The price of energy wood chips will not return to the pre-war level, Andris Meirāns, Deputy Director of Wood Products Production and Supply of AS “Latvijas valsts meži” (LVM) told LETA agency.
He noted that although the price of energy wood has decreased by 30% since July, when LVM conducted an auction of additional wood chips for Latvian heat producers, production costs have increased. At the same time, expectations from heat producers can be observed in the market.
After the stressful heating season, heat producers have “taken a vacation” before preparing for the next season and expect that the prices could continue to fall, Meirāns said.
He pointed out that it is already safe to say that this year will be different in the energy wood market. As one of the influencing factors is the declaration of an emergency situation in spruce forests to limit the damage of eight-toothed bark beetles.
He predicted that the volume of wood will decrease from April 1 until the end of summer due to the emergency situation. Those fells identified as healthy stands will not be able to be felled, the total amount of felling will be reduced, resulting in less wood chips. In addition, the volume of round timber, which also produces other by-products, including chips and bark, will also decrease.
As another factor, he mentioned the reduction of felling volumes under the influence of the overall market price level. Meyrans explained that the price level of round timber has significantly decreased compared to last year, because the demand for finished products, such as boards, boards or OSB plates, has significantly decreased. As a result, buyers of round timber reduce their prices.
“The question arises whether private forest owners will have the same level of activity and desire to develop the volume,” Meirāns said, stressing that every forest owner thinks whether to develop the volume now or to wait anyway. Moreover, if last year the prices were good, this year they have decreased.
Unless there is a pressing situation, the forest owner will delay the development of forests and thus cause an additional volume reduction in the market, Meirāns predicted.
At the same time, he emphasized that LVM plans to provide its customers with the production volumes in the amount that was planned at the beginning of the year – seven million cubic meters of wood per year. Meyrans noted that it is difficult to judge how much volume will be provided by other market participants, but it will be affected by the bark beetle and timber prices.
The third thing affecting the market, which, according to Meiran, may not be seen by the heat producers, is that the price of wood chips rose significantly last year and everyone who had the opportunity got excited and started producing this volume.
Meirāns predicted that if the prices are significantly lower this year, it will not be possible to earn so well at higher costs and the interest in the production of wood chips will be much less.
If the competitive price, which is both what heat producers can afford and what price can be produced, does not remain, the amount of energy chips offered by the private sector may drop significantly, Meirāns emphasized.
At the same time, he added that in Latvia, similarly to other countries of the Baltic Sea region, a lot of thought is being given to how to increase renewable resources, including investing in the creation of various types of boiler houses. Since new projects are implemented not only in Latvia but also in neighboring countries, international deliveries are taking place in the Baltic States and competition between countries is also increasing.
“It should not be forgotten that we are on the coast of the Baltic Sea and there are large North Sea countries next to us, such as Sweden, Finland, Denmark, Norway, which are also eager for energy wood chips and energy wood chips are also exported to these countries every year,” Meirans reminded. .
It has already been reported that LVM’s turnover in 2022, according to preliminary data, was 566.577 million euros, which is 39.8% more than the year before, but the company’s profit before tax increased twice – to 258.485 million euros.
The sole owner of LVM is the state, while the share holder is the Ministry of Agriculture.
2023-05-12 13:09:20
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