Global Trends Review, January 13-26, 2014: results of 2013 for Central European sawmillers; pellet prices stable, but under pressure

At the beginning of the year the average price of wood pellets in Germany has slightly decreased, as the German Energy Wood and Pellet Association (DEPV) reported. January price is €284.93/t, which is 0.2% lower than in December but still 8.8% higher on-year. “The wood supply is currently very high and for the year 2014, we can expect a high domestic pellet production,” said Martin Bentele, Executive Chairman of DEPV.

EUWID adds that prices for A1 and A2 pellets in Central Europe have been under pressure recently, as imports are growing from Eastern Europe and North America, while the weather in Europe is unusually mild this winter. Prices have been cut by €5-10/t, the journal says.

Pellet price hike in Austria was marginal, +0.1% compared to December. Currently the average purchase price stands at €265.9/t for a purchase of 6 tonnes.

Changes on the panel market

Pfleiderer and Swedspan Slovakia commissioned new particleboard lines in the middle of December, EUWID reported. Pfleiderer replaced two existing multi-opening presses at the Neumarkt II Mill with a new continuous press line. Swedspan has also installed continuous line instead of a second-hand multi-opening press in Malacky.

Binderholz will close MDF Hallein mill in Austria. Owner and managing director Hans Binder said there was no choice with 30% overcapacity in European MDF production and strong competition from low cost manufacturers. “Most importantly, there was no sign of any future change in the tough market situation in MDF,” Binder concluded.

Egger is going to focus OSB sales on the UK timber frame market, which generally will be a new area for the Austrian company. Production upgrades made recently at the company’s mills in Germany and Romania boosted Egger’s OSB capacity to almost 1 million m3. UK housebuilding is now growing, and timber frame housing construction is becoming more popular, which means increased demand for OSB-3.

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Holzkurier continues to sum up year’s results for the industry. In the first quarter of the year, the situation in the timber sales in Central Europe was severe, but later the dynamics clearly improved, the journal says. Austria and Germany had almost compensated for the bad start of the year. This recovery is due to three export markets, two of which may be considered as surprises (Italy and China).

First, the downward trend on the Italian market which is very important for Austria has finally stopped.

Austria focused on sales to Japan; in the first half-year, deliveries of Austrian timber products there increased by 56%. Even those mills which have not been traditional exporters to Japan managed to place some orders. Among other valuable customers were Germany and Czech Republic.

Germany found another alternative buyer for softwood timber – China purchased five times more than in 2012 – 194,000 m3 for ten months of 2013. According to Holzkurier, partially this is accounted for opening of Chinese sales offices by Ilim Timber and Klausner Holz. Among other European exporters, Finland and Sweden also benefited from the growing Chinese demand, while Austria’s exports there even declined.

Finnish log sales grew by 18% in 2013 but the high cost of raw material impacted Finnish mills’ competitiveness on the international market, says the Finnish Forest Industries Federation (FFIF). Log procurement volumes grew 26%, with 15.1 million m3 of sawlogs procured from a total of 33.4 million m3. In December 2013, pine logs cost on average €55/m3, with spruce averaging at €56/m3 and birch €40/m3.

According to FFIF, Finland by far fails to fully utilize its timber resources. Its growing stock almost doubles every year compared to logging volumes. Many forests are left unmanaged, and the short supply keeps costs high, which weakens investment conditions.

The Austrian Schweighofer Group is to build its fourth sawmill in Eastern Europe in Kolomyja (Ivano-Frankovsk region, Ukraine). Launch of the mill is preliminary scheduled for late 2015 or early 2016, its capacity will reach 500,000 m3/year. The enterprise will mainly process small-diameter wood. The investment scope of the project is around €50 million.

Canada sees India as a potential market for its lumber exports, as the country is fourth-largest consumer market in the world. Minister of Natural Resources Joe Oliver said that the Canadian government is going to boost financing for lumber marketing in India. According to Oliver, India’s demand for imports is one decade behind China: “China was very small too 10 years ago and yet the Chinese market was crucial in helping our forestry industry emerge from the recession when residential construction in United States basically collapsed”.

Analyst Paul Quinn of RBC Capital Markets said that Indian lumber imports will gradually increase, although transportation and infrastructure pose big problems in getting materials to local markets.

WhatWood’s reviews are prepared using corporate press releases, Holzkurier, Timber Trades Journal, Fordaq, EUWID Wood Products, ITTO, ForestTalk, and EUWID Paper.