European timber market shows signs of resilience despite global challenges, according to Canfor Corporation report

Despite a difficult global economic environment, the European timber market is showing remarkable resilience, according to the latest financial report of Canfor Corporation for the second quarter of 2024.

Canfor's European operations, principally through its subsidiary Vida Group, posted solid results this quarter. European sales accounted for 24% of the company's total sales, totaling C$329.4 million, a significant increase from 20% and C$286.4 million in the same period last year.

Lumber production in Europe increased to 364 million board board board feet (MMfbm) this quarter, up from 344 MMfbm in the same period last year. Moreover, European lumber deliveries increased to 429 MMfbm, up from 393 MMfbm in 2Q2023.

Timber prices in Europe improved this quarter, particularly in Central Europe. This was supported by relatively robust activity in the DIY sector, which offset persistently low levels in residential construction.

However, the report also points to some challenges in the European market. Unit production and product costs have increased significantly, mainly due to log supply constraints. This suggests that while demand remains strong, the industry is facing pressure on profit margins.

For the foreseeable future, Canfor anticipates slight pressure on wood prices in Europe in the third quarter of 2024. This is due to an anticipated seasonal slowdown in the DIY sector and continued low levels of residential construction, combined with persistent log supply constraints.

Despite these challenges, the solid performance of European operations compared to other regions suggests that the European timber market remains a bright spot in the global industry landscape. This resilience is likely to position Europe as an increasingly important player in the global timber market in the period ahead.