In its Global Forest Industry Summary for 2023, Wood Resources International (WRI) attributes tightening hardwood pulplog supply, decreased Russian lumber shipments and prices, and uncertainty in the European energy market to Russia’s invasion of Ukraine.
Global timber market
Europe’s sawlog market has taken hits from declining wood demand, fluctuation in log flows, and ‘unprecedented swings’ in sawlog prices. In the third quarter of 2023, the European Sawlog Price Index (ESPI) fell by 12% quarter-over-quarter (q-o-q); Central Europe saw the biggest decline.
For the first nine months of the year, these falling prices are thought to have stemmed from reduced production at Austrian, Czech, and German sawmills.
These developments came after WRI’s market insights for the global forest industry in the first quarter of 2023 took note of Europe’s close proximity to a twenty-year high in sawlog prices and a decline in its pulp prices due to a reported decrease in global paper demand.
Spruce prices were up by almost 10% from 3Q/22 to 3Q/23 in Sweden. WRI attributes this to slower log deliveries from private forest owners, mostly in the southern region of the country. Besides this, however, prices have been almost static in the Nordic countries.
Global wood fibre markets
Russia’s invasion of Ukraine is cited as a primary cause for the tightening supply of hardwood pulpogs throughout the year. The interrupted supply has caused a 44% surge in the Global Hardwood Fiber Price Index (HFPI) since late 2020, WPI explains – and the index reached its highest level in over a decade in 3Q/23.
As opposed to the hardwood market, though, decreasing prices for softwood pulp and lower pulp production in both Europe and North America have contributed to reduced demand for softwood wood fibre. As a result, the Softwood Fiber Price Index (SFPI) decreased by 4.5% q-o-q in the 3Q/23.
The first eight months of 2023 oversaw a decline of over 12% in hardwood chip trade in Asia. WRI states that China reduced its purchases by 26% year-over-year (y-o-y), yet Japanese pulpmills drove the strongest chip import volumes in four years.
Global lumber markets
An increased flow of wood products from countries with vast amounts of forests to those with fewer sources of wood has driven the global lumber trade over the past few decades, WRI explains. It raises Sweden as an example; whereas almost 80% of its lumber export volume was sent to European markets fifteen years ago, the current figure is closer to 55%.
In Canada and the US, combined softwood lumber production is said to have totalled 73 million m3 in the first three quarters of 2023; 25 million m3 was attributable to Canada, while the US accounted for 48 million m3. This development marked a decrease from 77 million m3 in the same period in 2022.
Canadian lumber dominated 83% of the US market in 2023, yet German imports have slowly increased since 2019 and made up almost 7% of the market share in 2023. Swedish lumber was responsible for around 3% of the US lumber import market, and the remaining 7% came from smaller, supplying countries in Europe, New Zealand, and Latin America.
While Russia was the world’s largest exporter of softwood lumber in 2020 and 2021, the country’s invasion of Ukraine and the subsequent boycott of Russian forest products led to a drastic decrease in shipments. WRI reports that the country’s record high of over 31 million m3 in 2020 fell below 21 million m3 in 2023.
In March, WRI reported that imports of wood chips and logs to Finland from Russia fell from an all-time high in 2020 to zero in the third quarter of 2022. Now Russian lumber exports have decreased by almost 50% in terms of US dollars – more specifically, they dropped from $310/m3 in early 2022 to $163/m3 in 3Q/23.
In China, log and lumber imports increased between 3Q/23 and 4Q/23. Nevertheless, the estimated annual importation for 2023 was still the lowest it has been in eleven years, with logs undergoing the most significant decline; lumber imports have fallen less in comparison over the past two years.
Global biomass markets
WRI names the US as the world’s largest exporter of wood pellets. Shipments have steadily increased for over ten years, it says.
Over the first nine months of 2023, export volumes were said to be 7% higher than the equivalent period in 2022. The total for the year is predicted to exceed 9.5 million tons, which is over 50% higher than five years ago.
Residential wood pellet prices in Europe were apparently lower in the 4Q/23 than the same quarter in 2022 after Russia’s invasion of Ukraine. This led to uncertainty in the European energy market, with Central Europe reaching its lowest level of energy prices in almost two years at an average of €370/ton.
Once again, Sweden saw less of a fluctuation, only experiencing ‘modest declines’ in 2023.
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