Europe’s softwood industry, battered by years of falling production, rising raw‑material costs, and sluggish demand, is staking its recovery hopes on a long-awaited rebound in construction activity next year, industry leaders told the 73rd International Softwood Conference last week.
“Raw material prices have increased across Europe, denting profitability in the industry,” Tommi Sneck, president of the European Organisation of the Sawmill Industry, told delegates. “There are significant differences across Europe in terms of profitability. When demand resumes, there is a risk of log prices being too elevated.”
The conference, held October 22–23, was hosted by Norway’s Treindustrien, the European Timber Trade Federation, and EOS, and drew hundreds of producers, traders, and analysts from across the world. Speakers described an industry that has trimmed output by about 10 per cent since a 2021 peak and now faces a complex mix of cyclical and structural pressures.
Johan Freij opened the conference with a blunt assessment. He warned of “exceptional uncertainty” and long-running structural inflation, urging the sector to press its advantage on climate credentials. “We should be bolder in communicating the benefits of using wood to tackle climate change — not only in terms of storage but also as a substitute for more carbon-intensive materials,” he said.
The case for recovery rests in part on a decades‑long gap between housing stock and demand: “Europe, the United States and China have underbuilt for about 20 years,” Morten Bergsten, vice‑president of the ETTF and chair of its softwood committee, told the conference. “With inflation coming down, 2026 could be the year of recovery in the construction markets.”
Yet several caveats shadow any rebound.
Delegates warned that elevated log prices, uneven regional profitability, and growing regulatory burdens could blunt the upside. “Regulation and bureaucratic burdens have increased sharply over the last few years,” Mr Bergsten said. “This should stop or, ideally, reverse, for the sector to thrive.”
China’s consumption is weak. U.S. mortgage rates continue to pressure demand. Japan’s market is soft. Parts of North Africa and the Middle East show resilience. “China’s softwood lumber consumption is now minimal,” said Olle Berg of Setra Group, citing the construction slowdown and Russia’s growing price influence.
Whilst on Atlantic trade routes, Paul Jannke of Forest Economic Advisors said U.S. housing fundamentals point to pent‑up demand but are constrained by high financing costs. He added that tariff differentials give European exporters a comparative advantage over some competitors. “There’s demand, but housing starts remain subdued,” Jannke said.
Several presentations highlighted longer-term supply concerns. Sami Pastila of AFRY Management presented projections showing that log availability will flatten or decline in many regions. The industry must adapt its raw-material strategies. “We need to process smaller-diameter roundwood, switch to more pine for construction, and pursue a whole-value-chain effort to make construction more efficient,” Christian Nielsen of the Swedish Food and Forest Industries said.
Speakers identified market opportunities to offset the downturn: more wood use in Japan’s non-residential buildings, rooftop construction and renovation in European cities, and greater demand for lower-grade pine in MENA. Companies are investing selectively in value-added products and digitalisation to protect margins and diversify revenue. But regulatory uncertainty remains—especially regarding the EUDR, with delegates highlighting a “serious lack of clarity and legal certainty” and urging measures to make the regulation practical and proportionate for operators. “(Still) If construction recovers and policy supports us, we could see real momentum in 2026,” Bergsten said. “We must prepare now.”
