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MARKET WATCH

Forest Products Supply & Demand in the Baltics

Posted by John Greene on March 16, 2018

Due to significantly higher amounts of rainfall and warmer than average winter temperatures, the harvesting window in the Baltics region has been shortened and the forest industry has been impacted. Since last August, Estonia alone has received over 30 percent more rainfall than normal and the above-average air temperatures have prevented the ground from freezing.

As a result of these conditions, performing seasonal harvesting has been virtually impossible; in most regional forests, the ground simply cannot support forest machinery and a large portion of forest roads have been flooded or are too soft for maximum vehicle weights.

The Estonian Forest and Wood Industries Association and the Estonian Private Forest Association recently called the situation an emergency and, while the sector is not expecting financial aid from the government, they expect the government to reaffirm the state of emergency.

"Conducting active work in forests in the present wet weather conditions is not responsible towards the environment and runs counter to the good practices of forest management. The situation is especially difficult for people getting their pay from the forest. These impacts may not be revealed immediately, as a result of rainy weather we have to work in areas now where we usually work when the weather starts getting warmer in spring," said Marek Kase, chairman of the board of the Forest and Wood Industries Association.

A similar emergency was announced for Latvian forests at the end of 2017.

 

Estonia

A subsidiary of the Estonian pellet producer Graanul Invest has purchased its first bulk carrier to serve customers in the United Kingdom (UK) and the Netherlands. The ship has the capacity to transport roughly 30,000 tons of wood pellets to these destinations. Lithuania_Forest.jpg

The 610-foot ship is named MV Imavere, which is derived from the name of the location of the company's first pellet factory. The vessel will be operated by a German company, Grona Shipmanagement GmbH & Co. KG.

“With the shipping volumes steadily increasing, the acquisition of such a vessel gives us control over a large portion of the transport costs of our product for a long time,” said Graanul Invest in a statement. “Moreover, the use of larger vessels reduces the ecological footprint of pellet production and trade and, due to significant decrease in the amount of fuel per ton, lessens the dependency of transport costs on oil prices.”

Graanul Invest currently operates 11 wood pellet plants in Estonia, Latvia and Lithuania with a combined production capacity of 1.8 million tons annually.

 

Latvia

Riga City Council's forestry management company, Rigas Mezi (Riga Forests), recently announced plans to increase the volume of processed roundwood by 2022. The company manages roughly 62,000 hectares (153,000 acres) of forest and parks throughout Riga, and currently processes about 25 percent of the roundwood harvested (the remainder is sold). Rigas Mezi plans to increase this volume to 40 percent by 2022.

According to the Baltic Course, Rigas Mezi will also purchase advanced production equipment for a regional sawmill, and also intends to begin producing wood pellets so it can actively sell heat energy produced by the company in the future. In 2016, Rigas Mezi posted nearly €15 million in revenue.

 

Lithuania

  • Sweden-based furniture giant IKEA Group has increased its forest holdings in Lithuania by 50 percent to 15,000 hectares (37,000 acres) over the past 12 months. IKEA now owns one of the largest private forest portfolios in Lithuania, which accounts for just under one percent of the country's forests. Lithuania’s total forested area is approximately 2.2 million hectares (4.4 million acres), or 33 percent of the country’s territory. (IKEA also recently acquired its first US forest property of approximately 25,000 acres in Lowndes County, Alabama.)

    In 2017, there were a total of 250,000 forest owners with total forest holdings of roughly 883,000 hectares (2.2 million acres) in Lithuania. The State Forestry Enterprise is the country's largest timberland owner with 1.1 million hectares (2.7 million acres).
  • Vakaru Medienos Grupe (VMG), one of the largest wood products and furniture manufacturers in the Baltics, announced plans to invest €180 million ($220 million) in the northern Lithuanian district of Akmene. The company plans to build a new particle board factory by 2020 and a new furniture production facility thereafter. VMG, which sells the bulk of its products to IKEA, posted €16.4 million in consolidated net profits for 2016, up 7.3 percent from 2015.
  • In 2017, Lithuanian companies manufacturing furniture and related items for IKEA moved up to 4th place on the company’s list of largest suppliers, surpassing Swedish manufacturers. Revenue of 24 Lithuanian suppliers totaled over €1 billion last year. IKEA’s single largest supplier is China, followed by Poland and Italy.

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Topics: Baltic States Forest Industry, estonia's forest industry

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