Despite slower lumber export sales, sawlog prices in Sweden continued upward in the second quarter of 2010, reaching their highest levels on record in localcurrency. Log prices have increased faster in the southern part of the country, where both sawlogs and pulpwood prices are now higher than in the northern region. As a result, forest owners in Central and Northern Sweden are increasingly considering shipping logs southbound, unless local log prices become more attractive, according to the Wood Resource Quarterly.Swedish sawmills continue to have lower wood costs than many of their competitors in Finland, Germany and Austria, as reported in the Wood Resource Quarterly. However, the cost discrepancy has declined substantially from last year. Sawmills in Eastern Europe and Northwest Russia, on the other hand, currently have 15-30 percent lower wood costs than Swedish mills with the Czech Republic being the only exception.Pulpwood costs, which account for about 60 percent of cash costs for Swedish pulp mills, were higher in the second quarter this year as compared to the same quarter last year. Average softwood and hardwood pulplogs costs have gone up twelve percent and 18 percent (in US Dollar terms), respectively, in twelve months, according to the Wood Resource Quarterly. In the local currency, the increases have been slightly smaller.With many sawmills reducing production this summer and fall and as a result, less availability of residual chips, the demand for pulplogs has increased. The pulp industry is very dependent on wood chips as this source is typically the lowest cost fiber. In 2009, just over 27 percent of the total softwood fiber consumption was bi-products from Sweden’s sawmills. It is likely that this share will be slightly lower this year because of the continued high demand for fiber and a reduction in available supply of residual chips.As a result, there will continue to be strong demand for pulplogs in the coming months.