The Finnish forest industry is changing their timber sourcing
The Finnish forest industry is facing difficulties with high wood costs and the prospect of sharply reduced log supply from Russia in the coming years. The industry has already started to alter their log procurement strategy by increased imports from other countries and intensified campaigns to encourage private forest owners to increase logging activities.
Total harvests in 2007 are projected to be 15% higher than in 2006, reaching a record level of 58 million m3. Although domestic log supply is expected to increase by approximately seven million m3 in 2007 compared to 2006, it is still not enough to substitute the Russian imports, which was about 13 million m3 in 2006.
Substantial reduction in Finnish log imports from Russia
Imports of logs from Russia were down 30% during the first six months of this year compared to 2006, while imports from other countries were up 13% (see chart). In the 2Q/07, Russian logs accounted for less than 82% of the total log imports, which is the lowest share in over ten years. Just three years ago, Russia supplied almost 94% of imported logs to Finland. The biggest increases in supply the past 12 months have been from Sweden, Uruguay and the Baltic States. The higher demand for domestic roundwood has had a dramatic impact on stumpage prices in Finland. From the 3Q/06 to 3Q/07 stumpage prices for pine sawlogs increased 48% and for pine pulpwood 31%.
The dramatic development in the timber market has drawn the attention of even passive timberland owners resulting in increased harvesting of timber also by people not necessarily dependent on income from their forests.
Higher timber prices expected in Central Europe
Prices in Central Europe, including Germany, Austria, the Czech Republic and eastern France, declined during the first six months of the year as there were large volumes of timber available after the storm in January. Much of the storm-damaged timber has now been removed, and the forest industry is in increased need of fresh wood, which resulted in higher prices in the 3Q. This upward price trend is expected to continue in the 4Q.
Average spruce sawlog prices in Germany were at US$142/m3 (Euro 104/m3) in the 3Q, which was down from the peak of $155/m3 in the 1Q/07 but up over 40% from 18 months ago. Austria and the Czech Republic have gone through similar price trends with timber prices down from their peak last winter, but substantially higher than a couple a years ago.
Higher wood costs for Swedish sawmills and pulpmills
Swedish sawmills have had a very good year and production has reached record levels. High prices for lumber have allowed sawmills to pay more for sawlogs this year. In the 3Q, the average price for pine sawlogs was $89/m3, which was up from $60/m3 in 2005.
Pulplog and wood chip prices also increased this fall to their highest levels since 1995. With the latest increases, Sweden now has the highest wood chip prices in the world. |
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