{"id":81199,"date":"2021-09-15T06:44:57","date_gmt":"2021-09-15T06:44:57","guid":{"rendered":"https:\/\/tin.happy-projects.ro\/no-reason-expect-skyrocketing-timber-prices-latvia-will-return-pre-pandemic-levels\/"},"modified":"2025-09-19T08:56:04","modified_gmt":"2025-09-19T08:56:04","slug":"no-reason-expect-skyrocketing-timber-prices-latvia-will-return-pre-pandemic-levels","status":"publish","type":"post","link":"https:\/\/www.timberindustrynews.com\/ro\/no-reason-expect-skyrocketing-timber-prices-latvia-will-return-pre-pandemic-levels\/","title":{"rendered":"No reason to expect that skyrocketing timber prices in Latvia will return to pre-pandemic levels"},"content":{"rendered":"
\n

In the Latvian timber industry, the sharp rise in prices was caused by an unpredictably high level of private consumption combined with a rapid recovery in construction.\u00a0<\/em><\/p>\n

Kristaps Klauss, Executive Director of the Latvian Wood Industry Federation (LKF), explains price changes and forecasts about the future situation in an interview.<\/p>\n

A year ago, the Latvian timber industry was in a difficult situation. What has changed now?<\/strong><\/p>\n

Let's just say that everything has changed during the year.\u00a0In May last year, markets began to revive unexpectedly.\u00a0Of course, after a year everyone is smart, and in theory it was possible to predict it, but I do not remember anyone who would have expressed such a development scenario at that time.\u00a0It is one thing to understand that the great changes that have taken place and the rapid rise in prices that everyone is talking about do not cover all wood products.\u00a0It covers softwood lumber and boards - OSB, particleboard, construction plywood and packaging.\u00a0The sharp rise in prices was caused by unpredictably high private consumption combined with a rapid recovery in construction.\u00a0During lockdowns, people did not lose their income, but even increased it due to both benefits and reduced spending (did not travel, did not go to pubs or cultural events, etc.).\u00a0Simplifying the situation very much - if a person has enough funds and is bored, they start to tidy up their household.<\/p>\n

\"\"<\/a><\/p>\n

Kristaps Klauss, Executive Director of the Latvian Wood Industry Federation.<\/em><\/p>\n<\/div>\n

People began to buy materials to improve their homes - renovated terraces, fences, repaired kitchens and rooms, and so on.\u00a0It was a rapid and massive demand.\u00a0All this madness was joined by the people in towns, who bought houses in the suburbs, in the countryside.\u00a0For example, in the United States, the most striking example, prices in this category of timber have more than quadrupled.\u00a0Imagine a New Yorker who has lived in the center so far and has been very happy, because life in the city never stops, suddenly everyone is forced to sit at home.\u00a0It is logical that there was a very massive interest in moving to the suburbs - it makes a big difference whether you are sitting on the 12th floor in the New York area or you are in a suburban house with at least some kind of garden.\u00a0People became interested in renovating and there was a great demand for moving.\u00a0It happened not just in the US,\u00a0but also in the rest of the world.\u00a0We remember that in Latvia at that time it was almost impossible to rent a house in the countryside.\u00a0People fled the cities, and this led to the next wave, when the United States began to build both new homes and renovate existing homes on the secondary market.\u00a0All this led to huge short-term demand, but the production capacity for lumber is not unlimited.\u00a0Capacity is quite limited by two important elements - whether there will be logs to produce and whether there is enough capacity to process these logs.\u00a0Both of these things - log availability and capacity - were virtually exhausted, all working at maximum capacity.\u00a0For example, in the last quarter of last year, since I monitored the production volumes of Latvian softwood sawmills, the production volume has never been so high.\u00a0This year is the same - in fact, we are at the maximum capacity load in Latvia.<\/p>\n

Supply is unable to keep up with demand.\u00a0Plus, production was greatly reduced in April-March last year, as everyone was scared at the beginning of the pandemic.\u00a0Because buyers canceled orders, logically that capacity was reduced.\u00a0Last year, therefore, two things coincided: not as much was produced as was normally required, and demand was much higher than normal.\u00a0This year, everyone is producing significantly more than usual, in fact the capacity of all European sawmills is close to the maximum, including the US capacity.\u00a0Demand is still very, very high.<\/p>\n

Currently, the price ceiling is regulated by demand.\u00a0If we look honestly at the construction estimates, of course, lumber prices have risen dramatically, doubled and even more.\u00a0But at the same time, if we look at the overall estimate of the building costs, the wood products in it do not form a lion's share of costs.\u00a0The most expensive items are others.\u00a0Even if the estimated\u00a0wood\u00a0is 10-15% and if the prices for timber increase by 50% and more, it still does not make construction impossible.\u00a0The problem for builders is that the same thing happens with cement, metal and more.\u00a0Therefore, the builders are in an unenviable situation.<\/p>\n

In any case, given that the overall cost of timber is not so high, buyers were willing to accept even higher and higher prices.\u00a0In addition, buyers were forced to the wall, if you have to finish the construction site or have demolished the old terrace and started to put a new one, they will not say that it will be restored after five months, when prices will be cheaper.\u00a0People have money, and they pay.<\/p>\n

