Softwood sawlog prices have gone up in 21 of 22 regions worldwide in the past year, as tracked by the WRQ. By far, the most significant increases have occurred throughout Europe and British Columbia.
In the 2Q/21, average sawlog prices were 60-70% higher year-over-year in Eastern and Central Europe, driven by the increased competition for logs by the sawmills throughout the continent. In the past year, lumber producers in Latvia, the Czech Republic, and Poland experienced the most significant cost increases for wood raw-material.
Serious Jump in Global and European Cost Metrics
As a result of the worldwide rise in log costs, the Global Sawlog Price Index (GSPI) jumped 10% quarter-over-quarter in the 2Q/21. This change was the fifth consecutive quarterly increase and the highest level recorded in seven years.
The GSPI has been higher only four times since the WRQ started tracking global sawlog prices in 1995. The recent price developments have resulted in Central and Eastern Europe and Western Canada becoming the highest-cost lumber-producing regions globally.
The rise of sawlog prices in much of Europe has taken the European Sawlog Price Index (ESPI), denoted in Euros, to an all-time high. In the 2Q/21, the index was up 18% from the previous quarter and 35% higher than in the 2Q/20. The most significant price jumps (in Euros) have been in Poland, Latvia, the Czech Republic, Germany, and Austria.
What is Impacting Market and Trade Prices?
The abundance of damaged timber from the storms and insect infestations in 2017 and 2018 still impacts log trade and market prices in Central Europe. Due to these events, there was an oversupply of logs which resulted in sawlog costs plummeting to their lowest levels in over 20 years (in Euro terms). However, in late 2020 the prices saw a turnaround.
The lack of fresh, quality sawlogs and strong demand for logs from the region’s sawmills moved sawlog prices sharply upward during the first six months of 2021, reports the Wood Resource Quarterly. In Austria, the Czech Republic, and Germany, average prices in the 2Q/21 were 40-50% higher than a year earlier and higher than their respective 25-year averages.