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2016 Shippers Meeting East Anglia Timber Trade Association Overview of the Baltic woodworking industry 21 st of September 2016 Kings College, Cambridge Linas Balkus Livland Timber Limited
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Content General economy of Baltic countries in figures Growing stocks and annual felling Export and import of wood products Price and exports trends Conclusions
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This time it is not as usual – who said that? Mr. Brexit
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The real GDP (as percentage change on previous year) for Baltic countries does fluctuate in greater extent than that of UK Source: Eurostat database
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The main reason of exercising the free labour movement within EU borders is quite clear Electrons move from higher potential to its lower level In labour market it is opposite – from lower income (expenditure) to higher one Source: Eurostat database
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The population of Lithuania within last 9 years has been decreased by -11.1% The population of Latvia within last 9 years has been decreased by -10.5% Source: Eurostat database
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The growing stock of forests available for wood supply are at very similar level in both Latvia and UK Source: Eurostat database
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The pine an birch trees are dominating in Latvian forests Some of them find the way to sail to China- for instance birch Source: Latvia State Forest Service
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The growing stock of coniferous species stay stable since 2012 Whereas that of deciduous has increased by +2.0% since that Source: Latvia State Forest Service
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The growing stock of pine has been reduced by -2.0% since 2012 Whereas that of spruce trees has been increase by +3.2% within same period Source: Latvia State Forest Service
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The growing stock op pine trees has been decreased by -1.8% in state sector since 2012 Similarly it has reduced in private sector by -1.6% Source: Latvia State Forest Service
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The growing stock of spruce trees has been increasing steady in state sector since 2013, growing by +6.1% by end of 2015 Whereas it has decreased slightly in private sector since 2012 by - 2.7% Source: Latvia State Forest Service
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The growing stock of birch do increase steady in private forests from 2012 Whereas that in state sector slightly fluctuate Source: Latvia State Forest Service
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Steady felling volumes from 2013 Felling of state ownership decreases Whereas those of private ownership increases Source: Latvia State Forest Service
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State decreases the feeling of the softwood type of trees Private sector increases the feeling of the hardwood type of wood Source: Latvia State Forest Service
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State has been sharply decreasing felling volumes of pine trees since 2012,constituting -31.2% by2015 Source: Latvia State Forest Service
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By decreasing felling of pine trees State tried to increase the price of those - but without success Sources: Latvia State Forest Service; Forest and Wood Products Research and Development Institute: Latvian Wood industry portal
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Average price of 18/24/28cm diameter basket decreases, whereas price of spruce stay steady from 2015 Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal
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The output of Latvia`s production of sawn softwood is increasing Consumption of sawn softwood is around 30% from what biggest part after further processing goas for export Source: EOS
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Exports of sawn softwood towards Europe increased, contrary volumes to North of Africa and Asia decreased within first 5 months 2016 vs 2015 Overall increase of 6% Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal Exports up Towards Europe Exports down Towards Africa & Asia
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Exports of sawn softwood to UK during summer holidays had decreased Only Germany reflects demand curve with appropriate price rise The utmost decrease of revenues per 1 m3 from UK attributed to competition: -11.7%(price decrease) +7.4% (GBP/EUR rate depreciating) = -4.3% Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal; EUROSTAT database
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Exports of sawn hardwood to UK 2016 first 7 months vs 2015 had decreased even harsher than that of softwood, constituting -26.1% The utmost decrease of sawn hardwood revenues per 1 m3 from UK attributed to competition : -10%(price decrease) +7.4% (GBP/EUR rate decrease) = -2.6% Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal; EUROSTAT database
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Exports of plywood to UK 2016 first 7 months vs 2015 had slightly increased whereas price decreased, constituting -11.1% The utmost decrease of plywood revenues per 1 m3 from UK attributed to competition : -11.1%(price decrease) +7.4% (GBP/EUR rate decrease) = -3.7% Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal; EUROSTAT database Let`s blame projected Brexit!
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Exports of sawn softwood towards Asia, UK & EE increased within first 5 months 2016 vs 2015 Overall rise of exports 15.8% Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal Exports up Towards UK, Estonia & Asia
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Exports of sawn softwood towards Japan, China, Iceland, Ireland, Germany & Netherland increased, contrary volumes to Latvia, the largest importer of EE softwood decreased within first 5 months 2016 vs 2015 Overall only 1% of increase of sawn softwood exports Source: Forest and Wood Products Research and Development Institute: Latvian Wood industry portal
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Projected increases of sawmilling capacities in Estonia Is enough & sustainable availability of logs to cover this demand? Source: Estonian Woodworking industry, LAESTI OU
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Answer: Projected felling volumes in Estonia by 2020 do provide such hopes Source: RMK Estonia
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Conclusions
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There is no hope of improved availability of logs in long term
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Log prices are likely to stay stable in LT and LV whereas do increase in EE
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Unfavorable GBP rate makes pressure on pricing fight
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The benefit of weaker RU ruble could be offset by rising transport costs towards EU direction
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Questions please?
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Thank you!
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