The market situation is uncertain now. During the second half of 2006  we faced a lack of logs in Finland, Russia, and other countries Finnish producers increased the amount paid for logs from around 48 eur/m3 to around 72 eur/m3 (at the forest) in order to get more logs from the land owners. As prices increased during the second half of 2006 producers in Finland, Sweden and Russia increased production and purchased as much logs as possible.

Buyers facing shortage of sawn timber purchased as much as they could get from Finland and Russia but also from Canada and Germany. As the log situation improved, the stock of buyers got full with enough stock for 3-6 months. In July the sawn timber market slowed down considerably. This slow down is expected to last until the end of the year.

In the longer term, a shortage of logs is expected in Finland, Sweden, and Germany. The imports of logs from Russia will be reduced in April 2008 as the Russian tax on export of logs will be increased. In January of 2009 the export of logs from Russia will stop as tax will be raised to 50 eur/m3. Unless this shortage of logs in Finland will be replaced from another source, perhaps domestic supply, it is expected that around 16,000 people will lose their jobs and the GDP will be reduced in 1%!

Russia will not be able to absorb the currently exported quantity of logs in the domestic sawn timber industry. This means that some time in 2008 and certainly in 2009 we are expecting a shortage in logs and sawn timber and price increases.