Tighter wood supply could push pallet prices up

According to the organisation, which represents manufacturers and other businesses in the European wooden pallet and packaging industry, the easing of lockdown conditions in many countries are causing significant upward pressure. These include a mismatch between the demand and supply of wood, as activity in construction and other wood using sectors have returned to pre-crisis levels following lockdowns and other restrictions earlier this year, while many sawmillers have remained closed or operated at below capacity and have seen their stocks fall to critical levels.  

In the US, domestic production has risen by just 2.5 per cent and prices have doubled in just three months; there have been interruptions in the supply of South America timber to the US; and in Canada output fell by 13 per cent in the first five months of 2020. Accordingly, European wood suppliers – particularly in Germany and parts of Scandinavia – have increased export volumes to the US and other non-European markets; this has diverted volumes that would otherwise have been available to European users. The US and China are currently the number one and three destinations, respectively, for German softwood exports. 

A backlog in issuing felling licences in Ireland and uncertainty leading up to the end of the UK’s Brexit phase on December 31, 2020, have been adding to the effect on prices.  

The situation is impacting on all wood sectors, including the pallet and packaging industry, which uses smaller logs and falling boards.