Global Sawlog Market-Demand Is Down But Prices Are Rising

The global sawlog market has faced significant challenges over the past two years. From declining house construction to slowing remodeling activities and reduced consumer goods consumption, demand for softwood lumber has steadily dropped across key regions.  

Yet, amidst these tough times, one surprising development has caught the attention of industry professionals—the Global Sawlog Price Index (GSPI) has been on the rise. For business leaders in forestry, lumber, and related sectors, understanding these trends is crucial to navigating this shifting landscape. Sawlog costs account for 60-70% of the production costs for lumber producers, making it the key cost factor when tracking a region’s competitiveness.   

Why Are Sawlog Prices Rising Despite Lower Demand for Lumber? 
Typically, a drop in lumber demand causes a similar decline in sawlog prices. However, the GSPI has defied expectations, climbing nearly 7% year-over-year by the third quarter of 2024 and 18% above its 30-year average. What’s behind this counterintuitive trend, and what does it mean for regional markets? 

Contrasting Trends in Global Regions 
A closer look reveals significant regional differences in sawlog market pricing. Some regions are seeing record highs, while others face sharp declines. Here are some of the most noteworthy trends: 

• Northern and Central Europe: Log prices have soared in Nordic regions, reaching their highest levels in over a decade. With these gains, sawmills in the region are facing shrinking profit margins. Why? The rising cost of raw materials has outpaced lumber prices, adding pressure on operations. 

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• North America: The story is very different in North America. British Columbia is contending with significant challenges that have reduced the region’s prominence in the sawmill industry. Production in 2024 is estimated to be almost half of what it was a decade ago due to timber shortages, high production costs, and other operational hurdles. Meanwhile, US Southern sawlogs have reached 30-year price lows. This decrease could attract new investment in the region’s mills over the next couple of years. 
• China and MENA Regions: Chinese lumber imports have seen a 7% year-on-year decline in the first ten months of 2024. Similarly, Middle East and North African countries reported a 4% drop in their total lumber imports over nine months. These weakening markets further emphasize the regional disparity in lumber demand and pricing. 

Implications for Forestry and Lumber Professionals 
These trends present both challenges and opportunities for professionals in the forestry and lumber sectors. For businesses in Northern Europe, controlling production costs has become more important than ever in adapting to rising raw material expenses. On the other hand, regions like the US South could see new growth, as the combination of low sawlog prices and competitive operating costs may attract fresh investments in 2025 and beyond. 

Meanwhile, the shrinking sawmill sector in British Columbia serves as a cautionary tale of how fluctuating demand, regulatory factors, and global competition can reshape an industry. Companies must stay adaptable while keeping a close eye on trade dynamics and evolving