Prices of European sawlogs varied significantly in the December Quarter of 2014, with the Scandinavian prices slipping for a second or third successive quarter in US Dollar terms, while the prices for non-Scandinavian supply were more stable. As the detailed analysis shows, currency movements are playing their part in the European sawlog trade, with implications for the price of Australian sawnwood imports.
The Baltic Region Pine Sawlog Prices chart is displayed below, up to date for DQ’14.
In the December Quarter of 2014, all of the relevant country prices for Pine sawlogs experienced declines in US Dollar terms, or, in the case of Lithuania, were stable. Large price falls from the prior quarter were experienced in Estonia (-7.5%), Norway (-8.0%) and Finland (-7.6%).
However, for the countries that experienced declines and are transacting in Euros (Estonia and Finland), both experienced price stability from the September Quarter to the December Quarter. The sole reason for the US Dollar price decline has been the appreciation of that currency against the Euro.
Norway’s US Dollar price slump is even more intriguing because Norway uses its local currency, the Krone, for international transactions. The Krone has been dragged down by falling oil prices. Pine log prices actually rose in Norway in the December Quarter, however translated to US Dollars they declined sharply.
The evident divergence of prices since Q3’12 represents in part the different trajectories of currencies supplying Baltic Pine sawlogs. Scandinavian countries, mainly transacting in their own currencies, have used local economic strength
The appreciation of the US Dollar against the Scandinavian currencies appears on face value to be driving down the price of Scandinavian supply. in a manner that the Lithuanian and Estonian producers cannot match. However, the reality is that most of the transactions in Scandinavian countries are for domestic sawmills and occurs in domestic prices.
On the flipside, the modest price increases in local currencies, in Lithuania and Estonia were, to the end of September, coupled with the stability of the Euro to US Dollar exchange rate to push them to an unsustainable competitive position in US Dollar terms. Little wonder the Estonian price fell sharply in the December Quarter.
Ultimately therefore, what the data really shows is that even when decreasing their prices in US Dollar terms, most of the Baltic region’s producers are also receiving more or at least no less) in their domestic currencies.
That is a topic of interest to everyone in the supply chain in Australia because on face, these producers have more room to move on prices.
For further details, go to the FWPA Data Dashboard.
