High prices for logs delivered to mills
The prices for spruce and pine logs that have been disclosed so far show no significant decreases. This is surprising, as sawmills are increasingly firm in demanding price reductions. Sawmills are not only faced with record prices for full-length and cut-to-length spruce and pine logs as well as pallet wood in the first half of the year, but also with high transport costs. Due to the lack of beetle-damaged wood, fresh wood has to be purchased and transported. The higher weight of fresh log wood results in lower truck utilization. Diesel prices reached record highs in April. Because of the costs and strict police checks, many transport companies have either reduced their capacities, or they even closed their businesses or filed for bankruptcy.
Sawmills affected by the slump in lumber markets in the Middle East, in particular, want to close ranks in their struggle to lower what they consider excessive log prices. However, the first large sawmills are breaking ranks, by reporting increasing deliveries to the USA at at least sufficiently high prices.
Reduced logging in Summer
Forestry companies are countering efforts to lower log prices, by planning to reduce harvesting if prices fall too sharply. This can be easily done with pine. As for spruce, a relatively small volume of beetle-damaged wood is expected as the initial population of bark beetles is small. Contrary to previous years, this is also financially feasible thanks to revenue from timber harvesting in recent months.
Particularly in eastern Germany and some regions in the north of the country, standing timber prices are supporting the high price level. Ex-forest-road prices are often less important there. Prices for standing pine across all grades often still exceed €80/m³. In this context, the purchasing activities of the pulp industry are repeatedly mentioned.
Different assessments regarding oversupply
Both forestry companies and sawmills deny reports by some log traders about a supposed significant oversupply of volumes that are not stipulated in contracts. What is clear, however, is that imports from Norway and Sweden have not reached the extent that was predicted in March and April. Log traders are reporting “intermittent sawlog deliveries” from the storm-hit areas of Scandinavia.
The prices reported are hardly different from those in April. At that time, importers operating primarily in Norway reported €105/m³ CFR for pine logs at North Sea or Baltic Sea ports and €120 to €125/m³ CFR for spruce logs. Storm-damaged spruce log wood from Finland is even slightly more expensive at €120/m³ FOB. In Sweden, in particular, efforts are being made to keep the sawlogs in the country. “There’s no Scandinavian timber available in German ports for less than €100/m³,” a log trader summed it up in early May. Thus, the falling softwood log prices in Norway and Sweden have not yet reached Germany.
