Wood prices coming down should serve both buyers and sellers

Pine logs.
Pine logs. Source: Margus Muld/ERR

Experts say that timber prices, down a few dozen percent compared to last year's peak, are benefiting both consumers and sellers. But both groups remain concerned for the future of the sector.

"The price of roundwood has come down, while it has not yet fallen back to the level where it all began," said Henrik Välja, executive manager of the Estonian Forestry and Timber Association.

"Our timber prices have come down to normal levels which we saw in 2018 and earlier in some contexts," forestry expert Heiki Hepner also said. ""2022 was an extraordinary year and prices have come down a lot from that point. It was not a normal year at all."

A recent timber prices overview by Hepner published in the Thursday issue of Maaleht reveals that the roundwood market is seeing sharp decline, with all goods groups seeing prices slashed, while pulpwood and conifer log prices are down the most. Pine logs are roughly 30 percent cheaper compared to a year ago, while spruce prices are down 20 percent. Birch and aspen prices are also down over 30 percent.

Henrik Välja said that lower prices mean owners are less keen to sell, which is why smaller quantities of roundwood are going around. But Hepner suggested prices are not yet low enough to cause owners to postpone selling, describing them as solid.

Concerns over sector sustainability

Hepner suggested Estonia should be a little more concerned when it comes to the future of forestry in the country. "It worries me to see a sharp decline in demand for our products. True, there are several reasons for this. One is that high interest rates have brought down the construction market, while the exchange rates of Norwegian and Swedish currencies to the euro have hiked our cost prices and hurt our competitiveness," he added.

Välja criticized the government for manufacturing uncertainty in the sector.

"While the Estonian timber sector is still able to rise to global competition, investments have slowed right down in the wake of political decisions. Stora Enso's decision of shutting down the Näpi Sawmill is telling. International corporations have a good overview of the region, and such decisions come as a dangerous indication of the business environment as a whole," he said.

"Price fluctuation and the economy rising and falling are normal parts of business environment. The problem is that the Estonian government has made a series of decisions and introduced restrictions which complicate Estonian companies' position in global competition. Whether our unique spring logging stoppage (referring to the so-called birds' nesting peace period – ed.), constantly changing State Forest Management Center (RMK) logging volumes or LULUCF. Obligations which make the situation more difficult for Estonia compared to its neighbors."

The sector representative added that the use of timber is favored globally in the conditions of fighting climate change. "The UN climate panel concludes that sustainable management of forests and timber products are a key component in slowing down climate change, Välja suggested, adding that the U.K. Parliament is currently discussing how to promote wooden buildings for this purpose. "Wood products are the only thing that's in the black in our carbon balance. We could say that Estonia has an advantage in the green transition context, as the quality of Estonian timber has helped the sector be successful in the world. Unfortunately, local policy is increasingly becoming a hindrance," the executive manager of the sector organization said.


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Editor: Marcus Turovski

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