Falling demand and high energy prices harming sawmills

Timber (photo is illustrative).
Timber (photo is illustrative). Source: Olev Kenk/ERR

Some sawmills may need to close by year end, at least temporarily, as a fall in demand has hit timber producers at a time of soaring energy prices. Mills are also facing competition from energy firms making the switch to burning wood and wood-derived products instead of natural gas, while even the hot summer has had its effect.

A fall in demand from the construction sector in particular has seen the market contract by around 50 percent since early on this year, ERR reports, and sawmills are also being undercut by energy firms who can pay higher prices for those types of timber suitable for burning, at a time when alternatives to natural gas are being sought.

Martin Arula, chair of AS Toftan, a sawmill in Võru County, told "Aktuaalne kaamera" that: "We are preparing for a worse-case scenario, which means that prices will fall further, and the availability of raw materials will not improve suddenly.

"Instead,, we think that a particularly bad time will probably come in December and around Christmas-time, when we may have to instigate a longer shutdown," Arula went on, adding that changes in the market for different types of logs, firewood and pulpwood had been extraordinary, while energy prices were absurdly high

"The curious thing is that spruce logs are even cheaper than X logs; spruce logs are around 90 euros per dense meter and a spruce log is somewhere around 100.," he said, adding that part of the reason was sawmills trying to compensate for other losses.

For forest owners, the situation is one of choice – take their cut trees to a sawmill, or sell logs themselves, as firewood.

Võru County timber firm AS Barrus' purchasing manager Lauri Junkin said: "Firewood prices are very high, while this is especially true for hardwood. We have such a rare situation where the price of firewood is approaching that of logs; these differences are extremely small, and in some places they have already crossed over.

"For example, they now have the option of taking a beautiful birch log to a sawmill, or seeing it can be there is already more money somewhere to be made at a [energy company's] boiler. There has never been a situation like this before," he went on.

Relatively speaking, pine and spruce timber is reaching sawmills less than this year thanks to the hot, dry summer, which has made more cutting take place usually inaccessible wetter areas, favorable to deciduous trees.


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Editor: Andrew Whyte

Source: AK

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