Timber Exchange trade statistics October of 2023

• In October, the State Forest Enterprise (SFE) announced 178 auctions. A total of 263.3 solid m³ of wood products were offered. Compared to September, the volume of timber offered decreased by 1% and the volume of timber sold increased by 21%. The auctions were organised by 26 VMU units.
• The SPOT Wood Index recorded an index value of EUR 50.19/solid m³. The index value shows a decrease of 42% compared to the same period last year. Compared to the previous month, the index did not experience a significant change.
• Significant price changes were recorded in October:
  • In the sawn timber (D) assortment, the price increased by 9%, from EUR 55.71/solid m³ to EUR 60.78/solid m³.
  • The price of the firewood (II, III class) and panel wood assortment decreased by 7%, from EUR 42.12/solid m³ to EUR 39.25/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

In Western economies, the construction sector faces significant challenges. Central banks like the ECB and the Swedish Riksbank have raised rates, while others like the Fed, SNB, and BoE are cautious due to growing downside risks. This economic struggle is evident across various indicators, from construction to industrial production. For instance, German construction orders have shown recent improvement, but building permits remain weak, down by 20% YoY. In Sweden, a crucial market for timber construction, building activity has plummeted by 72% YoY, with a bleak outlook. Residential permits are down by 28% YoY. France and the UK also face declines in construction activity. The overall outlook remains subdued until a shift in monetary policy occurs, making fiscal incentives a challenge due to higher interest rates and economic slowdown.

 Meanwhile, the new EU Deforestation Regulation (EUDR) that took effect on June 29, 2023, will start with full business compliance by December 30, 2024. This comprehensive regulation aims to combat deforestation drivers worldwide. It addresses the link between European product consumption and global deforestation, establishing a higher sustainability and ethical trade standard. Companies must conduct thorough due diligence on their supply chains to ensure compliance with local laws. They are also obligated to assess the environmental and social impacts of their supply chains and take corrective action. The legislation also prohibits EU market entry for products linked to illegal deforestation. Large companies have an 18-month grace period to comply, after which penalties may apply.

ITTO provided valuable insights into the supply and demand dynamics of tropical wood in international markets in a webinar organised by the Ecuadorian Association of Teak and Tropical Timber Producers (ASOTECA).

The ITTO presentation, made by statistician Jean-Christophe Claudon in late October, provided Ecuadorian timber-industry stakeholders with an in-depth perspective on the status of global tropical timber supply and demand. Among the key points made by Mr Claudon in his presentation were the following:

• About 50% of global wood production is consumed for energy and the other 50% is used for industrial purposes. This allocation varies widely between countries, with developing countries in the tropics tending to use more of their wood production for energy.
• The largest consumers of tropical timber are tropical countries themselves (predominantly for energy).
• The Asia-Pacific region relies to a significant degree on the rest of the world to meet its timber demand. Africa and Latin America and the Caribbean are more self-sufficient.
• Globally, the major producers of industrial roundwood are the European Union, the United States of America and the Russian Federation, which, combined, produce half the planet’s industrial roundwood; China is also a big producer.
• The European Union and the United States are the major importer of wood products, together accounting for 52% of the primary wood products in roundwood equivalent, although most of this trade is either among European Union countries or from Canada to the United States. China is the third-largest importer of primary wood products and the world’s biggest importer of tropical primary wood products, accounting for 42% of the world total.
• In Japan, 80% of wood demand is linked to construction. Minimal economic growth, however, has meant a decline in housing construction in Japan and also in demand for tropical timber. Japan was the biggest importer of tropical logs in the 1990s, but its imports of this product has declined by 99% over the last 30 years.
• The recent slowing of the Chinese economy has been driving down demand for tropical timber. China’s tropical log imports declined by 50% between 2014 and 2022.
• In contrast, exports of wooden furniture have increased eight hundred times in China since 1990 and by a factor of 18 in Viet Nam between 2010 and 2022, driving up timber consumption in those two countries.
• It is expected that demand for industrial roundwood will continue growing strongly over the next three decades and could reach 2.8 billion m³ in 2050 (up from approximately 2 billion m³ in 2022). Demand for wood energy is expected to decline, however.
• China is expected to remain dependent on the rest of the world to meet its wood demand, with the Northern Hemisphere playing a significant role in its timber supply.