From November 20th to 21st, 2024, the board of Compagnia del Legno attended the traditional Karlstad Conference in Sweden, an annual event that attracts leading Swedish sawmills and numerous stakeholders from across Europe, as well as North Africa, the United States, and Asia. Organized by Swedish Wood, this event is a key reference point for the wood sector, offering a unique opportunity for discussion between producers, suppliers, customers, and professionals in the industry. For Compagnia del Legno, the event was not only an occasion to strengthen and expand its network in international markets but also a moment to deepen the understanding of the challenges currently facing the global wood sector, with a particular focus on the current situation in Sweden.
Challenges facing Swedish sawmills: the log war and market uncertainty
A dominant theme of the conference was the difficult economic scenario that Swedish sawmills have been experiencing in recent months. In Sweden, the production of sawn timber (processed logs) has been insufficient to meet demand, causing a “war” among sawmills for logs, which represent about 75% of total production costs. Log prices have skyrocketed, reaching unprecedented levels. The shortage of raw materials has forced sawmills to pay high prices to secure the necessary supply, but the situation is equally complicated on the demand side: the sawn timber market has seen a slowdown in demand, with prices for sawn wood largely unchanged from April 2024 to today.
This discrepancy between the rising costs of acquiring logs and the stagnant prices of sawn timber is putting immense pressure on the profitability of Swedish sawmills. Forecasts suggest that many producers, especially small and medium-sized enterprises, may be forced to reconsider their production plans. The discussions during the event were invaluable: we gathered some insights from both small and large local sawmills. One small sawmill confessed that it is losing €60 for every cubic meter of sawn timber produced and shipped, and without a change in prices, production closure is expected in the early months of 2025. On the other hand, larger sawmills are looking for alternative solutions to address the raw material shortage, such as importing logs from Norway by ship, but these measures also seem insufficient to guarantee long-term stability.
The future of the market: crisis forecasts and positive signs for sustainable construction
Despite the bleak outlook for the sawmilling sector, there are also reasons for optimism. As for sawn timber prices, forecasts for the first quarter of 2025 indicate a slight increase. However, due to the economic difficulties many producers are facing, it is also likely that the market will see closures, restructurings, or acquisitions in the coming months. Market uncertainties will continue to be a hot topic in the near future, but there are sectors offering positive prospects.
One area in particular showing signs of growth is construction, a sector that, although not experiencing significant increases in the short term, is gradually embracing wood as a sustainable building material. This is especially relevant considering the environmental impact of traditional construction, which is responsible for about 40% of global CO2 emissions. Materials such as cement, iron, and steel carry high environmental costs during their production process, while wood has a significantly lower ecological footprint. Not only does wood production generate lower emissions, but using wood in buildings also helps to preserve the CO2 stored in trees during their growth. This characteristic makes wood a key resource for sustainable construction, meeting the need to reduce emissions in the sector.
The Chinese market is also showing positive signs for wood, despite being the largest emitter of CO2 globally. China recently announced its goal to become carbon-neutral by 2060, and to achieve this, increasing the use of wood in construction will play a crucial role. In fact, China is also the world’s largest importer of wood, and the demand for wood for construction purposes could rise significantly in the coming years.
Compagnia del Legno and its participation in the Karlstad Conference
As Compagnia del Legno, participating in the Karlstad Conference gave us the opportunity to engage in discussions with colleagues, experts, and industry players about the future of the wood market, its dynamics, and the emerging challenges related to raw material supply and sustainability. As a company actively operating in international markets, participation in events like this is essential to stay updated on trends, challenges, and opportunities within the sector.
The conference also provided a space to reflect on possible strategies to tackle the current difficulties, such as adopting innovative solutions, diversifying supply sources, and strengthening relationships with customers. The interactions with Swedish sawmills and other sector actors allowed us to fully grasp the complexity of the situation and share experiences and perspectives on how to navigate the challenges of the coming years.
Conclusion: a future of uncertainty, but also opportunities
The European wood market, particularly the Swedish one, is going through a period of great uncertainty, with price wars for logs, slowdowns in demand for sawn timber, and high production costs. However, there are also positive signs, especially in the construction sector, where the adoption of sustainable materials like wood is gaining ground. Compagnia del Legno’s involvement in events like the Karlstad Conference reflects its desire to stay in tune with global dynamics and contribute actively to building a more sustainable future for the wood industry. Despite the challenges, the resilience of sawmills, growing environmental awareness, and the adoption of new technologies are the keys to facing the future with greater awareness and innovation.
Confident in the future of the wood industry and backed by our experience, we are ready to guide you in turning challenges into new opportunities: rely on our expertise.
