The uncertainty of the economy and the decrease in consumption will weaken the prospects of the Finnish forest industry this year and next, according to Finnish Pellervo Taloustutkimus PTT's forecast for the forest sector.\u00a0High energy prices improve the competitive position of the Finnish chemical forest industry.\u00a0For the sawmill industry, the boom brought by the coronavirus is receding, and export prices are dropping drastically.\u00a0The decrease in construction also reduces the demand for sawnwood products.<\/p>\n
\"Thanks to the strong development at the beginning of the year, the annual export prices of the forest industry's main products will rise strongly this year, with the exception of lumber.\u00a0Next year, export prices will fall along with demand.\u00a0High production costs, however, limit the drop,\" says forest economist Matti Valonen.<\/p>\n
The nominal value of Finland's forest industry exports will increase by four percent this year.\u00a0Next year, the value of exports will drop by a good ten percent, especially driven for sawn timber.<\/p>\n
The forecast is based on the assumption that relations with Russia will remain broken, and the price of energy will remain high during the winter and will decrease next spring.<\/p>\n
The decrease in construction affects lumber and plywood<\/strong><\/p>\n Finland's export of lumber will decrease by eight percent this year.\u00a0Demand will shrink due to the decline in DIY sector, which increased during the pandemic, and due to the fall in construction demand.\u00a0Next year, the reduction will be more moderate, and part of the reason for this is the depletion of stocks of Russian and Belarusian lumber imported to Europe which balances the market situation.<\/p>\n Next year, the export price of Finland's sawn timber will drop by almost 30 percent.\u00a0However, during the peak period, the sawmills made excellent results, which made it possible to invest more in Finnish sawmills.<\/p>\n Finland's plywood exports will also decrease due to the decrease in the construction industry and due to lower demand for furniture, car and transport equipment, and wooden packaging.\u00a0The price still remains high, because Russian plywood is no longer available on the European market.\u00a0In 2021, Russian imports covered about a third of imports from outside EU countries, and it is not possible to completely replace them from other countries.<\/p>\n The price of electricity is even an advantage for the Finnish chemical forest industry<\/strong><\/p>\n The Finnish forest industry both benefits and suffers from expensive energy.\u00a0The forest industry consumes a lot of electricity, but at the same time produces electricity and heat in addition to its production processes.\u00a0The companies use part of the electricity and heat they produce themselves and sell part to the national electricity grid and the local district heating network.\u00a0In addition, forest industry groups UPM, Stora Enso and Mets\u00e4 Group directly or indirectly own shares in nuclear and hydropower plants.<\/p>\n \"These are significant competitive advantages at current electricity prices and during expected price spikes.\u00a0It is likely that factories, especially in Central Europe, will be shut down during the rest of the year due to the unprofitability of production and poor availability of energy.\u00a0Energy has indeed become a competitive advantage for the Finnish chemical forest industry,\" says forest economist Marjo Maidell.<\/p>\n The demand for paper and cardboard wanes in the winter<\/strong><\/p>\n In the first half of this year, there was a good demand for papers in Europe, but the development will weaken during the rest of the year, when the purchasing power of households decreases and private consumption decreases.\u00a0Finland's paper production and exports clearly decreased in the first half of 2022 due to the shutdown of UPM's factories and the closure of the Veitsiluoto paper mill, and annual exports remain clearly lower than last year.\u00a0However, production stoppages in Central Europe and the competitive advantage in energy support the export of Finnish paper.<\/p>\n Paper market prices were historically high in the first half of 2022.\u00a0When demand declines, prices start to fall, although a significant drop is not seen due to the high price of energy.\u00a0The demand for cartons also fades as consumers prepare for uncertainty and high inflation.\u00a0In the longer term, the demand outlook for cardboard is still positive.\u00a0Finland's advantage is the use of virgin fiber compared to competitors in Europe that use recycled fiber, because this kind of cardboard is suitable for various food and hygiene packaging.<\/p>\n The demand for pulp is still strong, but the declining demand for end products will inevitably affect it as well.\u00a0In addition, significant additional capacity will be added to the production of both long- and short-fiber pulp this year and next year.\u00a0On the other hand, the bioenergy generated in production and the rise in electricity prices make pulp production even more profitable.<\/p>","protected":false},"excerpt":{"rendered":" The uncertainty of the economy and the decrease in consumption will weaken the prospects of the Finnish forest industry this year and next, according to Finnish Pellervo Taloustutkimus PTT’s forecast for the forest sector.\u00a0High energy prices improve the competitive position … Continue reading