Sharp rise in price of wood
Timber prices exceed expectations of forest owners
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The price of raw timber has risen sharply in recent months, according to information gathered by the Finnish Forest Research Institute.
The price of logs used by the sawmill industry has broken previous records, while that of wood used by the pulp and paper industry has risen more moderately.
Stumpage prices of coniferous wood was EUR 55-57 per cubic metre, whereas a year ago they were ten euros cheaper. The stumpage price refers to the value of unfelled timber in a forest.
Prices of wood used for fibre have gone up by a couple of euros per cubic metre since last year, and are still lower than the record highs for pine and birch fibre wood in July 1990.
Price trends for timber have come as a surprise even to the Central Union of Agricultural Producers and Forest Owners (MTK). Antti Sahi, the organisation's head of forest affairs, says that the situation has exceeded the expectations of the forest owners.
"Demand is strong, and the price level has increased further. The situation is unusual, because all types of wood are selling well. Forest owners are pleased", Sahi says.
MTK will not predict how long the good times will last. "The present year seems strong, but we have no reason to think any further."
Matti Karjula of the pulp and paper manufacturer Stora Enso notes that the rise in the price of raw timber is a pan-European phenomenon. "In Central Europe, wood prices have risen even more quickly than in Finland."
The sawmill industry has managed to pass the high cost of timber onto the price of boards. Jukka-Pekka Ranta, head of the Finnish Sawmills' Association, says that the export price for coniferous sawn timber has risen between 20 and 25 per cent.
"In addition to the raw material, the price of electricity and freight has also gone up considerably", Ranta says.
Sawmills are getting even better prices at home than they do on the export export market. "House factories have been whining and weeping, but otherwise we are treating them with kid gloves."
Heavy European demand for paper has been reflected in prices in an uneven manner. In Germany, the main export market for Finnish paper, the price of newsprint has increased by five per cent, and that of office paper by between seven and ten per cent.
The problem product for the paper industry is lightweight coated paper (LWC), which has fallen in price by between three and five per cent.
The lower price of LWC also affected supercalendered paper (SC), which is mainly used for magazines, even though there is a balance in supply and demand for it.
The falling price of LWC is attributed to the battle between the two giants UPM; and Stora Enso for market shares, which took place in mid-January. Customers were offered discounts, even though publishers were prepared for slight increases in price.
Myllykoski CEO Sverre Norrgård says that LWC manufacturing plants were operating at 93 per cent of capacity in February this year. The company manufactures magazine paper in Southern Germany and Finland.
A high utilisation rate of production capacity, and small amounts of products in stock should, in Norrgård's opinion indicate that there is room to raise prices.
"I have never seen a customer who would be demanding price cuts in this kind of market situation. Our customers also understand that all of our production costs have risen", he says.
He attributes the discounts to nervousness on the part of the other manufacturers.
Helsingin Sanomat
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| 27.3.2007 - TODAY |
 Sharp rise in price of wood |
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