Italian sawmills are running at near-zero or negative margins as Gulf container freight has jumped from US$500 per container to as much as US$4,000, whilst log prices across the DACH region of Germany, Austria and Switzerland remain at €148 per cubic metre. That is according to the latest Conlegno Study Centre report published on Tuesday, May 5, which warns that the conflict in Iran that closed the Strait of Hormuz, elevated roundwood prices and rising energy costs are eroding profitability across more than 2,000 member companies.
The perfect storm is hitting the sector,” the report finds.
And whilst weak European demand and oversupply would normally drag raw material prices lower, log values have instead remained historically high across the corridor, leaving Italian sawmills caught between elevated input costs and thin downstream pricing power. Conlegno describes the dynamic as a divergent binary effect, where soft demand fails to feed through to lower roundwood costs, squeezing the cash margin out of every cubic metre milled.
As it stands, Italy needs around four million cubic metres of softwood a year — the framing lumber, pallet wood and panel feedstock that supplies its construction and packaging sectors. Italian forests cover only about 20 per cent, with the rest shipped from Germany, Austria and the Czech Republic. That import exposure worsened sharply after Storm Vaia and the bark beetle infestation cut Trentino’s annual log supply from 500,000 cubic metres to as low as 250,000 cubic metres, with 2025 production projected at 450,000 cubic metres — well short of Trentino’s 1.25 million cubic metre post-Vaia milling capacity.
It traces back to Hormuz.
Following the Iranian Revolutionary Guard action that closed the Strait of Hormuz on 28 February, industrial diesel prices across Asia have climbed 140 per cent and ocean freight surcharges of up to US$5,000 per container have been baked into trade lanes that depend on Gulf transit. Maersk has separately applied to US regulators for an emergency bunker surcharge of US$200 per TEU on head-haul routes and US$100 per TEU on backhaul, with Drewry’s World Container Index holding at US$2,287 per 40-foot container as of 2 April.
“The timber-chain consequences are being severely underestimated,” Royal Dekker warned late last week.
It comes as Wood Central reported that the Hormuz crisis has driven Asian panel prices up by 15 per cent, with Indian wood panel makers raising prices by five to 15 per cent, and a Federation of Malaysian Manufacturers survey finding that nine in ten firms are either already affected or expect an impact within four weeks. The International Tropical Timber Organisation charts an industry-wide repricing from Kuala Lumpur to Bangalore to Ho Chi Minh City, with Italian panel prices rising by five to ten per cent — roughly half the Asian rate.
On the panel side, the European Commission’s 14 April 2026 decision to finalise definitive anti-dumping duties of 5.4 per cent on Brazilian softwood plywood — applied across an EU softwood plywood market valued at €600 million per year, of which €216 million was previously imported from Brazil — has trimmed one source of low-cost competition for Italian and wider European panel makers. But that relief has been overrun by a sharper rise in log, energy and glue costs, with OSB up around ten per cent since the start of the year and particleboard and pine plywood also climbing across European mills.
Whilst Italian sawmills have modernised through Industry 4.0 investments and improved processing flexibility over the past 15 years, the wider continental sector continues to operate under structural pressure on raw material costs, with the European Organisation of the Sawmill Industry warning at the International Softwood Conference in Oslo last October that rising input prices are denting earnings across the continent. “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.
