Sawmills in the Nordic Countries Have Some of the Lowest Sawlog Costs Worldwide

Record-high lumber prices in North America and Europe have moved both demand and sawlog values to some of the highest levels seen since WRQ started tracking sawlog markets in 1995. In their local currencies, log prices in the Nordic countries, the Baltic States, Central Europe, Western Canada, and the Western US were at all-time highs in the 3Q/21.

Sawmills in Latvia, Estonia, the Czech Republic, Austria, and Germany have become some of the highest-cost lumber manufacturers globally after sawlog costs surged by 60% to 95% in one year, reports the WRQ. Log costs have also gone up in the principal lumber export countries Finland and Sweden, but more modestly than in the rest of the continent. In the 3Q/21, sawmills in Norway and Sweden had the lowest wood costs in Europe. The European Sawlog Price Index (ESPI) reached a new all-time high in the 3Q/21 as sawlog prices climbed throughout the continent. The index, which tracks sawlog prices in nine countries, has surged by almost 50% in one year and is substantially higher than its 23-year average of €78/m3. The recent price hikes have varied by subregion, with prices in Central Europe rising more than in Northern Europe. Last year in the 3Q/20, sawlog prices were practically the same in all the significant sub-regions of Europe, averaging close to €70/m3. However, this year prices have diverged, with the Nordic prices increasing only 16% while log costs in the Baltic States and Central Europe jumped more than four times as much.

Softwood sawlog price changes in European sub-regions from the 3Q/20 to the 3Q/21 were as follows (Source: WRQ):

Region, Change y/y (%)
Nordic, +16%
Baltic States, +62%
Central, +79%
ESPI, +47%

European sawlog prices have surged in the past year as lumber prices reached record levels and sawmills paid almost anything to ensure they would be able to run at full capacity.
However, with lumber prices coming down from their record levels during the summer and sawmill production catching up with demand, log markets have stabilized, and sawlog prices have leveled off and even declined in some regions (e.g., Central Europe) during the fall and early winter.