Timber Exchange trade statistics February of 2023

• In February, the State Forest Enterprise (SFE) announced 119 auctions. A total of 87,71 thousand solid m³ of timber products were offered. Compared to January, the volume of timber offered decreased by 21% and the share of timber sold decreased from 78% to 62%. The auctions were organised by 23 units of the SFE.
• The SPOT timber index recorded a value of 67,92 Eur/solid m³. The index value shows an increase of 12% compared to the same period last year. The index did not change significantly compared to the previous month.
• Significant price changes in February were recorded in paper logs, tar logs, B/C class sawn logs and firewood assortments. The price of products in the range of paper logs rose by 12% (from 69.57 Eur/solid m³ to 78.09 Eur/solid m³), the price of tar logs rose by 10% (from 78.21 Eur/solid m³ to 85.94 Eur/solid m³), and B/C class sawn logs fell by 6% (from 78.27 Eur/solid m³ to 77.88 Eur/solid m³) and finally, firewood prices fell by 9% (from 63.28 Eur/solid m³ to 57.61 Eur/solid m³).

Baltpool Timber Price (SPOT) Index

Trade in TOP timber assortments in ETTS short-term auctions

Trade in TOP assortments in ETTS short-term auctions

Trade in regional units of the State Forest Enterprise in short-term auctions

Timber assortments sold at ETTS short-term auctions

Abbreviations:

KA – felling residues; KAD – covered felling residues; KAK – felling residues at cleared space; KL – hard leafy short timber; ML – firewood; PM – panel timber; PJ – sawn logs; PP – pulpwood; TR – packing logs; St – large-sized timber, small-end diameter ≥32 cm; Vd – medium-sized timber, small-end diameter 20-31 cm; Sm – small-sized timber, small-end diameter ≤19 cm; L1 – assortment length class, ≤2.9 m; L2 – assortment length class, 3.0 – 3.9 m; L3 – assortment length class, 4.0 – 6.0 m; L4 – assortment length class, 6.1 – 8.9 m.

Global timber market

As the heating season draws to a close, this month we’re focusing our attention on Europe.

In February, European Union (EU) negotiations on the use of biomass under the Renewable Energy Directive (RED) III stalled. The Council, Parliament and the Commission are currently engaged in trilogue discussions to agree on new RED III legislation, which includes biomass classification.

The European Parliament has proposed that all primary woody biomass should be excluded from financial subsidies. However, the Council, under the six-month Swedish Presidency, has so far blocked the Parliament’s proposals. Instead, it has proposed to exclude high quality roundwood from financial subsidies.

The Council has accepted the cascading principle for the use of woody biomass, in line with its previous proposals. It wants Member States to design support schemes for the biomass sector in such a way as to minimise market distortions on the raw materials market, and has therefore proposed to exclude high quality roundwood from biomass production. The Commission has been asked to draft an amendment to incorporate this principle directly into the revised Directive. The deadlock resulted in negotiations ending in February without any solution.

In January, prices for energy wood chips in Latvia continued to fall. According to the Latvian Forest and Wood Products Research and Development Institute (MeKA), firewood chips were valued at 25.77 Eur/m³ in January, -7% lower than the previous month. The drop is expected to be even more significant after the publication of February prices, which are expected to be published in mid-March. Similarly, sawdust prices in Latvia fell by -6% month-on-month in February to 20.16 Eur/m³. However, not at the same pace as in Germany, with residual sawdust prices almost half the level of November-December. The mild weather and the large stocks of pellets have reduced the demand for sawdust by pellet producers as they have reduced production. EUWID estimates that at the end of January, sawdust prices in Germany were in the range of 15-18.50 Eur/m³ compared to 27.50-37.50 Eur/m³ in November 2022. Many people still have large stocks and are unwilling to pay high prices for sawdust. Moreover, sales are unlikely to recover before the end of the winter season. In addition, demand for sawdust from panel producers has decreased. The economic downturn has reduced demand for particle board across the continent. Due to high inventories and lower prices, many panel producers have reduced their production since the beginning of 2023 and further reductions are expected.

Meanwhile, many sawmills increased production in late January and February to compensate for the January downtime. Some of them postponed their planned Christmas shutdowns until the first weeks of 2023 due to an unexpected influx of orders in December. Sawmill activity was intense at the end of January and in February, which in turn increased sawdust supply. The divergence in price expectations slowed down the sawdust trade in early 2023. Sawmills were reportedly aiming for price levels in November and December, while panel producers and pellet mills were seeking price reductions of 50% or more. Prices for other sawmilling residues showed similar price reductions in early 2023. EUWID estimates that at the end of January the price of cellulose chips was in the range of 140-160 Eur/tonne, a decrease of 85 Eur/tonne (or 36%) compared to November. Some market participants speculate that sawmill operating rates may decrease from March onwards. A reduction in sawmill operating rates in the coming weeks could help to rebalance the wood waste market.

Despite a subdued global economy and an uncertain global market, 2022 was a record year for the Swedish forest industry. Never before has the forest industry exported such a high value of timber. But now the clouds of worry are on the horizon – rising interest rates, energy prices and uncertainty in export markets. These are just some of the findings in the latest Swedish Forest Market Report for 2022. According to a study by the Swedish Forest Agency, timber volumes increased by 10% to 7.7 million m³ at the end of last year. The most significant increases were in softwood sawn timber (3 million m³, a 10% increase), as well as in paperwood logs (3.9 million m³, a 9% increase) and in paperwood shavings (0.8 million m³, a 16% increase).

Sweden’s neighbour Finland did not have such a good year. Finland’s lower logging levels in 2022 highlight the difficult conditions facing the country’s forest products companies, which are also struggling with losses from Russian timber imports. According to preliminary data from the Natural Resources Institute Finland, total roundwood harvesting for processing will fall by -1.5% in 2022 to a total of 63.7 million m³ . The volume of sawn timber harvested fell by -1.2% to 29.5 million m³ and industrial roundwood by -1.8% to 34.2 million m³.

Before the war in Ukraine, Russia was the main supplier of whole logs and chips to the Finnish wood processing industry. From 1 January 2022. Russia has stopped exporting softwood logs to help support its forest industry. Hardwood logs and wood chips were exempted from the ban. However, EU sanctions imposed from April meant that trade in all timber, including chips, from Russia to Finland started to decrease until it stopped completely from July. Finland imported 311 kt of softwood chips from Russia in 2022 and 1.8 million tonnes in 2021 (-82% per year). From Russia, it imported 103 thousand tonnes of hardwood chips in 2022 and 567 thousand tonnes in 2021 (-82% per year).

Finnish pulp mills have tried to use more local wood, but as the harvest levels show, this has been difficult. Many of them have switched from using hardwood to softwood and increased imports of chips and roundwood from other countries. Prolonged shutdowns at UPM mills in early 2022 due to strikes helped to relieve pressure from reduced fibre supply. With sourcing from elsewhere, pulpwood imports recovered to pre-war levels by the end of 2022, but chips imports still fell significantly. Hardwood chip imports from the Baltic countries increased in the second half of 2022. There were also occasional shipments from Germany, Brazil, Uruguay and South Africa. In total, Finland imported 1.1 million tonnes of chips in January-November 2022, -59% less than a year earlier.