Chief Operating Officer of Wood Products, MERCER INTL INC
Carsten Merforth: "Beim Schnittholz können wir keine tieferen Preise mehr akzeptieren."
Der Absatz wurde heuer von Quartal zu Quartal schwieriger, analysiert Dr. Carsten Merforth, COO Mercer International, die Lage ...
About Carsten Merforth
Carsten Merforth, Chief Operating Officer of Wood Products at Mercer International, stated in September 2024 that the company's lumber segment is operating at economic limits where accepting lower prices is no longer viable. He said that demand and prices declined quarter by quarter across all areas, particularly in pallet and construction lumber, and that production had been reduced at the Torgau site due to weaker demand. Merforth described the current price level for pallet and lumber as "at the bottom." Merforth noted that the North American market performed similarly to Germany, with higher expectations for the second quarter of 2024 not being met, resulting in a prolonged sideways movement in demand and prices. He expressed a positive outlook for cross-laminated timber (CLT), describing it as a strongly growing market where Mercer is positioned as a leading producer. Merforth stated that the construction downturn will eventually end and that the long-term prospects for wood construction and the bioeconomy remain strong, though the industry must endure the current difficult period.
Transcript (13 segments)
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Interviewer0:11
Before the Holzk TV microphone, I now have Carsten Merforth, COO of Mercer International for the solid wood division. Thank you for taking the time. First question: how was the supply situation this year, and can we perhaps give an outlook? Winter is just around the corner, what can we expect for 2024?
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Carsten Merforth0:30
The supply situation this year was not bad. Mercer's sawmills are located in Germany, in central Germany, and we are naturally active in the area still heavily affected by the calamity. That means the spruce supply was very, very good; we had no supply difficulties. But also in pine for Torgau, there were no difficulties, especially since, due to the economic situation, we had to reduce production at the Torgau site because we are primarily active in the pallet sector, and pallet production, due to demand, has further declined in Germany.
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Interviewer1:04
Your company is a North American company, but when we talk about the domestic market, perhaps we should first talk about Germany. How was domestic sales for you, perhaps differentiated by pallets and sawn timber in Germany, and what can we expect for the following year?
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Carsten Merforth1:16
Sales were very, very difficult and became more difficult over the course of the year. At the beginning of the year, we still had hope that the economy would develop more favorably. That hope was not fulfilled; instead, we saw a decline in demand and prices quarter after quarter in all areas, in the construction sector and especially in pallets. This will continue until the end of the year; there was no autumn upturn as is usually typical in the construction and pallet sectors. The pallet sector is heavily dependent on the general industrial development in Germany. We are now in the fourth consecutive quarter of negative economic growth, and that is immediately felt in pallet demand. It remains cautious and difficult.
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Interviewer2:00
As an intermediate question, can we assume that a price floor has now been reached in many important areas, such as sawn timber for pallet material?
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Carsten Merforth2:08
I think we are at least approaching it. Yes, the production cuts are not yet at a level that matches the low demand, but we are already at a correspondingly low level. I don't think it will sink further in the pallet sector. In the sawn timber sector, we are simply moving into borderline areas where it is economically not sensible to accept even lower prices. In that regard, I think we have hit bottom in that area.
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Interviewer2:38
You operate one of the fastest planing mills in the world, specifically targeting North America. What can we say about the export markets, specifically North America? How was North America this year, and what is the outlook for 2024? Will North America recover faster than Europe?
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Carsten Merforth2:54
North America was similar to Germany. We had significantly higher expectations for the North American market starting from the second quarter, which were not met. For over 12 months now, there has been a sideways movement in demand and also in price. A very long phase of non-volatile development, very unusual for America. However, we are now sensing a slight upward trend and are optimistic that next year will not be super prosperous markets, but at least we can generate stable sales.
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Interviewer3:28
Your company has invested 300 million euros in the solid wood sector over the last two years, including in the CLT area. You are starting, I believe, two productions in North America. What are the prospects for CLT, especially for North America?
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Carsten Merforth3:45
The prospects are very favorable. It is still a very strongly growing market in the CLT sector. With our two large sites, plus a few smaller ones, we are now able to offer combined CLT and glulam in BC, and thus serve projects that require both types of products, including connection and the engineering services involved. This is a new market field for us, a completely different market we have to serve—not a pure product market, but a performance market where we must deliver a complete service. It is developing very, very well, very strongly, and I am glad that Mercer had the opportunity to rise to become a leading player in the production area in this segment in North America.
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Interviewer4:37
CLT is also a product made for modern timber construction; you can do modern architecture. The crisis will eventually pass—no one knows when, 12 months, 24 months—but it will pass. How will the timber industry be positioned globally when the construction crisis ends?
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Carsten Merforth4:54
I believe we all agree that timber construction has a super future. The demand is fundamentally there, even if it has stagnated a bit due to the recession. I think we can expect very, very good sales opportunities for our products in Europe and also in North America. We have to get through this stretch now, but timber construction is definitely the future, and the wood-based bioeconomy is what we are working towards. We believe that with our technology, our employees, and also our raw material, we remain very, very well positioned.
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Interviewer5:28
Thank you very much. With these great words, we end the conversation. Thank you, Mr. Merforth.