Some Estonian sawmills may have to temporarily halt operations before the end of the year, as a drop in demand hits timber producers amidst rapidly rising energy prices. Sawmills are also facing competition from energy companies, which are switching from natural gas to burning wood and wood products, while the hot summer has also left its mark.

The decline in demand from the Estonian construction sector has triggered a market downturn of approximately 50% since the beginning of the year, and the position of sawmills has been further worsened by energy companies, which can pay higher prices for timber suitable for burning at a time when alternatives to natural gas are being sought.

Martin Arula (Martin Arula), chairman of the Võru County sawmill AS Toftan, told the Estonian news service Aktuaalne kaamera: “We are preparing for a worst-case scenario, which means that prices will continue to fall and raw material availability will not improve suddenly. Instead, we think that a particularly bad time will likely be in December and around Christmas, when we may have to initiate a longer break,” continued Martin Arula, adding that the changes in the markets for various types of roundwood, firewood, and pulpwood have been extreme, while energy prices are absurdly high.

“It is interesting that spruce sawlogs are even cheaper than fuel roundwood; spruce logs cost around 90 euros per cubic metre, but a cubic metre of spruce firewood roundwood is somewhere around 100,” he said, adding that part of the reason is the sawmills' efforts to compensate for other losses. For forest owners, the situation is a matter of choice – whether to take their harvested wood to a sawmill or sell the roundwood themselves as firewood.

Lauri Junkins, purchasing manager at the Võru County timber company AS Barrus, said: “Firewood prices are very high, especially for hardwood. We are in such a rare situation where the price of firewood is approaching the price of sawlogs; these differences are very small, and in some places, they have already been crossed. For example, suppliers now have the option of taking a nice birch log to a sawmill, or, seeing that it is more profitable to sell to a boiler house, selling it as simple fuel wood… This situation has never happened before,” he continued.

Relatively fewer pine and spruce logs are reaching sawmills than this year, thanks to a hot and dry summer that forced logging operations to be organised more in damper areas that are usually inaccessible and favourable to deciduous trees.