Timber Exchange review – September 2019

In September, the prices of woodchips in Lithuania continued to decrease, as European forests were attacked by wormholes

By the end of September, the quantity of sold timber recorded with the Electronic Timber Trading System (ETTS) amounted to 70,440 solid m³. Over this period, 124 auctions were organised, of which 75 auctions were announced as completed. Ninety-three buyers from Lithuania and Poland took part in the auctions. Ninety-five per cent of timber was purchased by Lithuanian companies. The total value of the sold timber amounted to EUR 1,669,009.

In September, most of the timber sales via the ETTS took place during the repeat auction of the second half of the year (40,390 solid m³). During the auction, the State Enterprise State Forests Directorate (VMU) sold 46% of the offered timber. Twenty-five buyers participated in the auction.

Most offers consisted of cheaper timber assortments such as pulpwood, firewood and wood panels that remained unsold during preceding auctions. The supply of these assortments on the European market has increased due to an increased number of heat waves. Heat waves result in an increasing number of storms, droughts and fires and activate wormholes that can cause even more damage to forests than fires. This was the case in Sweden where last year fires destroyed 2.1 million m³ of timber, while forests suffered from wormholes twice as much – 4 million m³ of timber was damaged.

The third repeat half-year auction was announced for the remaining quantity of timber; buyers may register for the auction by 14 October inclusively. The auction will be held on 22–28 October.

During the short-term auctions held in September, 30,050 solid m³ of timber was sold. Sales volumes decreased by 17% compared to August; the decrease was due to the decreased supply and decreased activity of market participants.

Trade in TOP5 timber assortments in September accounted for 89% of the total sales of timber, i.e. 26,860 solid m³. The portfolio of short-term transactions was dominated by pulpwood (34%); the transactions for sawlogs accounted 25%, the transactions for wood panels and firewood (class II and III calorific value) accounted for 22%, packing logs accounted for 15% and timber harvesting residues accounted for 4%.

In September, the prices of TOP5 assortments decreased compared to the prices recorded in August. The prices of timber harvesting residues decreased by 10%, the prices of sawlogs and packing logs dropped by 6%, and the prices of wood panels, firewood (class II and III calorific value) and pulpwood decreased by 3%.

It is expected that in October the sales volumes of short-term auctions will be similar to those recorded in September and will amount to approximately 30,000 solid m³ since the State Forests Directorate plans to hold more auctions in the first half of October than at the beginning of September. The market price trends in the country may remain negative due to the excess of timber on the European market. The quick expansion of wormholes in European forests over the past few years has become a serious challenge. According to an article published by Wurzburg University, in 2018, these insects were responsible for the destruction of 40 million solid m³ of timber in Central Europe, and this process is continuing this year.

The Swedish Forest Agency forecasts that, in the worst case, wormholes may damage as much as 12.5 million solid m³ of timber in Sweden this year. Last year, this figure was 4 million solid m³.

According to estimates of the Czech Ministry of Agriculture, in 2018, 18 million m³ of trees were contaminated in the country, which is 10 times more than in the preceding year.

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