Changes on timber market

Ten thousands of tree trunks have ended up in the Liptovska Mara lake. The fact that state owned company Lesy SR decided to store the timber in the reservoir as it could not sell it on the market represents a small revolution in the industry.

About a year ago timber processing companies were fighting for timber and suddenly it cannot be sold and has to be stored in the reservoir.

Timber, floor and furniture manufacturers claim that the demand for their products and consequently also prices are falling.

Some have already started to decrease production and started making redundancies. And when manufacturers complain, the timber suppliers are not happy either. The reason is that the industry has been hit by several blows at the same time.

In last three to four years forests in Slovakia, Czech Republic, Austria, Scandinavia and in Canada have suffered several heavy windstorms after which large volumes of timber had to be processed quickly.

So there was an excess of timber, particularly spruce. This created an ideal situation for the processing industry where the more agile companies increased their market share and offered timber at more competitive prices.

But the US mortgage crisis had a completely reverse effect. Building activity in the USA has decreased and so construction companies are purchasing less European timber. 

And it has also had an impact on Slovak sawmills. Slovakia is not experiencing decreasing building activity but the market is too small to absorb all the timber available. About two thirds of Slovak timber is exported.