Södra Increases Price for Saw Logs; Launches New Pricing Tool for Transparency

Oct. 21, 2024 (Press Release) - Södra is taking action to strengthen conditions for family forestry and to develop its member offer. On 21 October, prices were raised for saw logs and small-diameter sawable ranges, and a new tool is being introduced to increase security for forest owners. Södra is also taking further steps to improve transparency in the wood market.

To increase security for family forestry and raise the level of service in a raw material market with continued high demand and considerably more fluctuations than ever before, Södra is taking initiatives to strengthen the profitability of forest estates and their conditions, both long and short-term. Over the past year, a process to develop forms of business and improve business conditions has intensified and in conjunction with a price increase for saw logs, a new tool is being launched with the aim of improving transparency in the raw material market and increasing security for members.

“Over the past year, Södra has stepped up efforts to develop business relationships with members, while the mills’ focus on using every wood fibre is continuing with the same intensity. We are doing so to strengthen the position of forest owners in a situation where we see long-term demand for raw material from family forestry as more and more players want to use forests for various purposes. At the same time, we are taking action with a price adjustment in a market with a raw material shortage and global uncertainty, which means that the situation could change rapidly,” said Peter Karlsson, President of the Södra Skog business area.

The following price adjustments have been introduced and apply from 21 October 2024:

• The basic price for standard saw logs of spruce has been raised by SEK 100/m³sub
• The basic price for standard saw logs of pine has been raised by SEK 70/m³sub
• The basic price for small-diameter timber and sawlogs has been raised by SEK 70/m³sub
• New pricing terms are increasing security when signing contracts

It is important that forest owners can feel secure when signing agreements. Södra has therefore introduced Highest price 60 days, which means that forest owners will receive the new higher price should the price be raised within 60 days of signing the agreement. The terms apply to harvesting assignments, including the log price and delivery wood. The ranges covered are standard saw logs, small-diameter ranges of spruce and pine, and softwood and hardwood pulpwood.

A high level of service is important, but there are occasions where priorities need to be made and harvesting operations take place later than planned. Södra is therefore adding a price term for price compensation should harvesting be delayed. The price compensation means that a harvesting operation that has not commenced within one year of signing the agreement will receive the current wood price at 12 months, if the price is higher than when the agreement was signed. These terms apply to harvesting assignments, including the log price. The ranges covered are standard saw logs, small-diameter ranges of spruce and pine, and softwood and hardwood pulpwood.

“We are operating in a market and in a global situation where everything is moving very fast, and this is creating uncertainty for forest owners. It’s important for us, and something that is in clear demand, that we take steps to increase security in transactions between forest owners and Södra,” said Peter Karlsson.

Highest price 60 days and Price compensation delayed harvesting apply to agreements signed as of 21 October. The terms apply to agreements with a price on the signing date and are paid as a supplement for the main ranges (saw logs, small-diameter ranges of pine and spruce, and pulpwood).

Increased Transparency with Pricing Tool

Södra already publishes wood price lists openly on sodra.com together with price statistics, showing current price levels and how much premium has been added to signed agreements for regeneration harvesting. The current premium levels and regulations are also available on each member’s page in Min Skogsgård (My Forest Estate). Södra is now taking a further step and in November, a price calculation tool will be launched. The tool enables members to calculate a wood price per range on their own by setting various parameters such as volume, availability and nature conservation set-asides.

“Our offer is based on cooperative principles where transparency is very important. We want to contribute to a fair payment for wood across the entire market and we believe that we can do this best by being transparent and open,” said Peter Karlsson.

SOURCE: Södra