In his October market report, Norra Timber sales director Erik Eliasson described a sawn timber market that remained weak but was showing signs of stabilisation. Production cuts and lower inventories were beginning to support prices, while European construction activity and customer purchasing remained subdued.<\/p>\n
GWMI followed up with Eliasson to ask whether this improvement reflected stronger orders or a reduction in supply. In the interview below, he discusses Norra Timber\u2019s sawlog position, the effect of exchange rates on mill returns, demand in Egypt and other MENA markets, and the company\u2019s production plans for 2027.<\/p>\n
GWMI: <\/strong>Your report is somewhat more optimistic than previous updates. What has changed most in your customer discussions? Are orders improving, or is the market mainly becoming better balanced because mills have reduced production?<\/em><\/p>\n Erik Eliasson:<\/strong> Supply and demand are now broadly more balanced, even though Swedish sawmill production was down 6% through September. The decline would have been considerably larger without Storm Johannes, which struck central Sweden and temporarily increased sawlog supply by about 5.5 million m\u00b3. As storm-damaged timber is now being processed, production is expected to fall further. Although driven by negative circumstances, this leaves mills in northern Sweden in a relatively stronger position.<\/p>\n Globally, consumption declined by 2.3% in 2025 and is forecast to contract by another 3.5% in 2026. This indicates that most of the market is still affected by weak construction activity, high financing costs, cautious purchasing and low inventories throughout the supply chain.<\/p>\n Despite this near-term weakness, the longer-term outlook is more positive. Overall, the outlook for global softwood suggests a difficult and contracting market in the immediate future, followed by a slow recovery rather than a strong demand rebound. A game changer would be peace in the Hormuz conflict and\/or the Ukraine war.<\/p>\n GWMI: <\/strong>What is the situation at Norra Timber? Are orders or selling prices improving, and are any products or markets performing better than others?<\/em><\/p>\n Erik Eliasson:<\/strong> Swedish sawmills currently benefit from favorable exchange rates. The Swedish krona has weakened by 8% against the US dollar and almost 15% against the Norwegian krone, while also losing ground against the euro and the pound. Combined with lower production, this is improving net mill prices. We are also seeing residual prices rebounding, caused by higher energy costs. We see exactly the same price pattern for Norra Timber.<\/p>\n GWMI: You note that buyers are keeping inventories low. Are European customers approaching the point where they need to restock, or can they continue buying only for their immediate needs?<\/strong><\/p>\n Erik Eliasson:<\/strong> At present, most buyers appear to be purchasing only what they need in the near term.<\/p>\n GWMI: How is the sawlog market developing in northern Sweden? You mention a cyclical oversupply of forest raw material. Does this also apply within Norra Skog\u2019s operating area, and are changes in availability and prices supporting mill margins?<\/strong><\/p>\n Erik Eliasson:<\/strong> Norra Skog has a strong business model and a successful strategy for securing sawlog supply. In the northern half of Sweden, harvesting notifications in Q3 covered 8,893 hectares, compared with 10,517 hectares the previous year. Norra Skog accounted for 36% of this area, up from 22%.<\/p>\n Increasing our market share from 22% to 36% in a weak sawlog market demonstrates the strength of our business model and strategy. Log prices in the north remain relatively stable, while prices in southern Sweden have seen greater fluctuations, giving forest owners greater confidence to continue doing business with us. Mill margins are still clearly too low, although they have improved moderately, mainly because of exchange-rate movements.<\/p>\n GWMI: Since you are in Egypt this week, what are your impressions of the market? Your report points to stronger activity in MENA. How much potential does the region offer Norra Timber?<\/strong><\/p>\n Erik Eliasson:<\/strong> I see significant opportunities for us to expand in the region. In Egypt, inventories were lower than usual and buyer confidence had improved. The UAE\u2019s land deal at Ras El Hekma, together with plans to create a new Dubai-style development there, is driving a major increase in construction. The project is expected to involve USD 150 billion in construction investment over five years, in addition to USD 35 billion for the land. At the same time, Russian exports to Egypt continue to decline because of damaged Black Sea ports, high freight costs and other domestic challenges.<\/p>\n Other MENA markets are also showing positive signs. Buyers remain confident and continue to purchase significant volumes of lumber. From my perspective, MENA is currently the most active region and the one showing the strongest demand, especially if you have slow-growing pine production that fits their needs.<\/p>\n GWMI: As Norra Timber plans for 2027, what are you monitoring most closely? What would give you the confidence to increase production, and what factors could continue to constrain the market?<\/strong><\/p>\n Erik Eliasson:<\/strong> There is one clear reason for us to maintain and slowly increase our production: we have access to the logs, and at a reasonable cost. We expect general production to continue declining, particularly in Sweden but also across the rest of Europe. This is evident in the current pace of sawlog procurement, especially among mills in southern Sweden, where they have bought just 50% of the necessary volumes so far in 2026. I am convinced that mills in central Sweden will face the same situation once the storm-salvage period ends. Overall, these factors are likely to drive production even lower.<\/p>\n We focus on the utilization of our investments in CT-scanner technology and more advanced log grading. We have learned that scanning creates customer value by enabling us to select the right log based on the customer\u2019s product and the characteristics that deliver the greatest value. We use this capability in three main ways. First, we assess strength and structure for products exposed to high loads. Second, we identify visual characteristics of selected raw material for visual flooring and panel products or to create high-quality premium decking. Third, we measure heartwood content. In short, we try to translate each customer\u2019s needs into the right characteristics, the right log and the right product, thereby creating greater customer value.<\/p>","protected":false},"excerpt":{"rendered":" In his October market report, Norra Timber sales director Erik Eliasson described a sawn timber market that remained weak but was showing signs of stabilisation. Production cuts and lower inventories were beginning to support prices, while European construction activity and … Continue reading
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