Wood price is a combination of many factors

Factors affecting wood price

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  End products’ market situation

  

  End products’ market situation

  One major factor is the market situation of the end products, i.e. the price at which the planks, pulp and paperboard are sold. This ultimately determines how profitable the forestry industry is.

  In the long term, the market situation guides the location of mills and the selection of tree species. In the short term, it sets a price level for raw wood, while other price factors fluctuate.

  “The market situation changes daily, determining the wood grades that are more in demand and those that are not,” Rantala says.

  In addition, the relation between the end-product markets and the wood purchaser’s wood resources must be taken into account. If the end products sell well, and the wood purchaser only has a small stock of wood (or wood purchased standing but still in the forest waiting for harvesting to begin), the price of the wood will rise. Correspondingly, a poor market situation for end products and large wood stocks push down the price of wood.

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  Tree species

  

  Tree species

  The tree species affects the wood price because different end products are made from different tree species. The properties of spruce and pine are similar, but the applications of sawn timber made from them are different. Birch logs are often used in plywood production. Softwood pulpwood can be used to make pulp that is strong and durable thanks to its long fibres. Birch fibres are shorter, and birch pulp often competes on the market with pulp made from tropical wood.

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  Stem volume and other quality factors

  

  Stem volume and other quality factors

  Stem volume means the thickness and volume of the trees. The sturdier the trees on a felling site, the more economical their harvesting per cubic metre. Thicker trees also allow the sawing of a greater variety of sawn-timber sizes and the larger selection makes the wood more valuable. In addition, it takes about the same time to saw sturdy trees and thinner trees, so more finished sawn timber can be obtained from sturdy trees in the same processing time.

  “The rule of thumb is that because the processing of sturdier trees is cheaper at all stages of processing, more can be paid for these trees,” Rantala says.

  Other quality factors affecting wood price include the presence of knots and rot, which reduce the price.

  There is always more than one wood grade coming from each felling site, often six or seven, and purchasers typically purchase them all, although there can be significant differences in their demand. When it comes to wood sales, the bigger picture matters, Rantala says.

  “In addition to unit prices, the sales decision is often influenced by other monetary incentives offered by buyers, such as member benefits, which, at Metsä Group, are known to be the best on the market.”

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  Amount of wood to be harvested

  

  Amount of wood to be harvested

  The amount of wood to be harvested is an important factor affecting the price. For each felling site, the purchaser of wood will incur transaction costs such as planning, administration and transport of equipment to the site. The amount of these costs depends only slightly on how much wood is ultimately harvested from the site. Therefore, the larger the amount of wood, the lower the transaction costs per cubic metre, allowing the purchaser to pay more per cubic metre.

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  Geographical location and forest transport distance

  

  Geographical location and forest transport distance

  The geographical location of the felling site matters. If the wood is harvested near the mill, the transport distance will be shorter, which will reduce costs. In this case, the purchaser can pay the seller more for the wood. The price also often reflects the local wood market situation, which is affected by the number of nearby wood processing units.

  And when it comes to transport, we must also remember forest transport – that is, moving the trees from the stump to the roadside. It is obvious that a long transport distance costs more than a short one. It is also necessary to consider the bearing capacity of the soil with respect to heavy machinery.

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  Harvesting method and soil bearing capacity

  

  Harvesting method and soil bearing capacity

  Some stands can only be harvested in winter, when the ground is frozen and can support forestry machinery. Others can be harvested at any time. In this case, the time window for harvesting is longer, Rantala explains.

  “The better the bearing capacity, the more flexibly harvesting can be carried out, and the more valuable the stand therefore is to the buyer. If the bearing capacity of the soil is good, more can be paid for the wood.”

  From the roadside, the wood will be transported by truck. And the bearing capacity of the forest road will also need to be considered in the same way. Rantala emphasises that it is important to keep the forest road network in good condition, as it increases the price of wood.