Finnish Forest Industry Review (November, 2024)

The global forest products market is described as stagnant. We already know that various factors, such as weather conditions, policy changes and global demand , are constantly changing, so everyone involved in this industry should be informed about the latest developments. And now let's take a look at the news of the Finnish forestry industry in the second half of 2024.

The Finnish economy contracted in 2023 and growth is not expected in 2024. Slowing inflation, falling interest rates and positive trends in household income are expected to boost disposable income and consumer spending. New investment is not expected to pick up until 2025.

GDP growth forecasts are as follows:

· 2025: 1.6%

· 2026: 1.5%

Similar to other countries, government spending cuts and tax increases are likely to dampen domestic demand and push up prices. Although employment fell slightly in 2024, it is projected to pick up from 2025 on the back of rising demand and government initiatives to boost employment. The employment rate is expected to reach 73.9% by 2026, while the unemployment rate is expected to fall to 6.9%.

Sawmills are facing challenges due to rising log prices. The main factors driving this increase are improved conditions in the pulp industry and a booming energy wood market. In 2020, log stump prices ranged from 55 to 60 euros per cubic meter, while current prices have increased to 83-85 euros per cubic meter and above.

Private sawmills are expected to implement production cuts by the end of the year if their significant cost structure does not result in further price increases. In contrast, large integrated mills are unlikely to reduce their sawmill output, given the high demand for wood chips and pulpwood.

Finnish sawmill output has decreased. Finnish softwood sawmill output is estimated to have decreased by 6% to 5.5 million m³ in the first half of 2024, compared to the same period in 2023.

The domestic market continues to struggle, mainly due to a sluggish construction sector. Cumulative domestic consumption has fallen sharply over the past 12 months to a record low of 1.9 million m³. In contrast, before the financial crisis, consumption was close to 6 million m³.

Export markets have been relatively quiet, although some regions have seen a slight price increase. However, order estimates for the third quarter are still incomplete. It is worth noting that Finnish imports to China fell by 27% in the first half of the year to 370,000 m³ compared to the same period last year.

Finnish roundwood prices are showing an upward trend, despite the sluggish lumber market. There are signs of recovery in the pulp, paper and packaging markets, which means that companies are looking to buy more wood.

Source: GWM

Photo: Aleksi Partanen, Unsplash