Overall actual softwood timber market reflection (inspired by PMI outcome August 2023)
We are leaving the ‘summer break’ behind us, and the market is slowly picking up again. But how much? Expectations that we will see a different trend than before the summer break are virtually nil. Unfortunately, the signals are still red. And an upward trend seems far removed from us at the moment…
Although the Manufacturing PMI has improved everywhere (Eurozone from 42.7 (July) to 43.5 (August), globally from 48.6 to 49, and the Netherlands from 45.3 to 45.9), there is still no sign of growth. Not even sure whether the bottom has been reached. All are still (well) below the neutral threshold of 50, which separates expansion from contraction.
The economic ‘savior,’ the service sector, is also slowly declining both globally and in Europe, thereby narrowing the gap between industry and services.
The price inflation of goods should continue to decline due to weak global demand for goods. Although the picture is painted that inflation will be structurally higher and more volatile over the next ten years, the ECB is likely to be convinced, partly due to the weakness of the economic developments in the Eurozone, to refrain from further interest rate hikes. But that remains speculative…
The fact for now is; production stabilization seems (for the time being) to have been achieved. Also in economic powerhouse China, where the manufacturing industry broadly improved.
While the automotive sector is back on the rise, and have machine builders full order books, the whole chemical industry is declining. An overall revival is certainly not in sight for the time being. Hopefully, this stable trend will at least continue…
The timber market, too, generally has its first stable quarter after four quarters of price declines. Whether this means that we have reached the nadir and are back on the path upward seems too optimistic for now. At least we have to get through this year for that.
Let’s hope that the supply side does not plunge into a late-summer oversupply. The greatest danger for that lies with our eastern neighbours, especially since affected timber is pushing down log prices here and there.
We wait to see when the market truly awakens what the real situation is in our world of timber!