The timber industry has seen a slowdown in demand over recent weeks – some describing it as a correction, others as a collapse – and it may be different in each segment. Either way, we’re not seeing the crazy highs we saw in the summer months of last year. Yet they could be just around the corner.

Demand has softened due to many factors including plunging consumer confidence (the lowest in 40 years, thanks partially to social media and a tendency for national media to talk soaring markets down), higher energy costs, increasing interest rates, rising fuel costs, rising consumer price inflation etc.

The world has been changing on the supply side too. In response to the Ukraine war, heavy sanctions have been imposed and, since midnight 9th July, imports of any wood based material is no longer possible from Russia and Belarus. They’re no longer possible from Ukraine either, for different, more direct and hopefully temporary reasons.

This removes a significant volume of “wood” in its various forms from the market. In some assessments that’s estimated to be more than 55mln m3 (Roundwood equivalents) a year. This will have a significant effect on countries previously importing from Russia and Belarus, and they are now seeking replacements from within Europe. Finland was a huge importer from Russia and Belarus, and it’s now seeking to replace it with wood from European locations and is targeting the Baltics heavily. The knock from that means that the cost of wood is increasing, and at a very quick pace. This will, in turn, affect all those products derived from Roundwood: Sawn Timber, Oriented Strand Board (OSB), Particle Board (PB), which includes chipboard and low-density fibreboard, medium-density fibreboard (MDF), Pulp etc.

About 8% of total OSB (over 500K m3) has been removed from the European market, due to the ban on Russian and Belarussian imports. Over 1.2mln m3 of Hardwood, Plywood, and almost 800K m3 of PB have also been removed from the market.

As demand recovers, availability will be interesting, but hopefully European producers can step forward and fill the voids.