Last year was a period of stabilisation in many areas for the Latvian forest industry.
Annual cutting volumes settled at 10.75 million m3, 8% below that of 2003., which is positive in terms of sustainable forest management as the gap between annual growth and felling had widened. The decrease in harvesting was compensated for by a 73% increase in roundwood imports from Russia, Lithuania and Belarus, taking these volumes to 797,000 million m3.
Softwood log prices stopped rising as supply and demand came into balance. During 2004 the average price for spruce logs was stable, but Baltic pine logs became cheaper because of weaker demand from export markets.
The industry’s commitment to sustainable forest management has also helped stability.
Last year exports of forest products grew by 9.7%, while sawn timber exports grew by 2.1%. In natural volumes sawn timber exports were 9.7% lower than in 2003 at 2.9 million m3.
Growing market share
A new trend emerging in Latvia’s export market is the growth in value-added goods. This means not only more kiln-dried timber, but also planed and treated timber. Another important change is Latvia’s growing share of non-European markets for sawn timber. Last year exports to Japan rose by 37%, making it the second biggest market after the UK.
Latvia’s wood panel industry also increased its export volumes last year – up 11% on 2003. Adding value is also a trend in this sector as increasing volumes are being sold as semi-finished product for the end user.
The Latvian forest industry is developing in two directions. The large sawmills – Kurekss, Nelss, Stora Enso Launkalne, BSW Latvia – are developing big volume production of construction timber while medium and small mills are concentrating on growth in other specific segments such as garden timber, decking and glulam. These two trends combined are also bringing stability to the industry.
Problems
The main problems the industry faced last year were weak demand in European markets and, by the end of the year, the burden of higher shipping costs and the short supply of vessels. Changes in the euro/sterling exchange rate worked in Latvian producers’ favour.
Although sawn timber imports increased last year, the first data for 2005 suggests this is no longer the trend. Further forecasts for the year expect problems in the pulpwood sector as demand from Scandinavia, which is processing windthrow timber from the January storm, will be very low, if non-existent.
