Wood prices in Germany have been experiencing a significant decline due to the construction crisis and recession. This unexpected drop in prices has taken many German forest owners by surprise, as prices had actually risen slightly in the first quarter. However, the market has since taken a turn for the worse. According to German forest owner associations, the demand for sawn timber has stagnated, causing prices to plummet. This trend has been ongoing since May and has only worsened in June. In fact, the wood price for the leading range BC Spruce 2b+ logs fell below the 100 euro per m3 mark in June 2023.
The reasons behind the decline in wood prices are multifaceted. Firstly, the construction industry in Germany has been facing a crisis, which has led to a decrease in demand for sawn timber. This has been compounded by the ongoing recession, which has resulted in a decrease in overall economic activity. As a result, many businesses have had to cut back on their spending, including construction companies. This has had a knock-on effect on the demand for wood, which has caused prices to fall.
Another factor contributing to the decline in wood prices is the oversupply of wood in the market. Many forest owners have been felling trees in anticipation of higher prices, which has led to an oversupply of wood. This has further pushed down prices, as the market struggles to absorb the excess supply.
The decline in wood prices has had a significant impact on the German forestry industry. Many forest owners are struggling to make ends meet, as the prices they are receiving for their wood are no longer sufficient to cover their costs. This has led to a decrease in investment in the industry, as many forest owners are hesitant to invest in new equipment or replant their forests.
Despite the challenges facing the industry, there are some glimmers of hope. The German government has announced plans to invest in the forestry industry, with a focus on sustainable forestry practices. This investment is aimed at helping forest owners transition to more sustainable practices, which will not only benefit the environment but also the long-term viability of the industry.
In addition, there are efforts underway to increase demand for wood products. The German government has set a target of increasing the use of wood in construction, which could help to boost demand for sawn timber. There are also initiatives aimed at promoting the use of wood as a renewable energy source, which could further increase demand for wood.
In conclusion, the decline in wood prices in Germany is a complex issue with multiple factors at play. While the immediate future of the industry may be uncertain, there are efforts underway to support the long-term viability of the industry. With the right investments and initiatives, the German forestry industry could emerge stronger and more sustainable than ever before.