The European softwood lumber market is still in a difficult position

The European softwood lumber market remains in a difficult position: a weak construction market and high prices for raw materials are squeezing sawmills.

    The European softwood lumber market is entering the second half of 2026 with an unusual combination of weak demand from end users and limited capacity of sawmills to lower prices. Market analysis conducted by Global Wood Markets Info (GWMI) shows that the eurozone economy returned to growth in the second quarter, but the construction sector remains a weak link, especially in Germany and France. At the same time, timber prices remain exceptionally high in a number of producing regions, putting sawmills between expensive raw materials and the lumber market, where buyers remain cautious.

Macroeconomic background: the economy is growing, construction is not

    The eurozone economy returned to growth in the second quarter of 2026, which gave hope for a recovery. However, the construction sector, a key consumer of lumber, remains a weak link. The situation is particularly difficult in Germany and France, the two largest EU economies.

Main problems:

•     - High interest rates that deter new housing construction.
•     - Reduced investment in commercial real estate.
•     - A slowdown in the pace of reconstruction and repair (of the repair sector).

Double pressure on sawmills

    Europe's sawmills are caught between two forces.:

1. Expensive raw materials

    Prices for wood raw materials (sawn timber) remain exceptionally high in a number of producing regions, especially in Germany, Sweden and Finland. It's connected with:

•     - limited supply due to problems with logging (fires, pests, weather conditions);
•     - high energy and logistics costs.

2. Weak demand for finished products

    The lumber market, in turn, is characterized by cautious buyers. Construction companies are in no hurry to purchase large volumes, preferring to work "off the wheels," which limits the ability of sawmills to raise prices.

The result: sawmills cannot fully transfer the increase in raw material costs to the prices of finished products. Their marginality shrinks to critical values.

Regional differences

    The situation varies depending on the region:

Key factors of pressure on the European lumber market:

Traders' position

    For lumber traders, the current situation creates uncertainty:

•     - It is difficult to predict the price dynamics.
•     - High storage and logistics costs.
•     - Low marginality in resale due to fierce competition.

    Traders are forced to work with minimal inventory to avoid the risk of falling prices and depreciation of goods in warehouses.

Forecast for the second half of 2026

Short-term forecast (3-6 months):

•     - Lumber prices will remain stable at the current level or will decrease slightly.
•     - Sawmills will continue to suffer from the high cost of raw materials.
•     - The recovery of the construction sector is unlikely until 2027.

Long-term forecast (12-18 months):

•     - If interest rates start to decrease, the construction sector may revive.
•     - This will create additional demand for lumber and will increase prices.
•     - However, structural problems (high cost of energy, raw materials) will remain.

Importance for the global market

    The situation in Europe reflects global trends:

1. - The construction sector is weak in many regions of the world. China, the USA, Europe — everywhere there is stagnation or a drop in construction volumes.
2. - The high cost of wood raw materials has become a global problem. The shortage of affordable saw blades is felt not only in Europe, but also in North America and Scandinavia.
3. - Sawmills are forced to operate on the verge of profitability. This may lead to the consolidation of the industry: the closure of unprofitable facilities and the strengthening of major players.
4. - Europe remains a key market, but its lumber consumption will recover slowly. Exporters from Russia, Belarus and Ukraine, who previously focused on Europe, will have to look for alternative markets.

Result

    The European softwood lumber market remains under pressure in the second half of 2026: weak construction demand, expensive raw materials and tight margins of sawmills create difficult conditions for all participants in the chain. The return of the eurozone economy to growth has not yet led to an improvement in the construction sector, and timber prices remain high due to limited supply. In these conditions, sawmills have to balance costs and prices, and traders have to work with minimal inventory.   Market recovery is possible only with lower interest rates and a revival of construction activity, but this cannot be expected in 2026.

Tags: #Europe #lumber market #coniferous forests #construction sector #timber prices #sawmills #euro area economy