The situation in the European softwood timber market remains uncertain, as various factors continue to influence supply and demand. One of the most significant influences is the crisis in Ukraine, which has prolonged the overreaction that emerged during the C19 pandemic. As a result, the market is experiencing volatility, with demand being either significantly lower or significantly higher than consumption.
In the United States, softwood timber consumption has hit a low point, as evidenced by the sharp decline in single-family housing starts and building permits. Comparing April 2023 with the same period in 2022, the number of single-family housing starts fell by -28.1%, while building permits dropped by -21.2%. However, there are positive signs indicating a recovery, as projections for individual housing for 2023 suggest encouraging trends. Despite this, Europe continues to increase its market share in the US, with a significant export growth of +25% recorded from January to April 2023 compared to the corresponding period in 2022, reaching 1.79 million cubic metres.
Europe has now captured 16% of the US softwood timber import market share. However, the European market itself is seeing several divergences as it prepares for a potential slowdown in new construction rates. For instance, in France, the start of individual housing construction fell significantly by -18% from January to April 2023 compared to the previous year. Furthermore, both in Europe and the United Kingdom, imports declined substantially in the 3rd and 4th quarters of 2022, as well as the 1st quarter of 2023. As a result, stock levels in many markets remain low as orders from General Sales Branches (GSB) resume, despite intense pressure from traders who are striving to maintain minimal inventories.
Due to complex global market dynamics, it is difficult to accurately determine the real balance between production and consumption. This uncertainty is exacerbated by factors such as volatile demand, the loss of Russian volume to Europe which is not being compensated by other sources, and ongoing or anticipated declines in production volume.
In France, it is expected that the renovation market will play a crucial role in maintaining demand throughout the year, especially in 2024, when the new construction market is projected to contract. This shift towards renovation projects reflects the need to adapt to the changing situation and find alternative ways to sustain the timber industry.