First of all, we wish you a healthy and successful 2023. Due to ongoing changes and turbulences on the wooden market, we’d like to update you on the latest market developments

General market situation

All major market indicators showing that economy is far away from being normal and the end of this historical disruption is not yet arrived:

  • Inflation in eurozone slightly decreased to 9.2% in December vs. November. At the same time inflation rate in Baltic countries which are important suppliers for wooden packaging and gardening items is kept at a very high level of over 20% in Latvia and Lithuania, and 17.5% in Estonia;

  • Prices for electricity, fuel and other energy costs: although further decrease of energy costs can be noticed, end consumers do not benefit from this development. Energy prices remain on a very high level, significantly higher than previous years.

  • Ongoing war in Ukraine puts additional pressure on already tough market situation.

  • Lower demands from the market are the logical consequence of the ongoing situation. Lower demands could be noticed from Chemical Industry already from Q4/22. Now lower demands are also expected from Consumer Goods as well as Construction industries. However, acc. to the latest prognosis of The Federation of German Industries (BDI) ongoing recession should be quite mild. So, basically the economical outlook improved a bit.

While prices for finished goods continue to be under pressure from customer side due to weak demands, prices for sawn timber seem to bottom out and started to increase again, at least for some assortments.

In our latest market overview, we have informed you about the connection between prices for sawn timber and energy wood (pellets, briquettes and fire wood). Due to unexpectedly warm winter, prices for energy wood continue to decline. Meaning that unlikely in the past, sawmills couldn’t balance lower prices for sawn timber with higher prices for energy wood.

Due to this dependency, sawmills started to increase prices for sawn timber as production costs increased significantly and compensation with the higher prices for pellets and briquettes is not an option any more. There is – of course – this golden rule of demand and supply which will balance the market prices at the end.

In our last market overview letter, higher prices in Q1 were just a rough estimation. And now we can say, that price increases for timber products during Q1 is the most probable scenario. This trend can also be seen on the latest price indexes, as shown below. Already now it can be stated that contracts with sawmills and therefore contracts for finished goods will be closed at a higher price level than it was for Q4/2022. And expecting unstable supplies of raw materials in coming periods, Kronus is working on preventing actions to secure the stocks to ensure stable deliveries to our regular customers.

Raw material and wooden packaging indexes

Meanwhile a changing trend in raw material prices can be seen in Europe as well as on US market. While prices on US market are changing with a higher pace.

a) German price index HPE

Latest HPE index from 24.01.2023 showing a first slight increase in raw material price of 0.5% to the previous month. So, it can be stated that prices reached its preliminary bottom and we will see an increasing price trend in coming months.

The HPE price index for sawn timber and wood-based products for wooden packaging and pallets

Der HPE-Preisindex Image

On the other side prices for wooden-based panels such as OSB and Plywood continue to decrease further. Plywood prices decreased by 8.7%, while prices for OSB decreased by 3.9%.


b) US Lumber

Chicago lumber futures crossed above the $500 per thousand feet mark, the highest since October 2022, supported by tight supplies and prospects of a demand recovery. On 13.01.2023 quite a big price jump was noticed. Meanwhile prices increased by more than 150USD / 1000 bdft during the last 2 weeks.

Last year, a sharp drop in prices and sluggish demand forced North American producers to curb production, leaving inventories low and sparking concerns about a supply shortage during the construction season this spring and early summer. At the same time, homebuilder sentiment showed signs of bottoming out after climbing in January for the first time in a year, mainly due to lower mortgage rates. Signalling what could be a recovery in demand, sales of new homes in the US increased 2.3% month-over-month to a seasonally adjusted annualized rate of 616K in December of 2022, the highest value in four months. Still, the benchmark remains down roughly 70% since its May 2021 peak of around $1,700, when supply chain issues compounded strong demand.

Usually US price trend becomes reality in Europe with a delay of 2-3 months. So, a higher price increase can be expected in Europe around March / April 2023.

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c) Wooden pallets

Although pallet prices decreased again in January, majority of market experts pointed out that the bottom has been reached and changes in price trend also for the finished goods are expected. Especially due to the fact, that raw material prices for some assortments started to grow already in December 2022.

Development of pallet price will again depend of the demands from the market which are at the moment hard to predict.

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d) Steel price

Among with the increasing price trend for sawn timber, steel prices are on the rise as well. Steel futures as well as prices on the spot market started to increase already by end of Q4/22. This development will put additional pressure on the prices of the finished goods and especially on the pallet collars. Therefore this development must be considered in further costs estimations.

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Meanwhile it can be stated that the situation on the wooden market started to change. Even still declining prices for finished goods such as some standard pallets can be seen in January, majority of market participant agree that the prices have reached its temporary bottom. Demands will certainly have an impact on the pace and size of price adjustments. But one thing is more or less secure: raw material prices are about to increase now.

Coming price increase was already announced by the sawmills by end of Q4/2022. We must admit that steady rising energy and electricity costs having a negative impact on production costs in entire woodworking industry. So, there are many objective arguments to adjust the prices to a higher end.