Wood price peaks have already been seen, says Pellervo Taloustutkimus PTT research director Paula Horne. It will not quickly correct the situation of the forest companies.
Natural Resources Center (Luke) estimated in June that the demand for forest industry products on the world market will remain sluggish this year.
However, raw wood procurement volumes and investments in production will increase the carrying prices of softwood logs by 5–7 percent this year, Luke estimates. According to the forecast, the scarcity of softwood as a raw material would increase the carrying price by 23–30 percent.
However, the price peaks have already been experienced, Pellervo’s Taloustutkimus PTT estimates.
PTT research director Paula Horne says that the prices of pine and spruce logs started to fall already in the spring.
“The price spikes for conifers were in May-June. In the spring, several sawmills already reported possible closures in the fall.”
“Birch logs and softwood saw a price spike at the end of June. Since then, the weekly prices have decreased.”
The highest price for pine logs in vertical stores was 75 euros per cubic meter, for spruce logs up to 78.5 euros.
Regarding the pulpwood used by the pulp industry, prices have been increased by such large investments as the end of imports of Russian pulpwood and the increase in demand, Horne says.
Horne reminds us that wood prices are also typically higher in late spring.
The reason is that then summer flowers are bought, which can be harvested at any time of the year.
PTT is now predicting that softwood prices will fall at the end of the year.
“Our view is that the real price increase for conifers is about zero, which means prices will rise this year by inflation, i.e. 6-8 percent. When the prices are now 11-12 percent higher than the average of the previous year, we expect that the prices will decrease in the rest of the year,” says Horne.
PTT has estimated that the price of softwood will increase by 27 percent compared to last year’s average price.
That increase has already been exceeded, which means that PTT predicts that prices for softwood will also decrease somewhat from the peak prices in May-June.
The price of softwood began to rise already at the end of last year. It lowers the relative growth rate, Horne points out.
In the beginning of the year, the high price level of pulpwood obtained in thinning fellings was maintained by the absence of Russian imports, he estimated.
For forest companies the first year has been difficult. For example, Stora Enso’s April-June result announced on Friday collapsed in the second quarter of the year.
Operating profit was only 37 million euros, while analysts’ consensus forecasts predicted 126 million euros.
A year earlier, in the comparison period, Stora Enso’s operating result was 505 million euros.
The demand for pulp is weak and the sale of cardboard is not picking up either.
Stora Enson CFO and Country Director of Finland Seppo Parvi summoned Kauppalehti in the interview especially in Finland, the impact of rising wood prices.
“Wood accounts for about a third of our costs. Especially in Finland, the development of wood prices has been deadly. The price has risen by 20-30 percent in a year,” said Parvi.
I- and the forest director of the Finnish Federation of Forestry Producers (MTK). Marko Mäki-Hakola admits that “reasonably high” wood prices have been reflected in the wallets of forest owners.
Prices have increased due to the end of imports of fiber wood and energy chips from Russia, but the main reason has been good demand, says Mäki-Hakola.
“Demand has been reflected in the results of both sawmills and the pulp and paper side. They have achieved their best ever results in recent years. The price of wood has not been a disaster.”
Mäki-Hakola reminds us that the forest industry is a very cyclical sector.
“In the United States, the situation is already improving.”
Stora Enson country manager Parvi also lamented in Kauppalehti that pulpwood has also started to be burned for energy due to the increase in the price of energy wood.
According to Mäki-Hakola, the rise in the price of energy wood close to the price of pulpwood has been understandable due to the Russian war of aggression.
“If you have to choose between cooling down the city or heating it up, it’s better to heat it up. And I’d rather use wood than fossil fuels.”
If the price of wood would turn down, at forest companies the changes in the price of raw wood are reflected in the profit and loss accounts more slowly than in industry in general.
In industry, the delay in the effect of price changes is often a maximum of three months, but in the forest industry the delay is longer.
A lot of wood trade has already been done when the industry competes for wood. There are also many private forest owners who are not in a hurry to sell.
According to an old joke, forest owners have a good memory – they remember its highest price.
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