A decline in construction volumes has significantly reduced the need for building materials in the Baltic Sea region, and consequently, the demand for various types of timber industry products has also experienced a downturn. As a result, the Latvian timber market saw prices continue to fall across all market segments in June. In June, the average price for spruce and pine small-diameter sawlogs fell by approximately 5%, which can be explained by the drop in the price of pulpwood for these species. The prices for birch veneer logs and pallet logs experienced a steeper decline in June than in May, falling by 5% and 10% respectively. At the same time, the price of birch pulpwood also fell from €65.00/m³ to €58.00/m³, according to information compiled by E-silva, the largest forest auction system in Latvia.
A general decrease in activity in the construction sector has been observed since the Russian invasion of Ukraine in 2022, when the availability of certain building materials was significantly reduced. Subsequently, rising inflation increased construction costs, thereby also reducing activity in the sector. Furthermore, due to the European Central Bank's interest rate hikes, it is more difficult to secure financial resources for real estate purchases, and as long as uncertainty regarding interest rate rises persists, fewer real estate transactions will be carried out, which also negatively affects the construction industry. Although to a lesser extent, the slowdown in construction in the private sector is also caused by a lack of public confidence in the future, which is exacerbated by the ongoing Russian invasion of Ukraine. These circumstances affect not only individual timber market segments but the entire timber industry as a whole, and prices continue to fall for all timber assortments.
Furthermore, according to E-silva auction data, the demand for Latvian forest felling sites was stable in June, despite the fact that demand for timber as a raw material has fallen, and consequently, roundwood purchase prices and sales opportunities have also decreased. This is because the economic activities of logging companies are significantly restricted due to the ongoing emergency situation restrictions regarding the spruce bark beetle, leaving a large portion of companies facing the threat of downtime. "To avoid potential losses caused by downtime, a large number of companies continued to purchase and harvest felling sites in June in order to avoid halting their business operations and thereby reduce the volume of potential losses," explains Gints Šnikers, founder of E-silva.
Sawlog prices continue their downward trend due to the fall in construction volumes
Although not as sharply as in May, the average price for softwood sawlogs continued to decline across all segments in June. Similarly to May, the average price dropped most sharply in the small-diameter sawlog segment in June, with the average price of spruce small-diameter sawlogs falling by approximately 5% from €76.13/m³ to €72.00/m³, while the average price of pine small-diameter sawlogs fell by just over 4% to reach €72.19/m³. In the medium sawlog category, the average price also continued a moderate decline, with the average price of spruce medium sawlogs reaching €76.25/m³, while the average price of pine medium sawlogs fell to €77.88/m³. Accordingly, a decline of 2.9% on average was also observed in the large-diameter softwood sawlog segment.
Birch prices begin to fall more sharply
In June, the average price for birch veneer logs fell from €139.75/m³ to €132.70/m³, a decrease of 5% compared to May. While the average price for birch veneer logs experienced a moderate month-on-month decline from March to May, the price drop in June has been sharper.
The price of birch pallet logs also fell in June. This is explained not only by the decline in pulpwood prices but also by the drop in construction volumes, as a reduction in the need for construction product volumes also reduces the need for pallets and packaging for the transport of construction products. Compared to May, the highest price for birch pallet logs fell from €107.00/m³ to €96.00/m³ in June, which is a decline of approximately 10%.
Firewood prices stable during the summer period
The price of firewood reached its lowest point in May, and as expected, the price of aspen firewood remained unchanged in June at €50.00/m³. However, the situation could change as autumn and winter months approach; as households and producers begin preparing for the new heating season, demand for firewood could increase, which could result in a gradual rise in firewood prices.
Birch pulpwood prices continue to gradually decrease in June
The highest prices for pine and spruce pulpwood, as well as birch pulpwood, continued to fall in June. Compared to May, the highest price for birch pulpwood fell by nearly 11%, from €65.00/m³ to €58.00/m³. Meanwhile, the highest price for pine and spruce pulpwood decreased by approximately 6%, reaching €58.00/m³.
For more information, see: https://e-silva.lv/aktualitate/koksnes-tirgum-sogad-jauni-izaicinajumi
About E-silva: E-silva is the largest forest auction platform in Latvia, operating as an industry-unifying forest sales system where logging companies, as well as local and foreign investors, compete for the opportunity to purchase timber harvesting rights and forest properties. Over the past seven years, the company has strengthened its position among Latvian and foreign clients.
The system offers open and transparent auctions of felling sites and forest properties, which are secure, fair, and economically beneficial for both forest owners and loggers. Its operator is the Latvian full-service forest management company SIA Forest Mentor Group. More: www.e-silva.lv