28 | Country Report: Germany
SUMMARY
■ Softwood lumber production fell by 5.6% in 2023
■ Foreign sales remained of key importance in 2023, despite a decline of 11.4%
■ European countries accounted for around half of exports overall
■ Weak demand in domestic markets and abroad led to falling prices
MARKET CHALLENGES IN GERMANY
Germany’s sawmill and timber industry faces a challenging market environment, reports DeSH
Above: Julia Möbus, managing director of the German Sawmill and Timber Industry Association
The crises of recent years continue to weigh on the German economy. Russia’s war against Ukraine has further exacerbated existing challenges and structural problems and noticeably slowed economic growth. The hoped-for economic upturn failed to materialise last year. Instead, the German economy stagnates – with consequences for the sawmill and timber industry. Julia Möbus, managing director of the German Sawmill and Timber Industry Association (DeSH), explains the economic development in the industry and gives an outlook for the future. 2023 started with a positive outlook but instead of a fast economic recovery, high inflation and sharp rises in interest rates caused real incomes to fall and had a dampening effect on investments and private consumption. While prices in the energy sector gradually decreased, the rise in production costs was increasingly reflected in all other goods and services. At the same time, there were no significant impulses from the international market environment. The sawmill and timber industry was directly affected by this development. Instead of an upturn, the construction sector, the most important domestic customer for timber products, experienced further setbacks. While companies were able to compensate for the weak domestic market in the previous year with increased exports, the most important foreign markets also proved to be weak in 2023. The unsteady market developments led to a very changeable business climate and continuing uncertainty. After exports fell well short of the previous year from February onwards and the domestic market continued to provide no positive impetus, there
TTJ | November/December 2024 |
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were noticeable reductions in production, particularly in the first three quarters. As a result, softwood lumber production fell by 5.6% in 2023, but remained at a high level at 22,944,059m3
.
Despite a decline of 11.4%, foreign sales remained of key importance in 2023. After the record year of 2022, the volume exported fell to just under 10 million m3
. Despite
significant volume losses, the US market remained the most important single buyer of German softwood lumber in 2023. The UK took ninth place and purchased around 10% less than in the previous year. Nevertheless, European countries were the most important buyers outside Germany, accounting for around half of exports overall. At 16 million m3
, domestic consumption
fell to a long-term low. This was because the construction and packaging industries, the most important sales markets, were under pressure. The sharp slump in demand in the construction industry intensified over the course of the year. The number of residential building permits fell by more than a quarter. At the same time, the packaging industry lacked important impetus from foreign trade. Weak demand in domestic markets and abroad led to falling prices. Prices for softwood lumber lost an average of around 25%. As a result, sales fell by a quarter compared to the previous year. The earnings situation was difficult. Raw material costs in particular put companies under pressure. Until 2022, large quantities of calamity timber ensured an oversupply of softwood logs and low costs but this trend reversed in 2023. Rising raw material costs met with a poor sales situation.
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