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In 2022, the export revenue of the forest sector reached an unprecedented record - 4 billion euros, but it will not be repeated in 2023, which was marked by a drop in the prices of wood products.<\/p>\n
Future challenges lie in EU settings and the ability of entrepreneurs to quickly change according to the situation. Art\u016brs Bukonts (in the left photo), the new executive director of the Latvian Wood Industry Federation, tells this in an interview with Latvian news agency LETA. He points out that in the conditions of rapid inflation (cost increase), many companies in the industry have been able to survive only thanks to previously accumulated fat (profit), but these stocks are not inexhaustible.<\/p>\n
What is the situation in the Latvian wood industry?<\/strong><\/p>\n It was the latter that caused a fear factor in the European wood product markets, where, not knowing what the near future would bring, there was an increased demand for wood products - foreign buyers of wood products wanted to fill their warehouses in the shortest possible time for safety. Of course, this exercise was not carried out by one or a few players in the market, but it was a mass phenomenon, which led to an increase in demand and prices.<\/p>\n Last year, you could experience the obvious - the unbelievable, when the price of lower-quality or energetic wood reached such a level that at times you had to start thinking - to produce building material or wood chips from sawlogs? In accordance with the law, the European Union imposed sanctions against the wood products of Russia and Belarus, they came into effect already last summer. If Latvian companies already stopped importing wood and its products from these countries in the spring, then in Europe this flow stopped only after the date of entry into force of the sanctions in July. At the same time, in Europe, at the end of summer, all warehouses were full and overcrowded, because the real consumption was much lower than the forecasted volumes.<\/p>\n Namely, the European Central Bank began to fight against decades of unprecedented high inflation in the Eurozone, raising interest rates, which sharply cut construction, which is the main consumer of wood products (about 50%). And even in a situation when the product is in stock and the reduced demand does not allow further price increases, potential buyers chose to wait and buy less, which is why a significant price drop began. This is already visible in Latvia. And although the consumption of wood products has not decreased so significantly, the demand for them has decreased due to the factor of overcrowded warehouses.<\/p>\n Stocks of traders' warehouses are settling within the limits of the previous norm, and such warehouses of finished products have started to form near manufacturers. And although such a model of operation is more applicable to Scandinavian rather than Latvian sawn timber manufacturers, currently such finished product stocks are also available to those who produce this product in Latvia. There are forecasts that the situation will normalize in the coming months, roughly in the second quarter of 2023.<\/p>\n What was the overall situation in the Latvian wood industry last year?<\/strong><\/p>\n It must be said that now the situation has to be evaluated over several years, because the last \"normal\" year of the market situation was 2019. Then came Covid-19, which scared many in all industries. After the beginning of the pandemic, we realized that we are not so bad, there is demand, because people lived in houses, repaired houses, renovated rural properties. There was a high demand for wood products for construction, which is our core product - planks, boards, slabs and glued structures. It was also high for furniture manufacturers. Global traders feared what was happening and filled their warehouses to meet the demand. On the other hand, at the end of 2021, even before the war, a sufficiently rapid rise in inflation began. Even then, we saw a rapid rise in all costs (logging and timber transportation) and as loggers we could not keep up with all of that. When the war started, the first big drama was fuel prices, which doubled, while wages remained virtually unchanged, affected by long-term contracts. The high wood prices were accompanied by the story of wood chips.<\/p>\n What are the predictions for this year?<\/strong><\/p>\n As inflation rises and bank interest rates increase, the global construction sector begins to slow down - both in the USA, Canada, Great Britain, which is one of our largest export markets. As long as the warehouses are sufficiently full of the expensive material, which must be realized in some way in order not to suffer losses, the demand falls and the prices fall very rapidly. We have also purchased forest properties that need to be developed, but purchased at a high price. At the moment, the situation is very sad, in our region, not only in Latvia, production volumes are reduced by about 30%. In Finland, Sweden, Canada, production plants are closed, capacities and volumes are reduced.<\/p>\n The last quarter of 2022 has been very dismal in primary production, and this year's first quarter will be exactly the same. Once the global warehouses are empty, demand is expected to pick up again. We expect growth starting from the second quarter, when prices could return to an acceptable level for both the seller and the buyer. Your prediction that the market situation could normalize this year?<\/p>\n In general, I would like to hope so. From the export data, it can be seen that last year a record was reached and the export value of forest products increased to 4 billion euros. I think that there will be no such results this year, because prices are falling. Last year's results are not so much related to the volume of output, but to the increase in the value of products. I don't think that we will reach four billion euros in exports this year.<\/p>\n Similarly, the story about Russia and Belarus has not disappeared anywhere. The good news is that we haven't had logs from these countries for a long time, but we used to buy quite a lot of lumber there. They were used by both furniture manufacturers and wood builders, some were also re-exported. They came from there for relatively cheap money. The figures show that sawnwood imports have almost halved, meaning that the domestic producer now has to buy the expensive European board, as there is really no alternative.<\/p>","protected":false},"excerpt":{"rendered":" In 2022, the export revenue of the forest sector reached an unprecedented record – 4 billion euros, but it will not be repeated in 2023, which was marked by a drop in the prices of wood products. Future challenges lie … Continue reading ![\"\"](\"https:\/\/timberindustrynews.com\/wp-content\/uploads\/2025\/09\/ab-1-300x207.jpg\")
In recent years, significant changes have already taken place, which forced the change of essentially the entire sector, starting with forest owners, logging and forestry service providers, and ending with wood processors. What's more, the changes have not ended in 2023 either, they continue. 2019 is called the last normal year in the industry, because it was followed by such an unprecedented challenge as the global pandemic, but already at the end of 2021 we saw an increase in inflation that was not previously predicted. This was nothing compared to the jump that began after Russia's full-scale invasion of Ukraine on February 24, 2022.<\/p>\n