Prof. Dr. Wilfried Puwein
Wood Market in Poland towards Stabilisation“Price Setting Systems in Austria”
Poznan, 4th december 2007
2 Dec. 4th, 2007
In a market economy the ‘Invisible Hand' is setting
the price
Supply
Demand
Price
Quantity
P0
Q0
3 Dec. 4th, 2007
Price setting systems in Austria
The Austrian wood market Supply Demand
Price Settings In general Saw logs Pulpwood Fuelwood
Time series components of prices Trend – cyclical – seasonal - irregular
Towards perfect competition Control of takeovers and mergers Outlaw of anti-competitive agreements Price information systems
4 Dec. 4th, 2007
The Austrian wood marketRoundwood supply
Domestic supply ~ 16 million m³/year
Imports ~ 8.5 million m³/year
54% wood land owners < 200 ha
13% OeBF-AG¹)
33% wood land owners ≥ 200 ha
1) owned by the Federal Republic
Domestic supply, shares
5 Dec. 4th, 2007
Roundwood supply
Woodland owners ≥ 200 ha
1 439 enterprises: private, co-operations, communities, Länder (provinces), R.C. church, monasteries
Ø 683 ha/enterprise
6 Dec. 4th, 2007
Roundwood supply
Woodland owners < 200 ha
148 324 enterprises: 40% traditional “forest farmers”,
28% non farming wood land owners with connection to “rural life”,
32% “urban” wood land owners
Ø 11 ha/enterprise
30% (2.5 million m³) of the wood harvest is managed by “Waldverbände”
7 Dec. 4th, 2007
The Austrian wood marketRoundwood demand
Domestic demand ~ 23.5 million m³/year
Exports ~ 1.0 million m³/year
10% pulp industry
4% wood based panel industry
71% saw milling industry
15% fuelwood
Domestic demand, shares
8 Dec. 4th, 2007
Roundwood demand
Saw milling industry 1 400 firms (but 65% sawnwood production share of 10 biggest mills)
Pulp industry 7 firms
Wood based panel industry 10 firms
Fuelwood about 2 million households with possibilities for wood fire (fire place → automatic pellet
heating)
9 Dec. 4th, 2007
Price setting in general
Wood product price world market
in US $
Export price for wood products
in Austria in €
Supply of export
countries
Demand of import
countries
Exchange rates,
transport costs
Processing industry: structure,
competition
Local supply of
roundwood
Logistic costsprocessing costsminus revenues
from byproducts,profits
Local demand for roundwood
Local roundwood
price, road side
in €
10 Dec. 4th, 2007
Monthly Prices of Soft Roundwood and Export
Sawnwood
– 40,0
– 30,0
– 20,0
– 10,0
+ 0,0
+ 10,0
+ 20,0
+ 30,0
+ 40,0
+ 50,0
+ 60,0
1M19
71
1M19
72
1M19
73
1M19
74
1M19
75
1M19
76
1M19
77
1M19
78
1M19
79
1M19
80
1M19
81
1M19
82
1M19
83
1M19
84
1M19
85
1M19
86
1M19
87
1M19
88
1M19
89
1M19
90
1M19
91
1M19
92
1M19
93
1M19
94
1M19
95
1M19
96
1M19
97
1M19
98
1M19
99
1M20
00
1M20
01
1M20
02
1M20
03
1M20
04
1M20
05
1M20
06
1M20
07
Annua
l pe
rce
nt c
ha
ng
e
Domestic Price Saw logs
Domestic Price Saw logs, estimated f(export price sawnwood t, t-1)
Source: Statistik Austria, WIFO calculations.
PDSL=9.05+0,16*EPSt+0,06*EPS
t-1
R²=0,86
11 Dec. 4th, 2007
Monthly Prices of Soft Pulpwood and Export Pulp
Source: Statistik Austria, WIFO calculations.
PDPW=22,11+0,025*EPP
t
R²=0,20
– 35
– 30
– 25
– 20
– 15
– 10
– 5
+ 0
+ 5
+ 10
+ 15
+ 20
+ 25
+ 30
+ 35
1M19
84
9M19
84
5M19
85
1M19
86
9M19
86
5M19
87
1M19
88
9M19
88
5M19
89
1M19
90
9M19
90
5M19
91
1M19
92
9M19
92
5M19
93
1M19
94
9M19
94
5M19
95
1M19
96
9M19
96
5M19
97
1M19
98
9M19
98
5M19
99
1M20
00
9M20
00
5M20
01
1M20
02
9M20
02
5M20
03
1M20
04
9M20
04
5M20
05
1M20
06
9M20
06
5M20
07
Annua
l pe
rce
nt c
ha
ng
e
Domestic Price Pulpwood
Domestic Price Pulpwood, estimated f(export price pulp t)
12 Dec. 4th, 2007
Annual Average Prices of Soft Roundwood and Export
Sawnwood
Source: Statistik Austria, WIFO calculations.
0
50
100
150
200
250
300
350
40019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
€/to
nne
Export Unit Value Soft Sawnwood (SITC 24820)
Domestic Price Saw logs/0.6
Margin for processing and logistics
13 Dec. 4th, 2007
Annual Average Prices of Soft Pulpwood and Pulp
Source: Statistik Austria, WIFO calculations.
