European sawmills continue to face considerable difficulties, as market conditions remain unfavourable. Hopes that the UK government's ambitious housebuilding programme would make a significant contribution are proving uncertain. Leading industry figures speaking at the Timber Development UK (TDUK) Global Timber Markets conference in early November stressed that the industry is still beset by difficulties caused by market volatility.
An economist from the Construction Products Association (CPA), addressing an audience of 200 industry professionals in London, expressed scepticism about the UK government's target of 1.5 million new homes over the next parliament. He described the target as "laughable", noting that the construction industry has seen a substantial fall in its workforce – since the first quarter of 2019 the number of workers has dropped by 385,000 people.
Setra Group EVP Market/Sales & Business Development said that sawmills in Sweden, Finland and Central Europe are still under serious strain. The downturn that began in the second quarter of 2024 is being felt across the industry. Production volumes remain low and there are few signs that the situation might improve in the near future. The availability of wood raw material is becoming an ever greater problem.
Setra Group EVP warned that the continuing strain could lead to a restructuring of the Swedish wood processing industry, as profitability problems persist. Even if market conditions improve, there will still not be enough raw material to meet any potential rise in demand.
Although the CPA's forecasts for the UK construction industry remain "cautiously optimistic", the figures point to relatively modest growth. UK GDP is expected to grow by 1.1% in 2024, by 1.7% in 2025 and by 2.3% in 2026. Construction output is forecast to rise by 2.5% in 2025, with private housebuilding up by 8%. These forecasts are tempered, however, by a 2.9% fall in total construction output in 2024, as well as a 9% fall in private house construction.
Although optimism remains fairly modest, some recovery is expected. European softwood imports into Europe are forecast to rise by 5% in 2025. European softwood exports to the USA are also expected to grow by 20%, following a 17% fall in 2024. Softwood exports to China, however, have fallen to their lowest level in 10 years, as the Chinese economy faces fundamental problems.
The US market is currently seeing steady softwood consumption, although supply appears to be oversaturated already. North Africa and the Middle East have become the largest overseas markets for European softwood, and redwood dominates there.
A panel discussion at the TDUK event raised concerns about the over-specification of *C24 timber, which has led to a shrinking market for *C16 grade timber. Industry leaders stressed the need for greater support for C16 timber to help stabilise the market.
Ireland still has a housing shortage problem, and the TDUK conference heard that increasing tree planting is vital in order to meet future demand for timber. The Irish representative pointed to a lack of political understanding, namely that if more timber is to be used in construction, more trees must be planted to secure a sustainable supply.
As European sawmills continue to grapple with the problems set out above, the industry remains under pressure. Any potential market recovery will require these current problems to be addressed.
* C16 and C24 grade sawn timber is graded according to its strength class and is intended specifically for building timber structures. Both C24 and C16 materials are intended for load-bearing and secondary structures. C24 has greater strength than C16 material.