Unusual for the time of year but a surprise to no one, lumber prices rose further in the second week of January. Ongoing momentum of strong demand from the end of 2021 combined with significant supply constraints, most notably from the northwest especially British Columbia, served to keep prices high.
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Transportation issues throughout the supply chain caused a feeling of panic among buyers, as the usual 6-week delivery time turned into 2-months or longer. Frustration reigned with customers as the location of wood previously ordered was unknown.
This problem with deliveries is due to a series of very powerful storms and massive flooding through November, which completely destroyed all four highways and both rail lines in southern BC. For details on the damage please go here: https://madisonsreport.com/2021/12/01/more-floods-british-columbia-nov-2021/
An upward bump in US housing starts, again unusual for the season, kept the pressure on for customers to order the dimension lumber building materials they knew they would need for the looming spring construction season.
New home building in the US for December 2021 exceeded the historical trend for the time of year. Indeed, total housing starts in the US increased by +1.4% from November 2021, to a seasonally adjusted annual rate of 1.702 million units. This is an +2.5% improvement from the same month one year ago, when it was 1.661 million. Meanwhile, December permits for future homebuilding rose to 1.873 units, a whopping +9.1% gain from the previous month, when it was 1.717 million. December 2021 permits are up +6.7% compared to one year ago, when it was 1.106 million.
The backlog of houses authorized for construction but not yet started shot up +1.1% to a rate of 270,000 units last month, the highest on record.
November starts of single-family housing, the largest share of the market and construction method which uses the most wood, was 1.172 million annualized, a drop of -2.3% compared to November, when it was 1.199 million. Building permits are generally submitted two months before the home building is begun, so it’s quite unusual for this metric to be rising in December. Normally, not many builders want to break ground on a new house in February. Last year was different; December 2021 single-family permits grew by +8.5% compared to one year ago, when it was 1.128 million units.
US Housing 1-Unit Starts & Permits December 2021 and Benchmark Softwood Lumber Prices January 2022
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Looking at lumber prices, momentum from strong demand at the end of 2021 pushed prices higher, so in the week ending January 14, 2022 the price of benchmark lumber item Western S-P-F 2×4 #2&Btr KD (RL) continued rising; up by +$70 or +6% to US$1,170 mfbm, from $1,100 the previous week, said forest products industry price guide newsletter Madison’s Lumber Reporter.. That week’s price is up by +$367, or +46%, from one month ago when it was $803. That week’s price was up by +$226, or +24%, from one month ago when it was $944.
Benchmark Softwood Lumber Commodity Western Spruce-Pine-Fir Price: January 2022
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A closer look at the housing data shows that availability of lots is hampering the speed of new construction coming on. The number of single-family homes on which builders started construction in December actually dropped by roughly -2% on a monthly basis. Put another way, the number of housing units that construction companies haven’t started work on despite having the authorization to begin building is up +44% from a year ago and is rising on a monthly basis. For each single-family unit completed in December there were 9.5 single-family units still under construction. This is the highest ratio in the life of the data.
As of December, there were 769,000 single-family homes under construction, a +26% gain from a year ago, and there were 750,000 multifamily units under construction, a 15% increase from December 2020.
STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.
When compared to the same week one year ago, of $944, the price of Western S-P-F 2×4 for the week of January 14, 2022 was up by +$226, or +24%. Compared to two years’ ago when it was $402, that week’s price was up by +$768, or +191%.
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Historical Perspective
Austrian wood-processing company HS Timber Group, formerly known as Holzindustrie Schweighofer, said it will reduce its timber cutting capacity in Romania’s Suceava by a third at the end of the first quarter of the year due to difficult general conditions.
According to the announcement, parts of the operations in Rădăuți, specifically the sawmilling operations, will cease. However, the production of posts and beams at the site will remain in operation. The panel plant in Siret, which processes sawn timber from the Rădăuți mill, will be closed down in its entirety. With this step, the cutting capacity of HS Timber Group’s sawmills in Romania will be reduced by 30%.
HS Timber said that one of the primary reasons for the restructuring is the ever-increasing challenges in wood production in Romania. The purchase of Romanian roundwood has been restricted for HS Timber Group since 2016. Ukraine and Russia are not available markets for raw material purchases, due to export bans in force there.
Furthermore, pending modernization of railway infrastructure in the region, as well as laborious import bureaucracy, make timber imports from other member states of the European Union challenging. In addition, the production of green energy and selling of green certificates has been made more difficult.
