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Timber prices: High prices for construction timber in Germany, the German forest is bought empty

2021-07-30T09:07:00.923Z

The high raw material prices not only threaten the wood and construction industries, but also mechanical engineering and trade. Peter Hoffmann-Pichler, head of a medium-sized wood packaging company, about absurd price negotiations with suppliers, plastic pallets at wholesalers and about raw spruce trunks in containers to China.



Enlarge image

Tree trunks loading: "We are currently shipping huge amounts of wood from Germany to China and the USA, and the German wood processing companies collect the remaining crumbs"

Photo:

Jan Woitas / dpa central image

manager magazin: Mr. Hoffmann-Pichler, the average price for construction timber in the USA has fallen sharply again since the record high in mid-May.

Can the German wood processing industry take a deep breath now?

Hoffmann-Pichler:

I wish it were like that.

Unfortunately the opposite is true.

The prices for sawn timber and wood-based materials have been climbing steadily for months, and we are now seeing double-digit price increases per month.

Furniture makers, house builders, but also companies from the packaging industry like us are experiencing a state of emergency: We can no longer calculate sensibly.

Confirmed deliveries are reduced or canceled completely, customers wait for their goods, supply chains crumble.

Why is that?

The German market has been bought short.

Many larger timber suppliers no longer supply the German and European markets at all.

We used to order wood at a certain price and received the goods shortly afterwards at that price.

Now I have to issue a blank check to my supplier in advance - if I can still find one.

It works on the principle: You only pay when we deliver.

And then the price valid on delivery applies, however high it may be.

And many processing companies then pay a moon price because they are happy that after a delivery time of up to ten weeks they can even get wood and fulfill their orders.

It sounds as if there is no wood at all, no more forest in Germany.

There is enough wood in Germany. Enough for the German and European market. The problem, however, is that the German forest is currently being bought empty, especially by customers from China and the USA. Due to the bark beetle infestation on the spruce, we currently have a lot of damaged wood that can still be used industrially. Many of these logs are loaded into containers directly in the forest and shipped to China, which do not even go to a sawmill beforehand. For many suppliers it is currently more lucrative to ship wood over thousands of kilometers to China or the USA than to serve the needs of their long-term customers and buyers in Germany. That means: We are currently shipping vast amounts of wood from Germany overseas, and the German wood processing companies collect the remaining crumbs. If this continues,many more industries in Germany will have problems.

You mean that the shortage of available spruce, beech and other wood threatens the supply chains in Germany?

It's already happening now.

As a family business, we manufacture, for example, transport packaging for products weighing up to 120 tons.

In order to export a machine of this weight class, you need decent special packaging, i.e. a stable and specially cut wooden box.

When a German mechanical engineering company can no longer safely send its million dollar goods on its way, the entire industry is slowed down.

They could simply pay significantly more for the wood and pass the price on to their customers in order to secure enough supplies for themselves.

Many companies are doing this too, trying to set up emergency supplies - which drives prices and delivery times even higher. But the problem is that the woodworking industry is currently in a bazaar-like state - or in the Wild West, if you will. Nobody can plan, everyone has to improvise and try to get what they can get. Specifically, we assure our existing customers that we will do everything we can to ensure delivery reliability - if possible. I also have to ask customers: How long can you wait for your goods? Are you ready to pay the then applicable price? And at what pain threshold do you cancel the order? We are used to dealing with our customers differently and more reliably.

House building in Germany has become significantly more expensive in recent months due to scarce raw materials, and retailers are also complaining about a lack of wooden pallets. Do you expect the situation to calm down by autumn?

I'm afraid not. At the moment, some large retail chains are also considering switching from wooden pallets to plastic pallets so that they can continue to get their goods in the supermarkets. Replacing the renewable raw material wood in the millions with plastic on pallets would also be a debacle from an ecological point of view. But also for simple wooden pallets, which we previously received mainly from Eastern Europe or Scandinavia, the following currently applies: availability is close to zero. Even the OSB panels commonly used in house construction, i.e. laying panels made of wood chip, are currently in short supply. Even we as a company now occasionally stop by hardware stores to see if we can pick up a few leftovers. Something's going wrong.

If the German timber market is currently being "bought empty", then politicians could counter this with export restrictions or tariffs.

That would at least be faster and more effective help than pointing out that Germany needs more reforestation.

We are currently harvesting the wood that was planted many years ago - or at least the remains of it that we can still access.

Politicians have a hard time with export restrictions: We always hear that Germany, as a global trading partner, stands for free trade.

If politics doesn't help through export restrictions, who could help?

Unfortunately, no help can be expected from the sawing industry in the short term. Many sawmills have been earning brilliantly for months: They get the wood from the state forests at a still low price, and the price they can ask from the customer continues to rise. It has already tripled for some materials. From an economic point of view, I can't blame the producers - the market just gives the prices, and now there are fabulous profit margins. Things look a little different when you consider that we have built trusting and reliable customer and supplier relationships over the years. As a family company, it hurts when delivery dates are simply canceled or prices are dictated at will. Many providers who contact you now in an emergency already have a "New customer acceptance stop ". That is bitter.

How do you plan for the coming months?

I have to improvise and can hardly plan for the long term.

We have long-term relationships with suppliers, which are now leaving us hanging.

That's why I phone every day to find available goods.

But what annoys me: There is enough wood in the German forest, too much is currently being shipped abroad.

We have to ensure that enough wood stays in the country through an export quota or tariffs.

Simply waiting for prices to drop again at some point is a dangerous game.

Source: spiegel

All news articles on 2021-07-30

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