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European log prices fall in US Dollar terms

In US Dollar terms, European log prices have fallen over much of the last year. The declines seem to reflect the strength of the US Dollar more than fundamentals in log markets and domestic economies, but they provide useful points of comparison, nonetheless. Estonian and Lithuanian supplies have in particular, seen the largest price declines.

Baltic Pine Sawlog prices have fallen furthest, with supplies from Lithuania 36.3% cheaper in December 2015, compared with a year earlier. At just USD52.04/m3, prices are very low. Unfortunately no figure was available for December for supplies from Norway, but as the chart below displays, in September, Norwegian prices essentially matched those of Lithuania.

Fig-12

To go straight to the dashboard and take a closer look at the data, click here.

While Lithuania may have experienced the steepest decline over 2015 and Estonia (-17.1%) had a significant but less sever experience, no supplier country has been immune. Although Baltic Pine Sawlogs were selling in a moderately tighter range at the end of 2015 than at the beginning, it is of interest to note that the divergence in prices, which commenced in mid-2012 continues. With the exception of Lithuania, relative price positions have held over the course of 2015.

Prices for Baltic Region Spruce Logs tightened over 2015, with the possible exception of Norwegian logs, for which there is no December data. In US Dollar terms, Norwegian prices have been trending downwards and appear to be the lowest of the supplier countries.

Again however, as the chart below shows, Lithuanian Spruce log supplies fared the worst over 2015, falling 34.4% to just USD55.69/m3. Of interest is that this was modestly higher than in the previous quarter.

fig-13

To go straight to the dashboard and take a closer look at the data, click here.

It is not possible to escape currency considerations entirely. For the countries transacting in Euro, the situation seems similar, except for Lithuania, whose economy is struggling and is experiencing over-supply. Its logs are on the open market in order to sell to someone and earn much-needed income.

It is Norway, with its own currency that provides the counter-point. Its lower prices in US Dollar terms, include some local conditions that are at least in part being brought about by its depreciating currency. Over 2015, the Norwegian Krone declined 15.2% against the US Dollar and since the start of 2014, it has declined 38.0%.

Just like Australia, Norway’s international competitiveness, at least for transaction in US Dollars, has experienced a boost that is very similar to Australia’s.

 

Posted Date: January 25, 2016

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