Wood market in Poland - towards stabilisation, Poznań, 4 December 20071 ADAPTATION PROCESS OF THE WOOD MARKET IN SLOVAKIA Hubert PALUŠ Department of Marketing,

Wood market in Poland - towards stabilisation, Poznań, 4 December 2007 1

ADAPTATION ADAPTATION PROCESS OF THE PROCESS OF THE WOOD MARKET IN WOOD MARKET IN SLOVAKIASLOVAKIA

Hubert PALUŠ

Department of Marketing, Trade and World Forestry

Technical University in Zvolen

Slovak Republic

[email protected]


ContentsContents

Principles of the wood Principles of the wood marketmarket ForestForest rresources in Slovakiaesources in Slovakia Ownership structureOwnership structure HarvestingHarvesting Roundwood classificationRoundwood classification Roundwood deliveriesRoundwood deliveries and export and export development development PPooints and methods of wood salesints and methods of wood sales Wood pricesWood prices


Principles of the wood Principles of the wood marketmarketGeneral 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

HARVESTINGHARVESTING STANDING VOLUME

STANDING VOLUMEAllowable cut

PRICEPRICE

World supply and demand, Economic development

EXPORTEXPORT DOMESTIC DEMAND

DOMESTIC DEMAND

SUPPLY

DEMAND

Economic developmentExchange rateSubstitution materialsPreferences

IncomesConstructionSubstitution materialsPreferences


ForestForest rresources in Slovakiaesources in Slovakia Forest area 2 mil. ha Forest cover 41% Standing volume 444 mil. m3

Annual increment 11.6 mil. m3 Allowable cut cca 6.5 mil. m3

Forest cover in regions of Slovakia


Ownership structureOwnership structure

State owns 42% and manages 58% of forest area (LESY SR, state enterprise) State forest’s 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 (%)

ownership real use ownership real use

State 807 753 1 130 786 41,8 58,5

Private 275 243 121 372 14,2 6,3

Common 480 160 459 162 24,9 23,8

Municipal 187 816 168 770 9,7 8,7

Church 65 242 47 449 3,4 2,5

Cooperatives 2 635 4 106 0,2 0,2

Unknown 112 796 - 5,8 -

Together 1 931 645 1 931 645 100,0 100,0


HarvestingHarvesting

Favourable conditions to increase harvesting volume by 2030 (7-7.5 mil.m3)

Threat – accidental felling!!!

Development of harvested volume

Year

1990 2000 2005 2006

thousand m3

total accidental

total accidental

total accidental

total accidental

Coniferous 2 777 1 838 (66.2%)

3 245.0 2 012(62.0%)

6 927.4 6 152.7(88.8%)

5 150.0 3 831.0(74.4%)

Non-coniferous

2 499 766(30.7%)

2 973.0 1 010(34.0%)

3 263.1 380.3(11.7%)

3 207.2 435.0(13.6%)

Total 5 276 2 604 (49.3%)

6 218.0 3 021(48.6%)

10 190.5 6 533.0(64.1%)

8 357.2 4 266.0(51.0%)


Roundwood classificationRoundwood 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 480055, STN 480056 Temporary Governmental regulation 86/2005 on

timber classification Standards are only recommended for contracting

parties STN EN (harmonized standards) already elaborated


Roundwood deliveries Roundwood deliveries Increasing volumes of delivered timber (7.3 mil. m3 in 2006)

Softwood deliveries Softwood deliveries for domestic market

Hardwood deliveries Hardwood deliveries for domestic market


Roundwood export Roundwood export development development

1 23

3 00

0

1 81

5 00

0

1 13

6 00

0

1 12

3 62

5

1 28

3 76

2

794

175

1 17

0 00

0

891

986

913

632 1 40

4 00

0

1 94

6 20

2

1 68

5 00

0

0

500000

1000000

1500000

2000000

2500000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

years

m3


Industrial Industrial rroundwood oundwood consumptionconsumption

Industrial roundwood consumption

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

2001 2002 2003 2004 2005 2006

years

m3

SK

Share of industrial roundwood export on production

year 2001 2002 2003 2004 2005 2006

% 28 21 17 16 19 15


PPooints of wood sales I.ints 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


PPooints of wood sales II.ints 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


Methods of wood sales I.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


Methods of wood sales II.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)

www.lesy.sk


Methods of wood sales III.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

www.kbb.sk


Wood pricesWood 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 pricesWood prices

Assortment Quality class Coniferous Non-coniferous

SKK/m3*

Veneer logsI. 3950 8772

II. 3080 5673

Sawlogs

III. A 2300 2432

III. B 1853 1812

III. C 1450 1584

Pitwood IV. 1658 -

Pulpwood V 882 1199

Fuelwood VI. 634 858

Stagnation of prices between 2003-2005 2006 – price increase by 14%

Average timber prices (as of Jun 30, 2007)

* Exchange rate approx. 34,- SKK/EUR


Thank you for your Thank you for your attention!attention!

Wood market in Poland - towards stabilisation, Poznań, 4 December 20071 ADAPTATION PROCESS OF THE WOOD MARKET IN SLOVAKIA Hubert PALUŠ Department of Marketing,

Documents

wood market principles

wood market forest resources

industrial wood

points of wood sales

domestic market slide

quality class pulp wood

methods of wood sales

quality class fuel wood