Over the last few years, the most significant change in trade flow in Europe has been a sharp decline in roundwood imports from Russia to the Nordic countries. Russia's war with Ukraine at the beginning of 2022 led to Europe halting the purchase of timber exports from the country.
The total volume of roundwood imports into Finland and Sweden in 2022 halved compared to the average for the previous decade.
Log trading in the Baltic Sea region has declined for two reasons:
– Russia's invasion of Ukraine;
– investments in forest production capacity in the Baltic states.
The two largest roundwood trading regions in Europe are the Central and Northern regions. In Central Europe, the main importers are Austria, the Czech Republic, and Germany. In Northern Europe, Finland and Sweden are the two primary roundwood importing countries.
Exports from other European countries continue to decline
In addition to Russia, we are also seeing a decline in roundwood exports to the Nordic countries from Estonia, Latvia, and Lithuania. The majority of the decline relates to coniferous logs, whereas broadleaved log exports have remained relatively stable.
Over the last five years, trade in coniferous roundwood in the Baltic Sea region has been steadily declining. Total coniferous roundwood imports into Finland and Sweden reached a 15-year high in the third quarter of 2018. Since then, the price trend has fallen by approximately 40% as of the first quarter of 2023 (see chart).
Over the last year, trade flows to Sweden from neighbouring Finland and Norway saw the largest decline. A slight increase was observed in shipments from Sweden to Finland and from Latvia to Sweden.
Pulpwood prices rise due to lower supply
Lower pulpwood supply and strong pulp markets have driven up roundwood prices over the last year. In the first quarter of 2023, compared to the previous year, import prices for coniferous and broadleaved pulpwood into Finland rose by 93% and 123% respectively.
Over the same period, import prices for coniferous and broadleaved pulp into Sweden also increased by 14% and 111%. Pulp import prices into Finland and Sweden in the first quarter of 2023 were significantly higher than domestic market prices.