17.05.2022

INCREASE IN TIMBER PRICES IS CURRENTLY MAINLY AFFECTED BY THE SANCTIONS AGAINST RUSSIA

Already last year, the timber market was characterized by a sharp increase in prices. Given the geopolitical situation earlier this year, prices continue increasing due to sanctions imposed against Russia.

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In 2021, the volume of construction of new buildings increased rapidly; moreover, in the USA and Europe it was related to construction with wood, for example, prefabricated houses, using spruce and pine wood sawlogs in their construction. As a result, coniferous building materials – beams and boards – experienced record high demand and an increase in prices last summer.

Experts point out that the demand for wood of Latvia is directly influenced by the US, British and European consumer markets. Fluctuations in these markets also determine changes in Latvia.

After the increase in prices in the summer, the prices of conifer sawlogs decreased in the 3rd quarter of 2021. Given the favourable price in the second quarter, forest owners and the largest market players were interested in selling as much as possible, and the workload of sawmills was high. The Scandinavian countries also sent their wood to Latvia for processing.

However, at the end of 2021, the price of conifer sawlogs remained 4% higher than before the large price increase. Although the price of thick sawlogs decreased – for example, in the highest price increase of the summer period, the price of thick pine sawlogs was from 124 EUR/m3, after the fall in prices in the second half of 2021, it was 111 EUR/m3 – for the rest of the conifer assortment, the price started to increase linearly, thus maintaining the overall increase in the price of sawlogs at the end of the year.

The upward trend in the price of pulpwood or birch last year is positive; the rise in prices at the end of the year is due to the increase in demand for pulp and wood energy. However, the price has been rising steadily throughout the year. Comparing the 4th quarter of 2021 with the 1st quarter of 2021, birch pulpwood has become 44.7% more expensive.

At the beginning of 2021, the price of birch veneer logs decreased by 19.5%, which can be explained by the annual seasonality, as well as reduced exports, mainly to China. However, in the 1st quarter of this year, the price of birch veneer logs increased to 123 EUR/m3, which is unusual for the spring months. The reason for this increase is mainly due to the war in Ukraine and sanctions against aggressive countries.

The current situation in the world makes it necessary to look for other options for purchasing wood in order to be able to meet the demand for harvested wood and its products. The increase in prices characterises not only wood materials, but also the transportation and production costs.