Wooden Market Forecast Q3 / 2023

We’d like to provide you with a concise market overview of the lumber, packaging, and gardening industries for Q3/2023. This overview highlights key trends, emerging opportunities, and market dynamics to help guide your strategic decisions in this evolving sector.

General market situation


The current market setting remains challenging. High global interest rates have had a negative impact, particularly on the construction industry, which is the main consumer of lumber and wooden products worldwide.


Consumers are also acting cautiously during times of uncertainty. Spending on consumer goods is now more deliberate than before. This behavior naturally affects the wooden packaging industry as well. The rule is simple: the fewer goods consumed and/or produced, the less packaging is needed. This global trend is observable in major international markets.

The logical outcome of weak demand is increased competition in the market. Producers of wooden packaging and gardening products are now competing for smaller demands and trying to minimize prices. However, many producers in Eastern Europe, especially, are resorting to unfair competition methods such as illegal imports of wood and wooden items from Russia and Belarus through Kazakhstan and Kyrgyzstan. More information and our suggestions on this matter can be found below.


On a positive note, there are some encouraging signs from the market. In recent weeks, we have received increasing feedback from the DIY and gardening sectors that sales in May and June performed quite well, and stocks of various items were significantly reduced. Consequently, retailers will start the new gardening season with lower inventory levels and are likely to experience higher demand compared to the 2023 season. This positive forecast is echoed across Europe due to favorable weather conditions in May and June this year.


In addition to the more positive outlook for the gardening season in 2024, initial price movements in the market have been observed. On May 29th, the Swedish sawmill Södra announced the first price increase for spruce and pine logs, followed a few days later by the largest Swedish sawmill, Vida. The price increase was around 10-15% for contracts until August 31st. Jörgen Henriksson, CEO of Vida Skog, justified this move by citing the current high demand for roundwood in the sawmill industry. Peter Karlsson, President of Södra Skog, justified the unusually strong price increases by anticipating high industry demand extending into the autumn, despite the current unusually high uncertainty in global timber markets.


In addition to these announcements, the unexpectedly positive housing statistics for May prompted softwood lumber traders in the United States to abandon their cautious purchasing approach from previous weeks and place new orders in the market. Various European exporters reported deals that exceeded the originally planned levels for June/July in terms of quantity. Moreover, the exceptionally high softwood lumber inventories on the US East Coast until the end of May have been significantly reduced. Some European mills have shifted their focus back to producing lumber for the US market.


At present, it is difficult to predict whether the announced increases from Vida and Södra, followed by increased prices in the US market, indicate the beginning of a changing price trend or are merely temporary.


It is inherent in the nature of sawmills to constantly strive for more attractive price levels. Various measures are being taken, such as reducing work shifts, limiting supply, and extending summer vacations.


Therefore, it is possible that we may see a different price level after the summer vacation. This, of course, depends on market demand.


What can be said with a certain degree of certainty is that the prices for sawn timber are unlikely to decline further but are expected to remain at the current level or potentially increase slightly.


Looking ahead to Q1/2024, we consider increased lumber prices to be the most probable scenario based on the market insights mentioned above. Therefore, our recommendation for customers making short or mid-term purchases would be to continue with your regular purchasing activities based on your current needs. For customers planning deliveries for the 2024 season, our strong recommendation would be to close the contract during July/August. This approach would provide the best opportunity to secure volumes and the best possible price for your 2024 season deliveries.

Illegal wood import into the EU


This topic has been an open secret within the wooden industry for quite a while now. When the first truck carrying lumber and other wooden products with origins in Kazakhstan or Kyrgyzstan arrived at EU customs, suspicions arose from the start. Neither Kazakhstan nor Kyrgyzstan have significant forests, making it questionable. However, the paperwork appeared to be in order, and customs allowed the materials to enter the EU.

In the meantime, this development has become a major issue and has contributed to the extremely low prices in the wooden packaging and gardening industries. EPAL has also issued several warnings regarding low-priced offers for so-called 2nd-grade EPAL pallets. It is highly likely that these pallets were produced from illegally imported low-grade timber from Russia or Belarus.

A look at the import statistics can be bewildering, but it does explain the reasons behind prices that sometimes fall below production costs. It is indeed alarming to see the significant and noticeable increase in sawn timber imports from Kazakhstan and Kyrgyzstan in the summer of 2022, especially following the ban on imports from Belarus and Russia.


It is shocking to see the enormous amounts of sawn timber and other wood products that have been illegally brought into the EU. This clearly demonstrates the importance of having the right supplier for wood products by your side. Otherwise, there is a risk of unintentionally violating European sanctions against Belarus and Russia.

