The biggest price declines have been in Sweden where pine saw log prices fell more than 15% from the 4Q/10 to the 4Q/12 in both the local currency and in U.S. dollar terms. Spruce log prices have declined more than 25% during the same time period. In Finland, Germany, and Norway, prices have dropped a more modest 5%-10% over the past two years, according to the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. Saw log prices fell during 2012 because sawmills were cutting back production in response to the weaker demand for lumber throughout Europe.
While log prices have fallen in both U.S. dollar terms and local currencies the past two years in Northern and Central Europe, prices for saw logs in the 4Q/12 in Eastern European countries, including Estonia, Latvia, and the Czech Republic, were generally higher than in 2011. This development has mainly come as a result of the relatively strong lumber export market which kept the log markets healthy.
The only major market in Eastern Europe where log prices have fallen has been Poland. From the 2Q/11 to 4Q/12, average prices have fallen over 20% and the country has now some of the lowest conifer saw log prices in Europe, according to the WRQ.
As a consequence of slowing lumber production, log trade declined in Europe during 2012, which also had a dampening impact on log prices on the continent. Net log imports to Western Europe fell from more than 14 million cubic meters in 2011 to an estimated 10.8 million cubic meters in 2012. Much of the declines in imports were those from Russia and the Baltic States.
Saw log prices might be close to the bottom in the 1Q/13, and they are likely to remain at these levels as long as the European demand for lumber continues to be weak. Despite the recent price declines, current price levels are higher than the 10-year average in all major markets throughout Europe.
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TAPPI
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