The situation has been stabilized owing to the efficiency of Directorate General of State Forests who effectively reacted to the adverse circumstances and provided necessary solutions. The Order of Head of the Directorate General of State Forests issued 24 August 2010 „Regarding measures to be implemented by directors of state forest enterprises in order to manage the effects of the squall of 8 August 2010‘ reassures that contractual sales obligations of roundwood will be fulfilled. As a result of this order, directors of state forest enterprises cooperate closely with roundwood purchasers and they sign three-party contracts which guarantee the implementation of the binding commitments.

Andrius Zimnickas, the director of UAB Juodeliai, admits that the sales capacity of pallet blanks is seasonally adjusted, and such market trends of wooden pallets have been recorded over the years. Large pallets blank manufacturing companies adapt to such seasonal factors, and maintain stable levels of production and sales. That allows UAB Juodeliai sell all their output without considerable difficulty.

The wood processing industry, including the companies that have wood pallets and pallet blanks among their products, will feel the consequences of the storm during the nearest period of purchasing raw timber. If the uprooted trees are urgently preserved, the amount of this timber will supplement the supply of raw timber. On the other hand, if the uprooted trees are lost, higher prices can be expected due to potentially lower amount of timber.

Wood processors are in obscurity as they cannot foresee, whether they will be able to maintain efficient production. The situation is facilitated only by the efforts of the Directorate General of State Forests, due to which all timber preparation works are concentrated in the regions that suffered most damage during the storm. It ensures continuous supply of raw material. The main uncertainty is related to the private forests, as their landowners do not provide the information about the planned actions to eliminate the consequences of the storm.

In the first quarter of 2010, Lithuanian roundwood export has increased by 65.63%, compared to the same period of 2009. The increased demand for wood from abroad raises raw material price for Lithuanian wood processors. Some of the wood processors buy roundwood from neighboring Belarus, Russia, or Ukraine; however, transportation costs also increase raw material price significantly.

Information is based on the newspaper “Verslo Žinios”.

Comparing the performance of the first half of 2009 and 2010, the number of manufactured wood products has increased from approximately 20,000 m³ to 30,000 m³, while the turnover has increased almost twice as much. Considering the market situation, it is being estimated that in 2010, the performance will be significantly better than in 2009. The best performance is expected over 16 years of UAB Juodeliai existence.

According to A. Zimnickas, the Director of UAB Juodeliai, such an increase in raw material prices has strongly influenced the realization of the company’s production to foreign and local markets. Not to suffer the loss due to raw material price increase, the manufacturers of wood pallet blanks had to raise the production prices accordingly. However, not all manufacturers of wood pallets have agreed to raise the prices that would offset high price increase of raw material, and some of them agreed to do so within the next 2-3 months by gradually increasing the price of pallet blanks each month. Many buyers gave reasons for the fact that the prices in wood pallet realization market have settled for quite some time, and that the next change in wood pallet prices is expected in autumn.

The growing demand for wood in the country increases the shortage of wood, and raises prices. Considering the announced results of the wood competitive tenders, the wood prices have increased significantly compared with the first half of this year, i.e. the price of small sawn logs has increased more than 25% (the latter are used in the manufacture of pallet blanks), paper wood prices – more than 38%, and panel wood prices – more than 30%.

Wood processing companies are worried that the increase in prices of the raw material may reduce the competitiveness of their wood production in foreign countries.

According to the latest information available in the international FSC Certificate Databases, more than 100 FSC certified companies currently operating in Lithuania (among them – 42 forest enterprises). On May 4 this year, a national FSC representative in Lithuania UAB NEPCon LT has successfully certificated sequence of operations and manufactured products (such as pallet blanks and Euro-pallets) of wood processing company UAB Juodeliai in accordance with FSC requirements (FSC certificate code – SW-COC-004863).

The company has been certified according to two following standards: FSC-STD-40-004 and FSC-STD-40-005. This means that UAB Juodeliai is allowed to buy raw materials from suppliers that do not have a FSC certificate. More information on the validity term of the certificate provided to UAB Juodeliai, and the types of certified products can be found on the web site: http://info.fsc.org/.

Currently, UAB Juodeliai produces and successfully sells more than 5000 m³ of secondary wood products during a month, which include about 40% of sawdust (approximately 30% of the total quantity of sawdust includes coniferous tree sawdust, and the rest – deciduous ones), and 60% of wood sliver (pulp chips). The production of the sawmills that belong to UAB Juodeliai has been well evaluated by not only Lithuanian but also by foreign buyers of wood products, who use wood as the main raw material for production of their products.

The opinion that the secondary products (sawdust, pulp chips, or cut-offs) obtained in wood-processing companies are only worthless waste has changed dramatically over the last decade. Currently, many representatives of the country‘s sawmills can only confirm that the secondary products (pulp chips, sawdust) obtained during the manufacturing process are as successfully sold as the main products (pallet blanks, pallets, etc.), and sometimes even better.

Wood processing companies that are willing to purchase raw material are required to participate in these tenders that take place in different forest enterprises, and often the same day and at the same time. It is consuming some time and expenses. Purchasing by mutual agreement it is difficult to predict what quantities of raw material will be offered by forestry enterprises during the tenders. Due to such fluctuating wood sales wood processing companies do not reach the expected results, because it is becoming more difficult to plan the production without knowing the quantities of wood.

According to Juozupas Zimnickas, General Director of UAB Juodeliai, only long-standing and half-yearly wood purchase contracts provide more guarantees both for buyers and sellers that mutual obligations are going to be fulfilled, and ensure a regular supply of raw material required for production.