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Weekly digest #5 2022


2022 is here. I was too lazy to put down on my wall anything about timber market and moreover probably had COVID and still think it has some interface. My laziness and COVID I mean, ha. Will not try to put all news in one post anymore as my own posts seems for me complete mess with no information. Will try in future post critical news immediately and summaries once a week. To all my Asian Friends I would like to wish prosperous and healthy Year of Tiger. Happy New Year! Under the link the summary of existing trends for China (from now and on always with Vietnam), Russia, Europe and U.S.

EU27. Longer term market prospects in the EU27 look reasonable as the economic expansion in the region is expected to continue, but there are significant downside risks. According to the EU’s latest Autumn 2021 forecast, the EU economy is expected to maintain growth of 4.3% this year. While strong domestic demand is expected to continue, the forecast recovery is heavily dependent on the uncertain evolution of the pandemic.

Inflation is another source of uncertainty for the European economy. As in other parts of the world, surging prices are hitting customers across the region with soaring food and energy bills. Germany, Europe’s largest economy, saw the biggest price increase for almost 30 years in December, beating forecasts. In Italy, economists have said the recovery could be muted in 2022 by rising prices, especially fuel prices. Poland has also reported a high inflation not seen over the past 20 years.

Supply bottlenecks and combined with rising demand, boosted by government stimulus measures, have caused consumer prices to rise. Rising energy prices and disruptions in global logistics, leading to severe shortages and price increases of key raw and intermediate inputs, is also holding back manufacturing across the EU. While this may be only a temporary phenomenon as supply bottlenecks are widely expected to ease in the course of 2022, an inflation rate of below 2 percent is not expected until 2023.

At the same time, activity in the construction sector in the EU, a key driver of timber demand in the region, remains fragile. The rise in eurozone construction activity in the last quarter of 2021 was led by a marked upturn among Italian companies. French firms recorded a softer rate of growth, while Germany noted a sustained decrease. Overall though, in December last year new orders placed with eurozone construction companies expanded at the fastest pace since February 2019 at the end of 2021.

The EU has requested consultations with Russia at the World Trade Organization (WTO) concerning export restrictions placed by Russia on wood products. The export restrictions consist of significantly increased export duties on certain wood products and a drastic reduction in the number of border crossing points through which exports of wood products can take place.The Russian restrictions are highly detrimental to the EU wood processing industry, which relies on exports from Russia, and create significant uncertainty on the global wood market. The EU has repeatedly engaged with Russia since Moscow announced these measures in October 2020, without success. They entered into force in January 2022.

Record-high lumber prices in North America and Europe have moved demand to some of the highest levels seen since 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 2021, as the Wood Resource Quarterly (WRQ) reports. 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 2021, 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 2021 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 Euro 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 2020, sawlog prices were practically the same in all the significant sub-regions of Europe, averaging close to Euro 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.

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.Softwood sawlog price changes in European sub-regions from the 3Q 2020 to the 3Q 2021 were as follows (source: WRQ): NORDIC +16% ; BALTIC SATES +62%; CENTRAL EUROPE + 79%; ESPI + 47%.

FINLAND. Last year, the member companies of the Finnish Forest Industries Association (FFIA) bought a total of 36.8mio cbm of wood, which is 24% more than in the previous year. Finnish timber trade was at a record pace until the end of the summer, but leveled off towards the end of the year. A total of 17.6mio cbm of logs were purchased, which was 39%t more than in the previous year. The purchase volume of pulpwood was 17.mio cbm, an increase of 13%. Throughout 2021, the average carrying price of softwood logs in Finland increased by 12–13% from the previous year, and that of birch logs by 4%. Pulpwood prices rose by 4–5%.

In December, an average of EUR61 per cbm was paid for pine aid, but the price varied between EUR42 and EUR65 by region and felling destination. The average price of a spruce log was 65 euros per cbm, and the price varied between 41 and 68 euros. The average price of birch logs was 45 euros per cubic meter, and the price varied between 31 and 50 euros. The average carrying price of pulpwood was EUR 17–19 per cbm, and the price varied between EUR10 and EUR22.

GERMANY. In November 2021, producer price indices for spruce and pine continued the upward trend that had been going on since March.

UNITED KINGDOM.  After a year of near-record imports, the UK timber industry is likely to find itself entering a period of greater stability in 2022, according to the Timber Trade Federation (TTF). The latest TTF statistics show the volume of timber imported between January and October 2021 to be 28% higher than the same period in 2020, reaching a total of 10.3 million m3 in the year to date. Yet even as this milestone is reached, these statistics reveal a significant shift in timber import patterns with volumes 16% lower in October 2021 than in the corresponding month in 2020.

This marks the first month in 2021 where the volume of timber imported was below its corresponding level from 2020, and the end of 15 months of continual growth in UK imports of timber and panel products. Softwood import volumes reflected these changes with just 557,000m3 entering the UK in October 2021, which is close to the average volume of softwood imports seen between 2015 to 2018, reaching 559,000m3. These shifts seen in the timber industry’s import patterns can likely be attributed to a return to more regular demand for new housing and repairs, maintenance and improvement (RM&I) of buildings seen in Q4 2021.

