Expert Insights by Hakan Ekström

Trade of logs and lumber in Europe will change dramatically in the coming years as timber harvests in Central Europe decline and the sanctions against Russia result in a plunge in forest products imports

Russia’s invasion of Ukraine is likely to impact global trade in the coming months. Increased sanctions against trading with Russia and difficulty with financial transactions will probably interrupt and re-direct shipments of forest products throughout the world.

Wood fiber costs for pulp manufacturers have gone up in practically all countries covered by the WRQ over the past year. In the 3Q/21, the Softwood Fiber Price Index (SFPI) was at its highest level since 2014, 8.1% higher than the 3Q/20.

The large softwood timber surplus in the US South is likely to diminish over the next decade, resulting in regional increases in sawlog prices, while prices for pulpwood will remain unchanged

STOCKHOLM, Dec. 13, 2021 -- The forest industry in the US South has attracted increased interest and investment over the past few years.

In 2020, wood pellet production in Europe was up 4% y-o-y and was 34% higher than in 2016, according to data just released by the UNECE. Despite this increase, production has not kept up with consumption, resulting in higher net imports to the continent over the past few years.

Softwood sawlog prices have gone up in 21 of 22 regions worldwide in the past year, as tracked by the WRQ. By far, the most significant increases have occurred throughout Europe and British Columbia.

Softwood pulpwood saw higher price increases worldwide than hardwood pulpwood, resulting in the widest margin between the two fiber sources in 14 years

Softwood sawlog prices have gone up in 21 of 22 WRQ regions worldwide in the past year. By far, the most significant increases have occurred throughout Europe and British Columbia.

Softwood lumber has been in high demand in the US and Europe throughout 2021. The limited supply resulted in temporary price surges to record high levels during the spring, followed by substantial declines in early summer.

The strong lumber markets in North America and Europe resulted in higher sawlog prices in most parts of the world in early 2021.

Global trade of wood chips increased by almost 50% from 2009 to 2020, driven by substantial demand for hardwood fiber by Chinese pulpmills

Hardwood fiber costs for pulp mills worldwide increased modestly at the end of 2020 but were still substantially lower in many markets compared to late 2019

The Global Sawlog Price Index rose 8% in the 4Q/20 as demand for logs was up in North America and Europe

Germany’s export value of logs and lumber has increased 63% the past five years, reaching 2.5 billion dollars in 2020

The forecasted growth in wood pellet production in Europe will increase competition for wood fiber and require new feedstock sources

China is the world’s largest importer of softwood and hardwood logs, and for many decades, Russia has been a significant log supplier for them.

The Global Sawlog Price Index rose 8% in the 4Q/20 as demand for logs increased throughout North America and Europe.

Russia exported 15 million m3 of logs in 2020, which accounted for almost 12% of globally traded roundwood.

Times have been good for lumber producers in 2020, with profitability rising worldwide. Most countries tracked by the Wood Resource Quarterly have had their highest gross margins in at least two years, with North America standing out as the continent with the most spectacular profit improvements.

Lumber trade fell slightly in Europe in 2020. During the first eight months, shipments from the major exporting countries were down 1.2% - the first y-o-y decline in eight years, reports the WRQ.