On the 2nd of February a public timber auction was held by the Estonian state forest RMK (Riigimetsa Majandamise Keskus). One of the major buyers was a subsidiary of the south Swedish forest owner’s association Södra, Södra Metsad OÜ, who set a price record for birch pulpwood by paying 770 SEK* (Swedish Krona) per m3solid wood under bark free Estonian port. If we subtract 100 SEK, we come very close to a comparable roadside price in Sweden which is 375 SEK. Furthermore, 770 SEK is more than the average Södra price for spruce sawlogs in Sweden.
This is a summary of an article at Skogsforum.se signed Torbjörn Johnsen.
Swedish forest owners’ association pay more for pulpwood in Estonia than in Sweden
A roadside price that in Sweden, according to Södra’s price list for birch pulpwood, is 345 SEK per m3 solid wood under bark, or 375 SEK for the certified forest owners. Still that´s less than half of what Södra are prepared to pay on the other side of the Baltic Sea.
We have questioned the Swedish forest industries price policies here at Forestry.com before. This raises even more questions.
Skogsforum.se has been in contact with forestry people in Estonia who confirm that the market for birch pulpwood has exploded in the country. They partly blame (or honor if you are a wood seller) Södra for this development. On the 2nd of February, Södra purchased more than 14 000 m3 birch pulpwood and some 8 300 m3 conifer pulpwood.
The price paid for conifer pulpwood was lower, around 562 SEK per m3 solid wood under bark free Estonian port. When subtracting the freight costs to port, this price is also significantly higher than what Södra offers their members in Sweden. According to our sources the situation is similar in the other two Baltic countries Latvia and Lithuania.
Why Södra?
If a listed company used this strategy, importing marginal quantities at high prices to force the domestic raw material prices down, no one would be surprised. But in this case, we are talking about a forest owners’ association that once was founded to help its members to get more profitability from their forests.
Why do they do this? Is it difficult to get birch pulpwood in Sweden? Well, try to raise the price to the above-mentioned levels and see what happens. Or are they just afraid to show the real value of hardwood in fear of the forest owners to abandon the spruce (that is the main species in Sweden today)?
Why not from other parts of Sweden?
Another question that occurs is why those marginal quantities are bought from other countries when it could be bought (cheaper?) from other parts of Sweden (Södra are active only in the southern parts of Sweden). The right price would bring out big volumes of birch pulpwood from the forest. Are they afraid of clashing with the forest industry outside their own sphere? Is it better to help filling the Estonian treasury by buying expensive pulpwood from the RMK? Maybe a good deed but hardly the purpose of a Swedish forest owners’ association.
Timber auctions – something for Sweden?
Estonian state forest holds several timber auctions every year. Some upcoming felling’s are sold on open auction. The rest is sold on long-term contracts, but the auctions are important as they set the prices for the long-term contracts. A smart way for the state to keep the prices up. Maybe the Swedish State Forest Sveaskog should have a look at that?
Market prices everywhere – but not in Sweden
The other day we wrote about that Sweden has the lowest timber prices. It’s often talked about, also among forest owners, that timber prices should be ruled by the market. One can´t help wondering how market-based the Swedish prices are when you see how they are being ruled by e.g., buying expensive pulpwood on the other side of the Baltic Sea to keep the domestic prices down.
Photo: Unsplash.com
*Facts/Sources
Data from the RMK timber auctions are openly displayed. The last auction was held in Tallin on the 2ndof February 2022. Here Södra purchased 14 068 m3 birch pulpwood and 8 354 m3 conifer pulpwood. Free port, Södra payed € 74 per m3solid wood under bark for the birch pulpwood. To make it comparable to Swedish prices we have converted it into SEK using the exchange rate € 1 = 10,40 SEK (3rd February 2022), which gives us SEK 770 per m3solid wood under bark.
The corresponding price for conifer pulpwood was € 54 per m3 which with the same calculation gives us SEK 562 per m3solid wood under bark.
Please note that the prices are free port which means that freight cost to Estonian port must be subtracted. Our estimation is that the freight cost is approximately SEK 100 per m3solid wood under bark.
