Timber Exchange review – May 2020

In May, trade via the Electronic Timber Trading System (ETTS) was very active and included short-term auctions and the auction of the second half of 2020. In May, 189 auctions were announced and 165 auctions were completed. During the auctions, offers were made by 266 participants, which was the highest number of participants since November 2017. Lithuanian companies purchased 94% of the total amount of sold timber.

Record large quantities of timber were sold in May both during short-term auctions (131,318 solid m³) and the half-year auction (817,268 solid m³). A total of 948,586 solid m³ of timber was sold in May, which is the largest quantity of timber sold via the ETTS since November 2017. The growth in the sales volume was due to the increase of supply by the State Forests Directorate. If auctions for all types of timber are considered, the largest amount of timber since December 2016 was offered for sale in May 2020, i.e. 1,083,632 solid m³. It should be noted however that, if only half-year auctions are taken into account, the quantity of timber offered at the half-year auction held in May was 4.96% smaller than that of the first half-year auction of 2020. Despite that, 14.29% more timber was sold during the second half-year auction, i.e. during the second half-year auction of 2020 buyers purchased a greater share of the offered timber (97.69%) compared to the first half-year auction of 2020 (80.12%). Based on this criterion, similar trends were recorded during short-term auctions: in May 2020, 55.77% of the offered timber was sold; this figure was 46.93% in April 2020 and only 23.56% in May 2019. For comparison, over the entire term of operation of the ETTS, 70.31% of the offered timber is sold on average; 45.68% accounts for short-term auctions and 87.54% accounts for half-year auctions.

Both during short-term auctions and the half-year auction, sawlogs and packing logs were the most demanded assortments: 94% and 92%, respectively, of the offered quantity of these was sold. In terms of quantity, the largest quantity sold in May accounted for sawlogs (244,120 solid m³); these were followed by firewood (162,119 solid m³), wood panels (161,939 solid m³) and pulpwood (160,021 solid m³). Trade in TOP assortments in May accounted for 85% of the total timber sales.

Comparison of the two most recent half-year auctions shows however that the weighted price of timber has shrank by 8.84% and was 33.04 EUR/m³ at the second half-year auction of 2020. At this auction, the biggest price drop was recorded for timber harvesting residues (all types): the final weighted price of these under completed transactions has dropped by 13.12%. Packing logs and short leafy hard timber were the only two assortments with an increased weighted price: the prices of these have increased by 10.13% and 6.22% respectively.

After the second half-year auction of 2020, the first repeat half-year auction was announced for the unsold timber; participants may register for the repeat auction by 16 June (inclusively). The auction will be held on 24–29 June.

Bark beetles continue to cause damage to forests in Western Europe: in Germany, Austria and the Czech Republic alone, there is more than 250 million m³ of damaged timber. According to optimistic forecasts, if the peak is reached by 2021, over the next five years this figure is likely to increase by a further 500 million m³ and reach 750 million m³. To stop the pests, the affected forests are massively cut using all available resources; in the Czech Republic, the army may be involved. Attempts are made to manage the current timber surplus by expanding trade with China: the German exports of timber to China have rocketed from 200,000 m³ in 2018 to 3.8 million m³ in 2019. The growth of exports to China is even greater for the Czech Republic: in 2019, 2.3 million m³ of timber was exported (+1255%).

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