible case. For European suppliers, this is a straw for easier market access in the coming weeks.
No cheap log wood anywhere
If there is an increase in Central European log prices in the autumn, US prices would have to rise substantially for European suppliers to be able to continue shipping their goods there. The fact that there is no longer any cheap log wood in the main producing countries helps the Central European timber industries. In Northern, Eastern and Southeastern Europe as well as in Canada, log prices are similar to those in German-speaking countries. In fact, cheap log wood is only available from fast-growing plantations, for example in the southern hemisphere.
Large European exporters are cautiously optimistic that sales opportunities in the US will improve starting in September. “Things could get even worse before a real recovery sets in,” one hears from the North American side. Even if the Canadians significantly reduce supply, there are still big volumes of lumber in the pipeline.
US market like a rollercoaster – now going down
Over the past five years, the average US price was €416/m³, and thus €118/m³ higher than comparable ranges in Europe. In July 2024, the price was €8/m³ below the European level – which shows how bad the situation is at the moment.
The price development from 2019 to 2024 illustrates the volatility of the US market. There were months with price jumps of over 40% (from November to December 2021, for example) and months with similarly high losses (from May to June 2021, for example).
While US prices changed by an average of ±15%, a fluctuation of “only” ±7% was recorded in Europe over the same period of time. In the US, the statistical standard deviation is €167/m³, which means that prices fluctuate by this value around the mean. In Europe, the standard deviation is exactly half, which indicates a significantly greater price stability.
