Wood market in Poland - towards stabilisation, Poznań, 4 December ADAPTATION PROCESS OF THE WOOD MARKET IN SLOVAKIA Hubert PALUŠ Department of Marketing, Trade and World Forestry Technical University in Zvolen Slovak Republic

Wood market in Poland - towards stabilisation, Poznań, 4 December Contents Principles of the wood market Principles of the wood market Forest resources in Slovakia Forest resources in Slovakia Ownership structure Ownership structure Harvesting Harvesting Roundwood classification Roundwood classification Roundwood deliveries and export development Roundwood deliveries and export development Points and methods of wood sales Points and methods of wood sales Wood prices Wood prices

Wood market in Poland - towards stabilisation, Poznań, 4 December Principles of the wood market General conditions Industrial market Often oligopoly structure Profit generation motive for sellers/buyers Relatively high transaction cost High volumes of transactions Low products differentiation – competition focused on price Often long-term relations between market players Supply side factors Valid legislation Allowable cut (accidental felling) Ownership structure Demand side factors Derived demand Set of socio-economic factors determine final level of consumption HARVESTING STANDING VOLUME Allowable cut PRICE World supply and demand, Economic development EXPORT DOMESTIC DEMAND SUPPLY DEMAND Economic development Exchange rate Substitution materials Preferences Incomes Construction Substitution materials Preferences

Wood market in Poland - towards stabilisation, Poznań, 4 December Forest resources in Slovakia Forest area 2 mil. ha Forest cover 41% Standing volume 444 mil. m 3 Annual increment 11.6 mil. m 3 Allowable cut cca 6.5 mil. m 3 Forest cover in regions of Slovakia

Wood market in Poland - towards stabilisation, Poznań, 4 December Ownership structure State owns 42% and manages 58% of forest area (LESY SR, state enterprise) State forests network of enterprises – concentrated timber supplies Number of non-state owners 48 thousand Average area of non-state forest property – 200 ha Type of ownership Area of forest land (ha)Share (%) ownershipreal useownershipreal use State ,858,5 Private ,26,3 Common ,923,8 Municipal ,78,7 Church ,42,5 Cooperatives ,2 Unknown ,8- Together ,0

Wood market in Poland - towards stabilisation, Poznań, 4 December Harvesting Favourable conditions to increase harvesting volume by 2030 (7-7.5 mil.m 3 ) Threat – accidental felling!!! Development of harvested volume Year thousand m 3 totalaccident al totalaccident al totalaccident al totalaccident al Coniferous (66.2%) (62.0%) (88.8%) (74.4%) Non- coniferous (30.7%) (34.0%) (11.7%) (13.6%) Total (49.3%) (48.6%) (64.1%) (51.0%)

Wood market in Poland - towards stabilisation, Poznań, 4 December Roundwood classification Roundwood quality classes I. quality class - veneer logs (used for production of sliced veneer) II. quality class- veneer logs (used for production of rotary cut veneer) III. quality class- sawlogs (includes A, B and C quality sub-classes) IV. quality class- posts, pit props, poles, and other industrial wood V. quality class - pulp wood for chemical and mechanical processing VI. quality class- fuel wood STN , STN Temporary Governmental regulation 86/2005 on timber classification Standards are only recommended for contracting parties STN EN (harmonized standards) already elaborated

Wood market in Poland - towards stabilisation, Poznań, 4 December Roundwood deliveries Increasing volumes of delivered timber (7.3 mil. m 3 in 2006) Softwood deliveriesSoftwood deliveries for domestic market Hardwood deliveries Hardwood deliveries for domestic market

Wood market in Poland - towards stabilisation, Poznań, 4 December Roundwood export development

Wood market in Poland - towards stabilisation, Poznań, 4 December Industrial roundwood consumption Share of industrial roundwood export on production year %

Wood market in Poland - towards stabilisation, Poznań, 4 December Points of wood sales I. The three main points: Standing timber Roadside Timber yard Key factors influencing the use of particular points of sales: size of forest property volume and concentration of harvesting Standing timber 10% of sold wood preferred by small forest owners Roadside partially used by small forest owners sale of raw stems and pulpwood

Wood market in Poland - towards stabilisation, Poznań, 4 December Points of wood sales II. Timber yard preferred by the State Forest Enterprise big capacity timber yards with regional coverage advantage – better condition for quality classification disadvantage – higher cost resulting from timber handling

Wood market in Poland - towards stabilisation, Poznań, 4 December Methods of wood sales I. The three basic methods Sales contracts Timber auctions Commodity exchange trading Sales contracts legal basis for exchange of timber long term contracts (1-2 years) concluded between the State forest enterprise and its strategic business partners short term contracts (quarterly revised) concluded with small sawmills EWX and FCA terms used in domestic contracts FCA, FOB and DAF included in export contracts

Wood market in Poland - towards stabilisation, Poznań, 4 December Methods of wood sales II. Timber auctions high quality hardwood assortments first-price auctions – bids submitted in concealed fashion minimum price set at regular price list level won volumes are soled at EXW term after payment organised by State forest enterprise possibility for small forest owners to participate (5-10% provision) auctions require concentration of relatively large volume of high quality stems (selecting appropriate stands)

Wood market in Poland - towards stabilisation, Poznań, 4 December Methods of wood sales III. Commodity exchange trading quick, secure and transparent way of selling timber standardised timber demand and supply published on webside and regularly updated trading allowed through registered brokers little interest in trading timber at the exchange

Wood market in Poland - towards stabilisation, Poznań, 4 December Wood prices State forest enterprise acting as a price maker Little space for price negotiations – (price lists used) Price discounts offered to big timber processors Small forest owners acting as a price taker Small negotiation power (regionally spread, less concentrated, small volumes sold)

Wood market in Poland - towards stabilisation, Poznań, 4 December Wood prices AssortmentQuality classConiferousNon-coniferous SKK/m 3* Veneer logs I II Sawlogs III. A III. B III. C Pitwood IV Pulpwood V Fuelwood VI Stagnation of prices between – price increase by 14% Average timber prices (as of Jun 30, 2007) * Exchange rate approx. 34,- SKK/EUR

Wood market in Poland - towards stabilisation, Poznań, 4 December Thank you for your attention!