Limited supply causes price increases on the timber market

It is a trend that has been going on for some months now: the prices for wood and other raw materials keep rising. For some products you now pay as much as twice as much as you did a few months ago. And the first stabilisation is not expected until early 2022.

The explanation for this remarkable phenomenon lies in the supply from the wood-producing countries. The supply is under such pressure that many suppliers are experiencing problems. Moreover, it is not only the suppliers in the tropical hardwood market who are experiencing problems, but also those supplying European wood, MDF, OSB boards and other wood products. But what is the exact cause of this exceptional market situation?

Photo of a man sawing wood in a sawmill.

Increasing demand for wood

The use of wood as an alternative raw material for building constructions, finishing houses and interiors or for use in gardens has risen to unprecedented heights in recent years. Wood is a renewable raw material that is less harmful to the environment than, say, stone or metal. In addition, it looks beautiful and brings nature closer. We can therefore conclude that an increasing demand is also the cause of the shortage.

 

 

COVID pandemic

Logically, the COVID pandemic also plays its part in the increase in timber prices. Due to the pandemic, a lockdown was declared in many countries and production in sawmills and tree nurseries was drastically reduced. Less production means less supply on the market. The production of wood is gradually picking up, but it goes without saying that a completely normal situation will not be reached for some time yet. 

Container shortage

COVID-19 and an imminent stoppage in world trade also caused many ports to close and many containers to be temporarily put aside. Because the global economy began to recover quickly, the demand for containers rose enormously. As a result, the container suppliers were faced with a notorious backlog.

 

 

Photo with stored containers.
Photo of the ship that blocks the Suez Canal.

Suez Canal

On top of that, on 23 March 2020, the Ever Given got stuck in the Suez Canal. The preferred access by boat from Asia and East Africa to Europe was blocked for days. Ships had to change their sailing routes and sail around Africa or wait. All these ships and containers remained temporarily unavailable for trade for longer than expected. The ultimate waiting times and damage are likely to run to more than USD 1 billion. There is already talk of container prices being up to five times higher than normal. And these costs, unfortunately, have to be passed on somewhere.

 

 

Import of US and China

To prevent a shortage of wood, the Chinese and Americans imported wood in large quantities. As a result, there is already an acute shortage of materials for MDF and OSB boards and the price of pallet and garden wood has risen considerably. European hardwood and softwood, as well as tropical hardwood, are also being bought up in large quantities by China and the United States. The shortage is also causing Russia to threaten to ban exports of logs by 2022. To be continued, no doubt.

 

 

Photo of flag US and China with dollars.

Ecological problems

And as if all this were not enough, Mother Nature is also playing a role in the current market situation. The spruce forests are being infested by a beetle that is causing serious damage. As a result, qualitative print runs are limited and alternatives are being sought.

How does Noble Timber deal with this situation?

Like any other supplier, we too are heavily dependent on the supply of wood. This means that there is a good chance that we too will have to adjust our prices or that some products will be temporarily exhausted. However, we can count on a nice stock and will do everything to keep prices as low as possible. We hope, together with you, that the market will stabilise soon. Until then, we will always look for a suitable solution together with our customers. To end on a positive note: our excellent service and craftsmanship will always be available free of charge.