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The German economy is threatened with further massive restrictions due to material shortages and burdens from rising prices for raw materials and intermediate products. The sharpest price increase in raw materials is recorded in wood, which is now twice as expensive as in September 2020. 

And there is no end in sight : “Every two to three days, raw material prices are adjusted upwards. North America and China are setting the trend, where prices are already a third higher than in Europe, ”says Horvath pricing expert Danilo Zatta.

For wood, the German manufacturers surveyed expect an increase of up to 33 percent by the end of the year. This is driven by a sustained high level of construction and renovation as well as the increasing demand for furniture.

The wood suppliers can hardly keep up and fear further supply chain problems if the countries react with restrictions to exponentially increasing delta virus variants. The Siberian larch, which is in great demand in Germany, is still in short supply as a result of previous lockdowns.

Because of high wood prices more spruce should be felled

Anyone who needs construction timber currently has to be patient – and dig deeper into their pockets than usual. In order to ease the situation, German Minister of Economics Altmaier apparently wants to have more healthy spruce felled again.

Federal Minister of Economics Peter Altmaier wants to have more spruce felled again in view of the high prices for construction timber and ongoing delivery bottlenecks. To this end, he wants to lift the current logging limit for spruce wood as quickly as possible, quoted the “Rheinische Post” from a proposal paper from the minister. The paper is entitled “Proposals for measures to improve the supply of wood products and other building materials and intermediate products.”

Altmaier therefore wants to strive for an agreement with the responsible ministries on the implementation of the proposals during this legislative period. “We are dealing with conifer timber products with price increases averaging around one hundred percent within the year,” the document says. Construction companies that had previously bought wood “just in time” for specific orders could no longer accept new orders despite the good economic situation. There are also delivery bottlenecks and price increases for other building materials.

Corona slows the timber trade

The reasons for these developments are complex, it is said. “Forest damage and bark beetle infestation reduce the amount of fresh wood and drastically increase the amount of damaged wood.” The sawmills had reached their capacity limits due to the amount of damaged wood. In addition, there are political factors that slow down international trade in wood as a raw material, as well as corona-related reductions in production and disruptions in the supply chains. “We must resolutely counter these critical developments affecting the construction industry, the building trade and the timber industry.”

The current limit on the felling of spruce wood continues until the end of September. In return, the forest owners receive tax advantages. Altmaier wants to continue this, even if the impact limit is to be lifted immediately. The federal, state and local governments should also use the permitted leeway for public contracts in order to “compensate as far as possible” for price increases in the procurement of necessary building materials, Altmaier writes in the paper.

A large part of the wood is exported

Another suggestion is that if a service is delayed because of the scarcity of raw materials, the public sector should forego contractual penalties. Damaged wood that has previously been sorted out and exported will also be used in Germany in the future.

At the moment, the construction industry in particular is complaining about the lack of raw materials and the drastic prices for wood. In addition, a large part of the wood from Germany is exported abroad, especially to China, because demand there is currently particularly high.

The post German wood prices expected to rise further by 30 percent by the end of the year appeared first on Timber Industry News.