The first half of 2026 has done little to solve the problem facing German sawmills. Logs became markedly more expensive early in the year and have stayed expensive, while the market for softwood lumber has remained too weak for mills to recover those additional costs from customers.<\/p>\n
Softwood sawlog prices stopped climbing during the second quarter, but the expected correction did not follow. Supply has remained relatively limited, not least because Germany has so far avoided the large influx of bark beetle timber that has disrupted the market in previous years.<\/p>\n
For forest owners, the absence of substantial salvage volumes has helped underpin the market. For sawmills, it has removed one of the few factors that could have brought raw material prices down.<\/p>\n
The problem is what happens after the logs enter the mill. Softwood lumber sales remain slow, particularly in products tied to residential construction. Buyers have little reason to build stocks and orders are not strong enough to give producers much room on prices. Mills are consequently paying for logs at levels established during the stronger raw material market at the beginning of the year while selling lumber into a market that has barely moved.<\/p>\n
This is increasingly showing up in production decisions. The German Sawmill and Wood Industry Association (DeSH) warned before sawmills were preparing to run less and keep plants closed for longer during scheduled maintenance. If sales fail to improve, the association expects further production cuts, with short-time working and job reductions possible at some companies.<\/p>\n
The pressure is not limited to sales. German producers are also dealing with high energy, labour and operating costs. DeSH says raw material and energy expenses put mills in Germany at a disadvantage against competitors elsewhere in Europe, particularly when everyone is competing for the same limited lumber orders.<\/p>\n
There is little mills can do about that equation in the short term. If log costs cannot be reduced and lumber prices cannot be raised, the remaining option is to produce less.<\/p>\n
The level of raw material costs illustrates the pressure on mills. For the benchmark spruce sawlog assortment B\/C 2b+, prices in Germany are currently around \u20ac125\u2013135\/m\u00b3 at forest road in many regions, after reaching roughly \u20ac129\u2013132\/m\u00b3 at the beginning of 2026. Some regional offers remain at \u20ac130\u2013135\/m\u00b3, while lower qualities and dimensions trade below these levels. Pine sawlogs are cheaper, generally around \u20ac95\u2013110\/m\u00b3 depending on grade and region. The important change for sawmills is that the sharp increase recorded around the turn of the year has not been followed by a comparable decline: spruce prices have largely consolidated at historically high levels, leaving raw material costs well above those seen before the latest supply squeeze.<\/p>\n
Bark beetle volumes remain unusually limited<\/strong><\/p>\n The absence of significant damaged timber has become an important feature of the German log market this year.<\/p>\n Large bark beetle outbreaks have repeatedly brought additional softwood onto the market in Central Europe. For sawmills, those periods created opportunities to secure logs at lower prices, even though the underlying reason was damaging for forests and forest owners.<\/p>\n That source of supply has been much less important so far in 2026. Regular harvesting therefore accounts for a larger share of available logs, and forest owners have faced less pressure to sell. This helps explain why the sharp increase in softwood sawlog prices seen early in the year has been followed by stability rather than a substantial decline.<\/p>\n The second quarter was consequently more a period of consolidation than reversal in the log market. This would not be particularly problematic if lumber prices had followed the same trajectory. They have not.<\/p>\n The German construction market continues to consume too little structural timber, and conditions in important export markets are not strong enough to compensate.<\/p>\n The better numbers are coming from elsewhere<\/strong><\/p>\n There is one set of figures that appears to contradict this picture. Members of GD Holz, the German timber trade federation, recorded a 6% increase in sales during the first six months of 2026. June was considerably stronger, with turnover 17% above the corresponding month last year.<\/p>\n After the long decline in Germany's timber business, those numbers are significant. They do not, however, describe the market facing sawmills particularly well.<\/p>\n Much of the improvement came from wood-based panels, flooring and building components. Lumber and planed timber also improved, but by much less.<\/p>\n Renovation and interior work are generating business even while construction of new homes remains depressed. A merchant selling flooring, panels and building components can therefore see turnover improve without a sawmill supplying structural softwood lumber experiencing anything close to the same recovery.<\/p>\n June also had more working days than the same month in 2025, and higher product prices contributed to the increase in turnover. The sales figures cannot therefore be translated directly into an equivalent rise in physical demand.<\/p>\n This is why the 6% increase recorded by timber merchants sits quite comfortably alongside warnings of production cuts from sawmills. They are looking at different parts of the same market.<\/p>\n Building permits are not becoming building sites fast enough<\/strong><\/p>\n There are similar contradictions in Germany's construction statistics. Building permits have been increasing, one of several indicators that could suggest the worst of the downturn is passing. German business confidence has also improved, and the ifo Institute described the economy as more resistant than expected during the first half.<\/p>\n None of this has produced the increase in softwood lumber consumption mills need.<\/p>\n One reason is the large number of approved projects that never reach construction. The German construction industry has pointed to a record level of expired building permits, as developers abandon or postpone projects because financing and construction remain too expensive.<\/p>\n For timber suppliers, the distinction between permission to build and actual construction is decisive. A permit creates no lumber order. Demand appears only when a project moves onto the building site, and too many German projects are still failing to make that transition.<\/p>\n The relative strength of the German economy in the first half offers little immediate help either. Much of the better performance has been associated with industrial business abroad rather than a revival in domestic residential building. New construction therefore remains the weak link for the timber market.<\/p>\n German sawmills face cheaper competition<\/strong><\/p>\n The difficulties at home would matter less if export markets offered better alternatives.<\/p>\n They do not.<\/p>\n Construction remains subdued in a number of European countries, and lumber buyers continue to purchase cautiously. Inventories are being kept lean and orders are often placed against immediate requirements rather than expectations of stronger future demand.<\/p>\n German sawmills are competing for those orders with producers operating under different cost conditions.<\/p>\n DeSH has become increasingly vocal about this point. According to the association, German sawmills face raw material and energy costs that are among the highest in Europe, while lumber produced at lower cost elsewhere is sold into both German and international markets.<\/p>\n That makes an already poor margin situation harder to manage. A German producer cannot simply raise its lumber price to compensate for expensive logs if competing mills are willing to sell more cheaply. Nor can it easily force down log prices when raw material availability remains limited. Reducing output becomes the quickest response.<\/p>\n Longer shutdowns could remove more lumber from the market<\/strong><\/p>\n Some sawmills have already been looking at longer maintenance periods and reduced production schedules. This is a relatively flexible way of dealing with weak sales. Planned revisions can be extended, shifts can be reduced and operating hours cut without permanently removing machinery. It also prevents lumber stocks from growing at a time when buyers are unwilling to take additional volume. How temporary those adjustments remain will depend on the next few months.<\/p>\n DeSH has warned that continued weakness could eventually bring short-time work and further job losses. Its concern is that repeated temporary reductions gradually turn into a permanent loss of German sawmilling capacity. The association has called for measures aimed at reducing the industry's cost burden, together with policies that could stimulate construction and timber building.<\/p>\n For mills making production decisions now, however, those are longer-term questions. Orders, log costs and selling prices determine how much they can economically produce today.<\/p>","protected":false},"excerpt":{"rendered":" The first half of 2026 has done little to solve the problem facing German sawmills. Logs became markedly more expensive early in the year and have stayed expensive, while the market for softwood lumber has remained too weak for mills … Continue reading