At the moment, as I have already mentioned, the supply is close to the maximum.\u00a0The producers cannot really be blamed for causing this boom.\u00a0The excessive change in the market has been caused by buyers with very high demand.\u00a0The only criticism that can be applied to producers, which we also cannot really accept, is that they were not able to keep up with the volume of supply.\u00a0This is not physically possible either in terms of capacity or available raw material.<\/p>\n

Indeed, the prices of particleboard have risen cosmically over the years.<\/strong><\/p>\n

I totally agree.\u00a0That is why I have also publicly told Latvian private individuals - wait!\u00a0Don't do it now!\u00a0Prices are now inadequately high.\u00a0At the same time, however, there is no reason to think, and I am now talking from a logical market point of view, which may not always be the case, that prices will return to previous levels.\u00a0For some products, prices are already starting to fall on September deliveries.\u00a0We are seeing that the prices of certain products, such as boards used for garden improvement, are now starting to fall, as the active season is over and demand is falling.<\/p>\n

Speaking of wood building materials, which is what Latvia basically produces, we will see how the Swedes will behave when they return from vacation.\u00a0It will also largely decide the game, but logically, prices should not fall until the end of this year.\u00a0Of course, if the Swedes decide that they are ready to sell cheaper, then prices will be down sooner.<\/p>\n

At the same time, there is no reason to expect prices to return to old, pre-pandemic levels.\u00a0The new normal will have higher prices than in the past, judging from a logical point of view.\u00a0I will simplify the green course very much, but it has two things built into it.\u00a0It embodies the trend towards declining logging in Europe and, at the same time, the trend towards increasing the use of wood, especially in construction.\u00a0We are already seeing that, especially in Germany, there are at least a dozen new CLT plants, and these materials will take away the market or replace, for example, reinforced concrete slabs.\u00a0Wood construction material will enter those market niches where it was not so well represented before.\u00a0Therefore, the consumption of boards in further processing will increase and at the same time will not fall in the classic DIY segments.\u00a0For this reason, demand will grow.\u00a0If production volumes fall due to a shortage of raw materials, but demand for the product increases, then there is no reason to think that we will return to the old price levels.\u00a0Future prices will, of course, be lower than we see in the market now, at the same time higher than we have historically seen them.<\/p>\n

How can Latvian companies use this current, very good situation to their advantage, especially in export markets?<\/strong><\/p>\n

Exports in monetary terms have increased, but in terms of products, the volume of exports has not increased.\u00a0Exactly the same is true for imports - in monetary terms they have grown, but not always in volume terms.<\/p>\n

The Latvian forest sector has no enthusiasm in the current market situation.\u00a0If this situation was and is beneficial for processors at least in the short term, then for the furniture industry, finished\u00a0wood for the construction of buildings the situation is not so encouraging.\u00a0These producers take a completely different view of the current situation, as raw material prices have rise, but they have relatively little room for increasing the prices of their end products.\u00a0In the furniture market, producer prices have risen sharply this year, but if we take into account that the prices for boards have doubled and for some even tripled, the furniture makers can talk about a 10% increase in prices for their final product.\u00a0Then it is possible to understand their position: raw material prices are rising insanely, demand is very good, capacity is overloaded as never before, but they cannot pass on this increase in raw material prices to finished products.<\/p>\n

\u00a0How has the situation in the UK market changed after Brexit?\u00a0Has this changed the total exports of Latvia's timber industry?<\/strong><\/p>\n

No.\u00a0Brexit has had a minimal impact on the overall market situation.\u00a0All those who have previously claimed that the British will have an economic downturn after Brexit have not been right.<\/p>\n

But it must be said that it is very difficult to assess the impact of Brexit in a situation where the world was confused by the pandemic.\u00a0Of course, Brexit caused us inconvenience, companies in Northern Ireland have to deal with a different VAT code than in the mainland England, the renewal of borders has hampered logistics, there is a shortage of vehicles.<\/p>\n

In view of the high timber prices, are private owners now reluctant to cut down their forests?<\/strong><\/p>\n

Both yes and no. Of course, if the forest owner has a very good softwood stand, especially pine, which has little pulpwood and 80% is sawlogs, then, without a doubt, this is the ideal time to sell them. However, if there is a mixed hardwood stand with both birch and aspen, spruce, then it should be noted that only softwood sawlogs actually have insane prices. Pulpwood is still relatively low in price and there problems to sell. There is also no high price for firewood and hardwood, the price of birch has not even returned to the level of last year's prices. From the point of view of the forest owner, of course, the prices have risen, but the value of the total felling area for mixed species is not particularly higher.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

In the Latvian timber industry, the sharp rise in prices was caused by an unpredictably high level of private consumption combined with a rapid recovery in construction.\u00a0 Kristaps Klauss, Executive Director of the Latvian Wood Industry Federation (LKF), explains price … Continue reading →<\/span><\/a><\/p>","protected":false},"author":1,"featured_media":58120,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[4716,4715,4714],"tags":[3569,3306,4071],"class_list":["post-81199","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-trends","category-market-analysis","category-wood-industry-prices","tag-latvia","tag-lumber","tag-timber-prices","topic-forestry","topic-industry-prices","topic-sawmilling","topic-wood-construction","topic-wood-furniture","topic-wood-based-panels","area-europe"],"acf":[],"yoast_head":"\nNo reason to expect that skyrocketing timber prices in Latvia will return to pre-pandemic levels - 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