Sawmills in Southeastern Estonia are continuing to have to reduce output and make lay-offs as uncompetitiveness in domestic prices, partly resulting from high energy prices, and a slump in demand from Scandinavian markets, continue to bite, ETV news show "Aktuaalne kaamera" (AK) reported Thursday.
Estonian timber is often used in the wooden building sector in the Nordic countries.
One such firm, Barrus, based in Võru County, had to lay off 48 people at the start of the year, but still is not running at a profit.
Barrus CEO Martti Kork told AK that: "While we may still be able to make sales today, this doesn't mean we can do so at any kind of profit."
"Input prices at present are all wrong. Starting with the raw material prices, of pine logs – we only use pine wood – then going on from there to electricity, transport prices, plus exchange rate issues with Sweden; add to that the building volumes which are falling very quickly, the fact that issuing new building permits in Finland and Sweden has halved – then we're talking about a perfect storm."
Barrus' competitor Toftan painted a similar picture.
The company's CEO, Martin Arula, told AK it was having to lay off 32 people.
Arula said "The intervening years, when timber prices were unusually high as a result of the boom, now make it clear firms now are not able to pay the sort of prices that they were a year or two ago."
"All this prevents private forest owners from managing their forests sensibly, and as a result it seems the most reasonable, at a time when raw materials are scarce and all other inputs are at insanely high prices, to reduce the import volumes where possible," referring to Scandinavian imports of Estonian timber.
While there appears to be plenty of timber in stock in warehouses in the region, both businessmen said there was no reason to believe that the difficult economic situation in timber production will end soon, due to the sharp drop in competitiveness in markets.
For example, AK reported, local producers sell lumber at a price of €190 per cubic meter (in Estonian the specific measurement Tihumeeter is used in this context, but this corresponds to a cubic meter more broadly – ed.).
However, in Sweden, the price for the same quantity of the same type of wood is €160 per cubic meter.
Energy in Sweden remains cheaper than Estonia, while that country's state forest management agency has reduced felling volumes; private forest owners in Sweden are as a result awaiting a boom period.
Editor: Andrew Whyte
Source: 'Aktuaalne kaamera,' reporter Leevi Lillemäe.