With stocks having been replenished throughout the supply chain, the TTF is seeing price pressure reducing and import volumes returning to more normal, stabilized parameters. This suggests an end to some of the market disruption they saw last year where the industry was working to ensure high construction demand was met. Given the increasing demand for low-carbon construction products to help build in a climate crisis, the TTF also expects that timber will remain an essential sector to building back better in 2022. However, the market is still some way off normality as Brexit, heavy goods vehicle (HGV) driver shortages, COVID-19 disruption as well as labor availability will continue to affect supply and demand.

RUSSIA and BELARUS. Prices for industrial timber continue to decline in Q4 2021 at the Belarusian Universal Commodity Exchange, Belarusian Universal Commodity Exchange (BUCE) reported. Prices for high-quality softwood of A and B grades plummeted by an average of 35%, and low-quality timber – by 30%.

NORTH AMERICA lumber prices have risen to a seven-month high as the lingering effects of flooding in Western Canada disrupt supplies and shipments. Lumber futures have jumped, touching their highest price since June 2021. Prices have been climbing since rainstorms hit British Columbia in November, damaging highways and rail lines and forcing sawmills to temporarily shutdown. Persistent supply logjams and strong demand are fueling the current rally.

The surge adds to swelling homebuilding costs when consumers are already paying more for goods ranging from food to fuel. Wood prices have been volatile since the global pandemic began. They touched record highs in May after COVID-19 lockdowns spurred a building boom, then collapsed as sawmills ramped up production and high prices stifled demand.

Unusual for the time of year but a surprise to no one, lumber prices rose further in the second week of January. Ongoing momentum of strong demand from the end of 2021 combined with significant supply constraints, most notably from the northwest especially British Columbia, served to keep prices high. Transportation issues throughout the supply chain caused a feeling of panic among buyers, as the usual six-week delivery time turned into two months or longer. Frustration reigned with customers as the location of wood previously ordered was unknown.

An upward bump in U.S. housing starts, again unusual for the time of year, kept the pressure on for customers to order dimension lumber building materials they knew they would need for the looming spring construction season. Continued strong demand combined with restricted supply pushed prices yet higher. Buyers had trouble finding prompt wood from producers, often turning to wholesalers and distributors and paying a premium for quicker shipment. Repeated forays into the market by large retailers fuelled strong demand for Western S-P-F. Prices were up in everything but the lowest of low grades.

Shipping times left a lot to be desired thanks to persistent weather and personnel problems at all levels of the transportation sector. Sawmill order files were into the last week of January or the first week of February. Following a somewhat disjointed week to start the year, demand was unabated according to Western S-P-F sawmills in Canada. Customers clung to their cautious approaches, but overall necessity-buying was more than sufficient to clean up what limited material was available from both primary and secondary suppliers.

CHINA. According to China Customs in Q3 2021 sawnwood imports totaled 21.91 million cbm valued at US$5.792 billion, down 19%. Main reason is drop of supply from Russia, Canada, USA, Finland and Germany (down 13%, 54%, 42%, 32% and 48% respectively). Imports from these countries accounted for over 60% of the national total. The main reasons for the decline were the impact of the pandemic control measures on processing plants and logistic problems. Another factor was timber prices rising strong demand in the EU, US and Japanese construction sectors.

In 2021, China’s imports of softwood lumber fell 26.2% yoy to 18,5K m3. The value of imports contracted 6.2% to $4,1 billion. Average price of softwood lumber increased 27% to $222 per m3. Only Brazil was able to increase the supply of softwood lumber to China in 2021 (+33.2%). The largest reduction was in supplies from Canada (-57%), Germany (-50%) and Finland (-32%). Shipments from Russia decreased by 17.7%, but the country’s share in the Chinese softwood lumber market increased by 6.8%.

VIETNAM. Earlier predictions in 2021 had expected Vietnam’s wood and wood product exports to hit less than US$14.5bn. However, after resuming production in October 2021, the sector’s export revenue reached $15.87bn. The overseas shipment in November 2021 alone hit $1.27bn, up 2.5% year-on-year, according to data from the Ministry of Industry and Trade’s Agency of Foreign Trade. In fact, between January and November, Vietnam exported $7.93bn worth of wood and wood products to the US, recording a 24.6% increase. Shipments to China and Japan during the same period reached $1.36bn and $1.28bn respectively, representing a 26.6%. After the export turnover of forest products (mainly wood and wood products) reached a record of 15.87 billion USD in 2021, Vietnam wood industry set a target of total export turnover in 2022 to reach 16 billion USD.

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White peat

white peat
Sphagnum white

White Peat – Used as a basis of many substrates.

Baltic Peat Moss is a relatively young white peat, partially decomposed sphagnum moss (Sphagnum is a genus of approximately 380 accepted species of mosses, commonly known as “peat moss“) that can retain between 10 to 12 times its own weight in water.

Structure of peat at the magnification of the electron microscope:

Total porosity, about 95%¾
Big specific surface area, about 200 m2/g¾
High liquid binding ability, 600-800 l/m3¾
Low volume weight, about 160-180 kg/m3

Milled sphagnum is an ideal germination medium

Milled sphagnum is a fine grade of sphagnum moss. In texture it resembles a coarse grade of chunky
peat moss. Milled sphagnum holds moisture well and is an excellent choice for seeding mixes.