According to European trade data, most of the wood was primarily sent to five European countries: Lithuania, Poland, Germany, Denmark, and Latvia. Lithuania (36.6%) and Poland (27.6%) were responsible for more than 64% of the total illegal imports of wood to the EU. This is primarily due to the previous cooperation between Poland and Lithuania with Belarus because of their direct borders.


At this point, we would like to state clearly and unequivocally that Kronus exclusively sources sawn timber from large and reliable suppliers in the Baltic states and Scandinavia. Our high moral and social standards do not allow us to obtain even 1 m3 of timber through illegal means from Russia or Belarus.

Furthermore, we urge all our customers, wooden packaging users, DIY, and gardening chains, as well as traders, to carefully check the origin of the wood used in the delivered products. We also encourage you to ask your supplier for written confirmation that no sourcing, directly or indirectly, is done from these regions.

European deforestation regulation

This is a connecting topic to the illegal imports of wood into the EU. This new EU law regulates the responsibility of market participants considering the environmental, economic, and social aspects.


The EU Regulation on Deforestation-Free Supply Chains (EU Deforestation Regulation EUDR, 2023/1115) came into effect on June 29, 2023. The EUDR is to be applied after a transition period of 18 months, starting from December 30, 2024. Small businesses have been granted a slightly longer transition period of 24 months.
The EU Timber Regulation (EUTR, 995/2010) will replace the EU Deforestation Regulation (EUDR). The EUTR was only relevant for timber imports and specifically for the so-called “initial distributors” on the EU market. However, the EUDR introduces provisions on due diligence obligations for both timber imports and different agricultural products.

According to the EUDR, these raw materials and products can only be placed on the market, made available, or exported if they are deforestation-free and do not contribute to forest degradation. This means that all market participants will have to fulfill their obligations in terms of providing proof of deforestation-free practices.
The sanctions in case of non-compliance with the EUDR are regulated in Article 25. The final penalties are to be determined by the member states. However, it is already evident from Article 25 of the regulation that the penalties are not insignificant but rather far-reaching, including the confiscation of relevant products and the revenue of the market participant.

Kronus is already well-prepared for the execution of the EUDR. Our procurement processes have already been updated and are performed in accordance with the EUDR. Please contact your responsible Sales Manager for more information.

Raw material and wooden packaging indexes


Price trends in Europe and the US are currently developing in different directions. While the German HPE index continues to show a decreasing trend, even in June, the US price index has increased by more than 100 USD per bdft from mid-May until now.


a. German price index HPE


Latest HPE index from 22.06.2023 showing a decrease of 2,6% following the overall trend of the last 4 months.


Plywood and OSB prices continue to decrease, mainly due to weak demands from the construction industry.

b. US Lumber


As mentioned earlier, wooden prices in the US market have ramped up over the last two months, driven by unexpectedly positive housing statistics for May 2023. Traders have started placing orders with greater frequency.

There was a pause after a nearly 10% rally in June, which pushed prices to their highest level in five months. Traders have expressed concerns that ongoing policy tightening by major central banks worldwide could potentially impact housing demand. Additionally, supply disruptions caused by wildfires in Canada, previous production cutbacks in British Columbia during a period of low lumber prices, and a slowdown in European wood shipments to the US may contribute to keeping prices at the current or even higher level.

c. Wooden pallets


Prices for wooden pallets are still under pressure due to the low demand from the market. However, we call all market participants to act more carefully, especially when receiving surprisingly low offers for pallets. As extremely low-price levels could be caused by using illegally imported material.




As usual, it is extremely difficult to predict the further development of wooden prices. Currently, we are seeing different trends in the European and US markets. Forecasts in some industries, such as DIY and Gardening, are cautiously optimistic, while others, like construction, are struggling with high-interest rates. However, positive market data can quickly trigger a price rally, as recently observed in the US market.


Based on historical data, the current average price level is nearly at a 24-month low. Therefore, it is highly unlikely that we will see a significant further decrease in raw material prices. Most probably, prices will stabilize at the current level for Q3, with slight fluctuations within a small range.


Hence, our recommendation for short or midterm purchases is to maintain your regular purchasing activities based on your actual needs. For customers planning deliveries for the 2024 season, our strong recommendation would be to close the contract during July/August.


However, the market is currently very volatile, and any changes in demand, customer behavior, interest rates, or other market data can potentially alter the price trend in one direction or another. Therefore, we must closely monitor market indicators and remain flexible and ready to adjust our approach to possible market changes.


At Kronus, we are well-prepared for the forthcoming challenges and closely monitoring the market. We will keep you informed about further market developments.