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Shaky European Sawlog Market Endures 12% Price Drop

Shaky European Sawlog Market Endures 12% Price Drop

The European wood market has experienced a fair amount of instability across the last three years. Much of the volatility has centered on the sawlog market with vast ups and downs in price and demand.

According to ResourceWise data, the European Sawlog Price Index (ESPI) experienced a 12% quarter-over-quarter (QoQ) drop between the second and third quarters of 2023. This comes after an 11-year low starting three years ago in Q3 2020, followed by significant ups and downs in between.

European softwood sawlog prices, 2000 to 2023.

(Source: ResourceWise via our online pricing and analytics platform, WoodMarket Prices)

The ESPI covers sawlog prices across nine countries in Europe, which provides a decently broad snapshot of how the market is moving in that region. Despite the sharp QoQ drop between Q2 and Q3 2023, current index levels are actually €13/m3 above the average over the last 28 years.

The above-average levels reflect record-setting jumps in ESPI rates first triggered by the pandemic. Price levels in all areas ResourceWise tracks, including East and Central Europe alongside the Nordic countries, rose sharply from 2020 into 2022. Since then, these numbers have seen a declining trend.

Market Hiccups Slow Demand Across the Board

Instability and ambiguity about the market has persevered throughout the last few years thanks to several ongoing global factors:

  • Russia’s War on Ukraine: Russia’s continued aggression against Ukraine is fast approaching its 2-year anniversary. The country has faced several consequences for their acts of war, including an export ban from Russia into the EU.
  • China’s Diminished Economy: China’s economic growth slowed to approximately 5% growth year-over-year (YoY). Although this growth is slightly higher than previous forecasts of about 4.5%, it still marks a much slower growth than the 20-year average of 9%. The softened demand here yielded lower wood product exports to the country from sources such as Europe.

ResourceWise has extensively covered several of these topics already. You can read more here:

Related: 2024 Outlook on Russian Exports in the Lumber Market

Beyond China and Russia, the general state of the European economy has also experienced much of the post-COVID depression seen in countries like the US. According to an Executive Summary from the European Commission, 2023 lost much of the steam that was seen in the past few years:

“Following a robust post-pandemic expansion in 2021 and 2022, the EU economy has lost momentum. Real GDP contracted very mildly in the fourth quarter of 2022 and barely grew in the first three quarters of this year. A high cost of living took a heavier toll than expected. On the external side, global trade provided little support. Meanwhile, the response of monetary policy to high inflation is working its way through the economy, and fiscal support is partly being phased out.”

Economic factors such as inflation have a direct effect on demand for wood products like sawlogs. Accordingly, it’s no surprise that GDP contraction and global trade declines have also affected European sawlogs and other wood products.

2024 Outlook Not Set in Stone

Fortunately, the 2024 outlook across the EU sees a modest but positive growth pattern ahead. With issues such as Russia’s export ban and China’s economic downturn, we will likely continue to see market instability in several European wood markets this year. However, other factors may impact this market in other ways.

For instance, massive growth and interest in decarbonization has become a top priority in 2024 for European businesses. With increasing mandates and reporting requirements looming, many businesses are actively working on their plans to reduce their carbon footprint and focus on sustainable operations.

Wood products have quickly come into the spotlight as a feedstock for renewable fuels. These developments will assuredly play a role in how the market moves from 2024 onward.

Check back with our blog for regular updates on the wood products and markets that are important for your business.

Get an In-Depth View of Europe’s Sawlog Industry with ResourceWise’s Market Insights Report

The European wood market carries its own set of unique challenges. Understanding how the market moves requires an in-depth analysis using high quality, reputable data.

Learn more about the current state of the European sawlog industry with our Market Insights report from Hakan Ekstrom, ResourceWise’s Special Advisor in the Global Forest Products industry. Download the report below.