Softwood lumber markets: Regional demand outlook to 2025

After several years of strong demand and record prices for softwood lumber, the global sawmill industry now faces challenging markets ahead.

From 2020 to 2022, supply chain constraints and an unexpected surge in home improvement due to COVID-19 have supported the industry, which is familiar with boom-bust cycles. However, higher interest rates leading to reduced construction and consumer spending are now impacting lumber demand in North America, Europe, and Asia.

United States

The US represents 26% of global lumber demand but only 19% of supply, mainly importing 27 million m3 from Canada. Demand had been on a growth streak since 2009 but contracted in 2022 for the first time in a decade.

The largest segments for US softwood lumber are related to residential construction, including new homes, repairs, and remodeling. These sectors have gained importance since 2010 and accounted for nearly three-quarters of demand in 2022.

Most forecasters anticipate a decline in US housing starts in 2023, followed by improvement in 2024 and a full recovery by 2025 (Figure 1). The US housing sector is considered “under-built,” requiring more new homes. GDP growth is also expected to decline in 2023 but normalize in 2024-2025. In our recently released report, we forecast a 6% decrease in US lumber demand in 2023, primarily driven by reduced demand in new housing, but a return to 2021 levels by 2025.

Figure 1: US housing starts forecasts

Already in Q2 of 2023, we are witnessing strong signs of a recovery in US lumber demand and prices, with housing starts growing 22% year-on-year in May, and supply constraints following forest fires in Canada.


Europe accounts for one-third of global softwood lumber production and is the third-largest export region after Canada and Russia.

European lumber demand declined in 2022 after eight years of relatively stable growth. End-uses related to construction and housing represent approximately 70% of demand and are facing headwinds. Confidence in the EU construction sector has dropped in 2023 due to the rapid increase in interest rates to combat inflation (Figure 2).

Figure 2: European interest rates

On June 15, the European Central Bank announced a 0.25 percentage point raise in the key interest rate, bringing it to 4%. According to forecasters, interest rates are expected to remain elevated well into 2025.

This will significantly impact softwood lumber demand as high interest rates increase the cost of financing construction projects. They also raise household borrowing costs and reduce spending power for new homes and renovations. In our recent report on the outlook for global lumber markets, we forecast European lumber to decline by over 10% between 2022 and 2025 and not return to growth until 2026.


China is the main lumber market in Asia, accounting for 71% of Asian demand and 17% of global demand in 2022. It is the second-largest lumber importer after the US, with 21 million m3 imports in 2022.

However, China’s lumber demand has declined by 6% annually over the past three years (Figure 3) due to a significant cooling of the construction sector, which represents approximately 45% of demand directly and an additional 40% indirectly (furniture, doors, windows, etc.).

Figure 3: China softwood lumber demand development

Looking ahead, China’s economy is expected to stabilize at a lower rate of growth, with a structural shift from investment to consumption, involving less infrastructure and construction. Despite slower GDP growth, lumber demand should be comparatively highcompared to other regions in 2023-2025 as the economy opens up post-COVID, and there are rumors of relaxed controls on the real estate industry by the government.

One crucial aspect for lumber exporters to China is the competition from Russian producers. With restrictions on Russian lumber imports to Western countries, including the EU, due to the invasion of Ukraine, Russian producers in the Northwest region particularly need to expand exports to China. However, they face challenges due to the long sea route and high shipping costs, as well as restrictions on imports of sawmill and harvesting equipment.

For more information about the recently released report, “Global Lumber Markets: Navigating in Uncertain Times,” please refer to our brochure or visit our webshop to place an order.