0
100
200
300
400
500
600
700
80019
83
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
€/to
nne
Export Unit Value Pulp (SITC 25151)
Domestic Price Soft Pulpwood/0.5
Margin for processing and logistics
14 Dec. 4th, 2007
Annual Average Prices of Fuelwood, Crude Oil and Pulpwood
Source: Statistik Austria, WIFO calculations.
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
400,0
450,019
72
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
€/to
nne
Import Unit Value Crude Oil (SITC 333)
Domestic price Fuelwood beech/0.35
Domestic price Soft Pulpwood/0.36
15 Dec. 4th, 2007
Price Development, yearly Averages
0
50
100
150
200
250
300
350
400
45019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
1970
=10
0
Consumer Price Index Fuelwood Saw Logs Pulpwood
Source: Statistik Austria, WIFO calculations.
16 Dec. 4th, 2007
Soft Saw Log Price
30
40
50
60
70
80
90
100
Jan 1
970
Jan 1
972
Jan 1
974
Jan 1
976
Jan 1
978
Jan 1
980
Jan 1
982
Jan 1
984
Jan 1
986
Jan 1
988
Jan 1
990
Jan 1
992
Jan 1
994
Jan 1
996
Jan 1
998
Jan 2
000
Jan 2
002
Jan 2
004
Jan 2
006
€/m
3
Cyclical component
Linear trend
17 Dec. 4th, 2007
Soft Pulpwood Price
20
25
30
35
40
45
50Ja
n 1
970
Jan 1
972
Jan 1
974
Jan 1
976
Jan 1
978
Jan 1
980
Jan 1
982
Jan 1
984
Jan 1
986
Jan 1
988
Jan 1
990
Jan 1
992
Jan 1
994
Jan 1
996
Jan 1
998
Jan 2
000
Jan 2
002
Jan 2
004
Jan 2
006
€/m
³
Cyclical component
Linear trend
18 Dec. 4th, 2007
Fuelwood (beech) Price
0
5
10
15
20
25
30
35
40
45
50
Jan 1
970
Jan 1
972
Jan 1
974
Jan 1
976
Jan 1
978
Jan 1
980
Jan 1
982
Jan 1
984
Jan 1
986
Jan 1
988
Jan 1
990
Jan 1
992
Jan 1
994
Jan 1
996
Jan 1
998
Jan 2
000
Jan 2
002
Jan 2
004
Jan 2
006
€/m
³
Cyclical component
Linear trend
19 Dec. 4th, 2007
Cyclical Price Fluctuations and Trend, 1970-2006
Saw logs 13.8 +0.5
Pulpwood 15.5 –0.7
Fuelwood 23.5 +3.0
Coefficient of Variation (moving average deviation
from trend)
Average annual
change in %
20 Dec. 4th, 2007
Seasonality in the Price Index
98,0
98,5
99,0
99,5
100,0
100,5
101,0
101,5
102,0
J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec
Index
Saw Logs
Pulpwood
Fuelwood
Source: WIFO calculations.
21 Dec. 4th, 2007
Price setting in practice
Timber Sale Contracts Contract period 0-12 month
Price Fixed price
Price Index
22 Dec. 4th, 2007
Methods of marketing timber
Enterprises
< 200 ha ≥ 200 ha OeBF-AG
In %
Selling stumpage ? 12 8
Selling harvested timber
roadside 81? 76 19
cif mill 19? 12 73
Source: BMLFUW, Österreichischer Waldbericht, Datensammlung; OeBF-AG.
23 Dec. 4th, 2007
Methods of marketing timberOeBF-AG
Source: OeBF-AG.
0%
20%
40%
60%
80%
100%
1998 1999 2000 2001 2002 2003 2004 2005 2006
% s
hare
Selling stumpage
Selling harvested timber roadside
Selling harvested timber cif mill
24 Dec. 4th, 2007
Methods of sale and price setting
Sale Lump-Sum-Sales – in Austria against the forest law
Sale-By-Unit
Price setting Oral bid or negotiations Written Sealed Bids
“Submissions” for veneer logs
25 Dec. 4th, 2007
Tendencies towards oligopolistic demand
Concentration tendencies in wood processing firms
Oligopolistic industries can manipulate the domestic raw wood price (by collusion)
Foreign industries transport costs/cif price relation
26 Dec. 4th, 2007
Measures against oligopolistic demand
Control of takeovers and mergers
Outlaw of anti-competitive agreements
EU-Competition Law Collusion and cartels Dominance and monopoly Mergers and acquisitions
27 Dec. 4th, 2007
Problem of Asymmetric Information
Setting the price
Local price information
World market information
Forecasts: housing starts, business cycle …
?
28 Dec. 4th, 2007
Strengthening the position of wood suppliers
Advancement for “Waldverbände”
Price information system
Benchmark - Tyrolean System
Report System via Internet:
Forest owners Forest Service of the district Forest Service of provincial government: Monthly report on prices and harvest recommendations
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