Larger investments are required at the Siret site, which are not economically feasible under the current framework conditions.
HS Timber Group GmbH will continue to operate two sawmills and one blockboard factory at other locations in Romania, which will employ approximately 2,400 people. These factories are not affected by the restructuring and will be further strengthened.
The European market for mass timber-based multi-storey buildings is growing at some 8% per year and is projected to grow from €5bn today to at least €10bn per year by 2030. Importantly, the development in wooden real estate is backed up by dynamic expansion of mass timber-construction material, especially engineered wood products (EWPS) such as cross-laminated timber (CLT), for which production capacity has been growing at 18% per year since 2013.
The above figures concern primarily multi-storey buildings, where rapid development has been achieved based on EWPs such as CLT, laminated-veneer lumber (LVL) and glue-laminated timber (glulam). EWPs represent technological breakthroughs in materials and the facilitation of on-site modular construction.
If other building types are added to multi-storey buildings, the resulting market volume would, of course, be even larger – not to mention if all the timber-frame buildings were to be considered as well.
The versatility of new EWPs adds value to the design and construction process. Wood is known for its health benefits, lowering residents’ stress levels and improving indoor environment air. The use of wood has also increased in building design for its aesthetic appeal.
Essentially, wood has a low-carbon footprint and the ability to store carbon during a building’s lifetime. Well-established research suggests that 1m³ of wood used in a building can store 0.9 tonnes of CO₂ and substitute 1.1 tonnes of CO₂, resulting in a total emission saving of 2 tonnes of CO₂. Construction materials, referred to as embodied carbon, are increasingly becoming the focus of regulatory bodies. With 8% of global carbon emissions coming from cement production it is no surprise that wood-based construction is in demand and supported by policies to achieve EU zero-emission targets.
The Lighthouse, Finland, is an example of how new wood technologies are changing construction
The amount of wooden construction projects and their size is growing. In Finland the total floor area of wooden apartments projects and office building projects is 10 times larger than 10 years ago, amounting to almost 600,000sqm between 2020 to 2024. This expansion is the result of the more projects and, more importantly, of a significant increase in project sizes. The average size of a project has more than doubled over the past 10 years, reaching more than 10,000sqm between 2020 to 2024, and continues to grow.
Reflecting a trend in the market for wooden construction in the education, apartment and office building segments, regulatory changes in 2011 and 2018 have helped to facilitate supply – for example, in building houses with eight floors and more. In several European countries, similar regulatory reforms have been implemented or are being planned. The regulation also includes explicit targets for wooden (and other sustainable) construction material in the public sector – for example, the target is 45% in Finland by 2025 and 50% in France by 2022.
The rapidly evolving demand for wood-based real estate is also supported by substantial expansion of the manufacturing capacity of EWPs. Stora Enso, a global leader in wood-based solutions is continuously expanding its CLT capacity in its production facilities in Sweden, Austria and the Czech Republic, in response to growing demand from real estate. Currently, a 18,900sqm office building – of which 5,000sqm is for the new Stora Enso headquarter – is being built in central Helsinki based on mass timber, especially CLT and LVL, produced by Stora Enso.
“Wood has a low-carbon footprint and the ability to store carbon during a building’s lifetime. Well-established research suggests that 1m³ of wood used in a building can store 0.9 tonnes of CO2”
Globally, the development in the wooden real-estate is backed up by dynamic expansion of mass timber-construction materials such as CLT, for which production capacity has increased at an average 18% per year since 2013. The use of CLT is expected to continue growing rapidly and will almost triple by 2026.
Besides the substantial environmental benefits of reducing carbon emissions, wood-based real estate is ecologically sustainable. We estimate that the biological growth of European forests produces in a few days all wood that would be needed if all European residential apartment buildings were built based on timber. Merely 17 hours of biological growth in the European forests would be needed to reach a 10% market share for wood-based real estate – a reasonable first target.
The overall consumption figures on the European wood flooring for the year 2021 are significantly increasing by 5,8% compared to 2020.
This evaluation, based on information obtained from its member companies and national associations, FEP – the European Federation of the Parquet industry – should be seen as a preliminary forecast and is the result of best estimates discussed with member country representatives at the recent FEP Board meeting held online. FEP underlines that this is a first prognosis subject to variations, in anticipation of the complete data to be communicated next June during its General Assembly in Hamburg.
