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Forest2Market: July 14, 2023
Wood raw-material costs for sawmills in North America and Europe eased in the third quarter 2022 as demand and prices for lumber fell.
A few countries faced slight log price increases in their local currencies. But with the strengthening US dollar, practically all markets worldwide had lower log costs in dollar terms compared to the second quarter of 2022.
As a result, the Global Sawlog Price Index (GSPI) fell about five percent from its all-time high in the previous quarter. Since the index fell to a ten-year low in early 2020, it has climbed steadily and was up 40% over two years.
Strong Softwood Sawlog Market Persists in US and European Markets
Unprecedented strong markets for wood products and record-high lumber prices caused record demand for wood raw-material in both Europe and North America during 2021 and early 2022.
On a worldwide basis, softwood sawlog prices (in USD) have gone up the most since 2020 in the following areas:
- Brazil (+76%)
- Western Canada (+70%)
- Estonia (+68%)
- Germany (+59%)
Only the Nordic countries, Oceania, and China, have seen more modest price adjustments in the past few years.
Dramatic Fluctuations Define Past 5 Years of Pricing Data
The past five years resulted in the most substantial price fluctuations Wood Resource Quarterly has observed in almost 30 years of tracking wood markets. In 2017, sawlog prices were at levels that had been practically unchanged for nearly a decade.
The situation changed when Central Europe was flooded with insects and storm-damaged timber in 2018-2020. As a result, log prices fell to the lowest levels in over ten years.
High demand for lumber, declining availability of quality logs in the Czech Republic and Germany, and reduced log imports from Belarus, Russia, and Ukraine resulted in a surge in log prices on the continent.
Consequently, the European Sawlog Price Index (ESPI) jumped over 40% from the third quarter of 2020 to the second quarter of 2022. As the chart shows, the index reached an all-time high in the spring of 2022.
In the third quarter of 2022, lumber demand weakened and reduced upward price pressures on sawlogs. Some markets even saw declines in prices.
Nevertheless, prices continued to be the highest in Central and Eastern Europe. Additionally, sawmills in the Nordic countries continued to have substantially lower raw-material costs than their European competitors.
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This post comes from Wood Resource Quarterly (WRQ), an ongoing report from Wood Resources International, a ResourceWise company.
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