Nordic winter biomass feedstock availability to tighten

Nordic woody biomass feedstock prices have risen ahead of the start of the heating season, owing to high production costs and as availability tightens on firm demand from the bioenergy sector.

Swedish forestry co-operative Sodra has increased the basic price of its fuelwood by 30 Swedish kronor/m³fub ($2.95/m³fub), wood chips by SKr20/m³s, and pine logs by SKr70/m³ in response to stronger demand. Continued demand for raw materials has resulted in a "deficit" in the timber market, Sodra Skog's business area manager Peter Karlsson said.

Although "uncertainties continue to prevail" in the global timber market, robust demand for forest raw materials will continue in the "long term", Sodra said.

The price adjustments will "stimulate" forestry activities, including regeneration felling, thinning and nature conservation management, Sodra added.

In Finland, logs are the largest expense for companies in the sawmill industry, with the price of wood rising "significantly more" than the price of the end product, Finnish sawmill industry association Sahateollisuus' chief executive, Tino Aalto, said. The ratio between log and sawn timber prices has grown higher than in more than 15 years, "making the economic situation very difficult", Aalto said.

Finnish production of sawn timber in the 12 months to 30 June was 10.1mn m³ — the lowest 12-month volume since October 2013, Sahateollisuus said. The use of logs has dropped by more than 4mn m³ from record levels in 2021, it added.

If wood availability tightens in Finland and costs there rise faster than in competing producing countries, it will "open up opportunities for sawmill industries in other countries to conquer markets", Aalto said.

Production and consumption of sawn wood in Europe has declined since 2022, owing to economic problems and geopolitical tensions, European sawmill industry organisation EOS president Herbert Jobstl said in the association's 2023-24 annual report. Price rises for labour, raw materials and energy have increased costs for the industry, Jobstl said.

Strikes in Finland caused "major difficulties" for the supply chain in spring, and while log prices are expected to remain high, "there are cautious expectations" that sawn timber prices will increase further in the country, EOS said.

And further out, European sawmills expect consumption to pick up in the longer term, once the subdued construction market resumes and as construction activity in key markets such as China and Japan is expected to pick up, Jobstl said.

Baltic biomass feedstock prices fall

Elsewhere, Estonian prices on an ex-works basis for fuelwood — or low-value roundwood — from privately owned forests fell in July compared with a year earlier, but were significantly higher than historical levels, data from Estonian private forestry association Eramets show.

The cost of fuelwood from Estonia's privately owned forests also dropped year on year in the second quarter, when it was down by just over 4pc compared with the first quarter, as a result of reduced demand stemming from a mild 2023-24 heating season, ample stocks and relatively cheap gas prices, Eramets said.

But an expected rise in gas prices ahead of the approaching heating season is anticipated to support fuelwood prices over the coming months, Eramets said.

Prices for fuelwood sourced from state-owned forests followed a similar trend to their privately owned counterparts. Prices on an ex-works basis in May — the latest month for which data are available — fell from a year earlier, but were significantly higher than historical levels, data from Estonian state forestry agency RMK show (see chart).

By Hannah Adler

Estonia raw materials €/m3