Kronus: Wood prices at a temporary low point, a price increase is expected :: Dienas Bizness

Wood prices have reached a temporary lowest point, an increase in prices is expected, informs the wood processing company “Kronus”.

“Kronus” representatives point out that although there was a drop in the prices of finished goods in January, most market participants believe that the prices have reached a temporary lowest point. Market demand will affect the pace and extent of price adjustments, but the company expects raw material prices to increase.

Likewise, adjustments in the prices of raw materials may affect the prices of finished goods until the end of the first quarter of 2023.

The current market situation is affected by inflation, the cost of electricity, fuel and other energies, the war in Ukraine, as well as lower demands from the market.

“Kronus” experts explain that due to the unexpectedly warm winter, the prices of firewood continue to decrease. On the other hand, while finished goods prices are still under pressure from weak demand, lumber prices have bottomed out and are beginning to rise again for at least some assortments.

“In the past, sawmills could not balance lower lumber prices with higher fuelwood prices. Due to this dependence, sawmills began to raise lumber prices as production costs increased significantly, and compensation with higher prices for pellets and briquettes is no longer possible,” explains the company.

At the same time, “Kronus” experts claim that contracts with sawmills and, therefore, contracts for finished products will be concluded at a higher price level than in the fourth quarter of 2022.

According to “Kronus”, the latest forecasts of the Federation of German Industry show that the current recession should be quite moderate and, in fact, the economic outlook slightly improved. On the other hand, on January 24, the HPE index of German prices showed the first small increase in the prices of raw materials by 0.5% compared to the previous month, but the prices of wooden panels, such as OSB and plywood, continued to decrease. Plywood prices fell by 8.7%, while OSB prices fell by 3.9%.

Also, “Kronus” notes that a fairly large price jump was also observed in the USA. Usually, the US price trend becomes a reality in Europe with a delay of two to three months, which indicates that a larger price increase in Europe is expected around March or April 2023.

“Kronus” experts also point out that although the prices of pallets decreased again in January, most of the market experts indicated that the lowest point has been reached and changes are also expected in the price trends of finished goods. Especially because the prices of raw materials for some assortments started to rise already in December 2022. The development of pallet prices will depend on currently difficult to predict market requirements.

The turnover of “Kronus” in 2021 increased almost twice and was 87.752 million euros. At the same time, the company’s profit was 10.242 million euros in contrast to losses in 2020.

SIA “Kronus” was founded in 2000, the share capital of the company is 341,264 euros, according to “Firmas.lv” information. The owners of the company are 16 private individuals, but the real beneficiaries are Aleksandrs Minajevs, Igors Ževaks and Andrejs Dikins.