Wooden market forecast Q2 / 2023

As usual, we have prepared a wood market forecast for the second quarter of this year. The market situation is still fluctuating and it is impossible to predict the exact price changes, as they can be influenced one way or the other by various factors.


General market situation


In our latest market overview letter, we’ve shared with you all major market trends and indicators. One of the main insights was the fact that due to the warm weather in winter energy wood (pellets, briquettes and fire wood) prices declined sharper than expected. Meaning that unlikely in the past, sawmills couldn’t balance lower prices for sawn timber with higher prices for energy wood.


Due to that basically all sawmills started to push for higher prices for sawn timber. We must admit, sawmills had their arguments such as increased production costs due to higher energy prices and overall inflation. But the golden market rule about supply and demands balanced the situation at the end. So, even some indexes like HPE showed slight increase in January and February and raw material prices increased, for ready products prices stayed more or less flat in Q1/2023.


But what are the main reasons prices for finished goods didn’t increase as expected during Q1 / 2023? Main reason is the relatively low demands from the market for sawn timber due to:


  • Low demands from construction industry because of the high interest rate
  • Cold weather in March and April put the brakes on demands from DIY and Gardening industry
  • Economy driving with half speed results in low demand for industrial packaging.


Looking now on some market indicators such as increasing orders on hands at sawmills, increasing consumer confidence and purchase manager indexes, as well as better weather conditions, we can infer that the prices are not going to go much lower as they are now. Our market analysts do not expect sharp price changes in May. Moreover, for May we expect price level like April.


Starting from June, due to the increasing indicators mentioned above, we foresee possible price adjustment in June. Although, due to the unclear prospects of construction industry and overall economic turmoil the seasonal price increase is not expected to be as high as usual.


Due to the current turbulences on the market other scenarios like sidewards moving prices or even slight decreases are possible as well.

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 24.04.2023 showing a slight decrease of 2.1%. Our prognosis for Q1/2023 was a slight increase, which we also could see till March 2023. So, our trend forecast for Q1 was basically correct. Although price increase was not that strong as expected.


For the first time since more than 7 months slight increase in plywood prices could be seen by end of March. While now Plywood and OSB prices continue to decrease, mainly due to weak demands from construction industry.

b. US Lumber


Lumber futures were trading around the $400 per thousand feet mark, still above an almost three-year low of roughly $340 reached on March 14th, supported by concerns about tight supplies and signs of a demand recovery. Previously, a sharp drop in prices and sluggish demand forced North American producers to curb output, leaving inventories low and sparking concerns about a supply shortage during the spring and early summer construction season. At the same time, data from the US Census Bureau showed that sales of new homes increased for a third consecutive month in February. Also, signs of cooling inflation boosted hopes that the Federal Reserve might be approaching the end of its tightening cycle, which, in turn, could help revive the real estate sector and add some upward pressure on prices. Still, the critical building commodity remains roughly 70% off its May 2021 peak of around $1,700, when supply chain issues compounded strong demand.

c. Wooden pallets


Prices for wooden pallets are still under pressure due to the low demands from the market. However as mentioned above we conclude that prices have reached temporary bottom and no further decreases are to be expected. Of course, further development of pallet prices will depend on the demands from the market which are at the moment hard to predict.




Further development of the wooden prices is very hard to predict. Evaluating main market indicators our market experts concluded that most probably we will see stable prices for raw materials in May and we might see some changes in June 2023. Our current prognosis is based on the current market indicators which are fluctuating a lot recently.


Therefore, we recommend you, planning your purchases according to you needs and considering the estimation that prices might bottom up in late May / June.


However, market is performing very volatile right now and basically every change in demands, customer behaviour, interest rate or other market data might change the price trend in the one or other direction. So, we must track the market indicators and be flexible and ready to adjust our approach to possible market changes.


We, at Kronus, are well prepared for the coming challenges and following the market very closely and will inform you about further market development.