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Log Costs in Finland Among The Highest in The World in The 1Q/08
The Finnish forest industry has had a tough year. The wood supply has been tight and the country is having some of the highest sawlog and pulpwood costs in the world, according to the market report, the Wood Resource Quarterly (WRQ).
The surge in wood costs cannot only be explained by the weakening US dollar; higher costs in the local Euro are also contributing to the price increases. The Finnish pulp industry now has the highest softwood pulplog costs of all the 16 regions tracked by the WRQ, averaging over twice the wood costs for pulpmills in the US, Latin America and Oceania. Hardwood pulplog costs are the second highest in the world after Germany.
The high wood costs in Finland are the result of increased competition for logs in the domestic market because the availability of Russian logs is dwindling. The Finnish industry has long relied on relatively inexpensive logs imported from its neighbor in the east, but this situation changed in 2006 when domestic prices in Russia started to go up and log export taxes were implemented.
The Russian government has assisted its forest industry by shutting of foreign competition for logs. As of April 1 this year, Russian log export taxes for conifer species and large birch logs (mainly for plywood production) increased from 20% (minimum €10/m3) to 25% (minimum €15/m3) of the log value. Smaller birch logs (