WHAT DOES 2021 BRING? Optimism and caution are mixed!

Wednesday, 23 December 2020 / Published in Activities, Announcements

The last nine months have been among the worst and most uncertain periods in our lives and careers. Due to the corona crisis, there were serious setbacks in the global and local markets, and in the first half of the year there was a significant statistical stagnation and difficult operations of most companies, either due to a complete standstill or a significant slowdown in major markets. Many wood processing companies have seen a decline in production over the last 7-8 months, although at the end of the year this decline does not look catastrophic and averages around -10% (wood processing around -7% and furniture around -15%).

Factories for sale
Despite the described difficulties, Croatian wood processing companies have maintained an enviable level of optimism and are preparing a series of market strategies to overcome the consequences of the crisis. The only visible element of a complex crisis environment and a large dose of uncertainty is the intensive increase in the sales offer of many plants, ie factories on the market. Analysts call for extra caution, although the sector should be commended for the high level of business solutions adopted and adjustments in the crisis, ie for the enviable level of market resilience.

The second wave of coronavirus increased market pessimism
The deterioration of pandemic conditions during November and December brought a dose of pessimism and caution across Europe to the timber sector, especially among furniture retailers. Most wood processors in the European Union are counting on the assumption of business deterioration in the next six months, especially Italian and Spanish companies. Bad prognosis come from Germany, the main European market, where a decline is expected in the sawmill sector, wood panel and packaging industry and a decline of 4.1% in the furniture sector. Analysts expect these current German ratings and market impressions to spill over into the business of suppliers who still mostly come from Eastern Europe.

Global slowdown – price cuts in the US
At the same time, analysts in the US suggest that prices for wood products will fall until May 2021, and sawmills are expected to reduce production. This, along with the current pandemic, will certainly affect investments and large projects that require larger quantities of timber. Moderate announcements are also coming in from other markets, and the biggest unknown is still the huge Chinese market.

The EU offers an opportunity for the sector – the Green Plan and the Recovery Program
Europe is actively facing the slowdown and proposing recovery policies with very generous funds. The European Commission has turned to green materials, and this is a great opportunity for greater use of wood, which has been intensively discussed in recent months by all European wood processors through their associations. Wood is an ideal material for a CO2 neutral Europe. For example, the EU dictates that buildings should lead to a reduction in carbon dioxide emissions, and since wood reduces CO2 throughout the product life cycle, it is clear that soon in the EU, wood-based buildings should have a big advantage over concrete-built buildings. or other materials. It is clear that family membership in the EU is a further cause for optimism, as the Croatian economy has the opportunity to participate in recovery measures and has unhindered access to the Union’s internal market.