After a stable year in 2020, the European consumption of wood flooring rose by 5,8% in 2021 despite the pandemic. Consumption of parquet has increased on all European markets especially during the 1st semester 2021, when compared to the same period in 2020. During the rest of the year, demand continued to grow but at a slower pace as consumers restarted to dedicate their spendings to areas such as leisure and travels. Nevertheless, renovation, and adaptation of homes to “post-covid-19” life, remains the driver of the parquet consumption growth. As usual, the results show variations from country to country, also reflecting the evolution of the pandemic and the related governmental measures in the different Member States in 2021 and 2020.
Countries such as France and Italy, which were not able to offset the loss experienced during the spring 2020 lockdown and reported declines in parquet consumption for the year 2020 as a whole, are showing the largest increases in wood flooring consumption in 2021 compared to 2020.
On the other hand, countries which totally, or partially, compensated, during the second half of 2020, the bad performance observed in March-April of the same year, generally report lower but still sustained increasing rates. This is the case for Austria, Germany, Scandinavia and Spain while the Swiss wood flooring shows a significantly higher progression rate.
All Member States are now back or even beyond consumption levels of 2019 and demand is continuing to progress. However, it is sometimes difficult to fulfil orders on time as the issue of raw material supply – availability & affordability – remains acute. Supply of glues, lacquers… and now staggering energy costs are also hampering the positive evolution on the European wood flooring markets. It is time that the European authorities consider the raw material issue and take relevant measures. This is paramount if those authorities want that wood products play effectively their positive role and tackle climate change by saving CO2!
Austria’s sawmills are currently still largely sufficiently stocked with needle saw logs. Now that production will soon be brought back to full speed, the purchase of logs is also increasing again. The demand increases accordingly, but there may be regional sales difficulties for large timber.
In Upper Austria, bonus payments are granted for special lengths. Prices have stabilized and are between €100 and €110 across Austria for the leading range of spruce A/C, 2b. Pine prices have been regionally adjusted upwards. Larch keeps its price level. Demand exceeds supply.
Demand for oak in Austria continues to be brisk. Their share in the deliveries to the hardwood timber submissions in Lower and Upper Austria, which in turn take place at the end of January, is correspondingly large. Red beech and ash are in demand at slightly higher prices compared to the previous year. For the other tree species, only the best qualities are priced accordingly. There is currently hardly any demand for cherries and pears.
The revival in demand for industrial logs that was already observable at the end of 2021 has continued in the new year and is now also reflected in higher prices. The reduced occurrence of sawmill by-products not only increases the demand for pulpwood, but also for sanded wood. The currently reduced availability of waste wood also plays an important role here. Red beech fiber wood is in demand with prices that have risen in some cases, the sale of ash fiber wood is currently also possible without any problems.
The Austrian energy wood market must be viewed in a differentiated manner. In Styria there has been a significant revival in demand, with noticeable price increases for quantities ordered at short notice. In Carinthia and Salzburg, prices were once again adjusted upwards. In the rest of Germany there are no changes compared to the previous month. Additional quantities outside of long-term contracts can hardly be sold.
Schilliger Holz AG is investing in an automated CLT production line in Volgelsheim, France. The order for the entire production line was placed with Ledinek. At the Volgelsheim location, the new production line will go into operation in the 3Q 2023. The production capacity will be around 100 m3 per shift or 50,000 m3 / year in two-shift operation.
The line consists of a quality sorting system with a planer and scanner, as well as 2 stacking machines for different qualities. The goods prepared in this way can be supplied to CLT production either directly or via the warehouse.
Fast vacuum destacking, the X-Cut cross-cut saw and the powerful Kontizink 2500 finger-jointing cycle system deliver up to 20,000 lm of lamellas per shift. This is followed by a generously dimensioned curing warehouse, a Superplan S400 lamella planer and the innovative Z-Press 16 joint gluing system for the production of pre-glued single-layer panels for lengthways layers.
The transverse layers are supplied by a Z-Press CL which, through external tasks, allows the system’s performance to be increased further. Large plate buffers for lengthways and crosswise layers give the system the flexibility it needs to be able to produce batch size 1 without any loss of performance. After the 26-fold review of the X-Press 16, it goes to the grinding machine and on to the CNC-s. Due to its flexibility, the line is also designed for the production of KVH.
