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There is anxiety throughout the Swedish sawmill industry. - Where is the market heading? After a cautious optimism in the spring, where lumber prices rose somewhat, the situation has become more challenging in the market. Buyers are increasingly pressured by the ongoing poor construction industry and demand further price reductions. <\/span>The situation is paradoxical as most sawmills in Sweden have seasonally low finished product inventories after a summer where most of them reduced production due to a shortage of timber. A timber shortage has caused raw material costs for sawmills to reach record levels.<\/p>\n Rising timber prices and falling lumber prices are setting the stage for more sawmills to post losses in Q3. The situation is stressful and gloomy but not entirely bleak. Lumber prices remain historically high. The weak exchange rate of the krona is absolutely crucial. Demand for lumber is decreasing globally, but the supply is likely decreasing even more. A tough autumn is expected for Swedish sawmills with lower lumber prices. However, if we consider further slowdown in the global economy, most Swedish sawmills should emerge from this phase relatively intact, at least until the turn of the year. This all depends, however, on a continued weak exchange rate for the krona.<\/p>\n Swedish lumber export prices, which are now in the range of 2,800 SEK\/m3 (EUR 241\/m3), compared to the previous equilibrium level of about 2,200 SEK (EUR 189\/m3). The USA usually leads the way in economic cycles, and with the recent strength of the Swedish krona, it is not impossible that this could become the future equilibrium level for Swedish lumber products.<\/p>\n For Swedish sawmills, optimism for the future is very high, driven by recent years' profitability boom and, perhaps even more, by the trend and society's demand for increased production of longer-lasting products from the forest. Investments in Swedish sawmills have steadily increased over the past five years, from a level of around 1.5 billion per year to over 4.1 billion kronor in the last 12 months. This contrasts with a 30% decrease in investments in the paper and pulp industry compared to the previous year. For sawmills, the main goal is often higher wood yields through X-ray technology, thinner blades, optimizing sorting systems, finger-jointing, gluing, advanced drying, etc. However, nearly all investments come with increased production and, therefore, a greater need for wood.<\/p>\n When analyzing the record investments in Swedish sawmills, there are approved expansion projects (in production by 2025) that would increase sawn volume by 1.8 million cubic meters in annual capacity. Additional projects are in the decision-making phase, with the largest being SCA\/Holmen in Rundvik and S\u00f6dra in Kinda, which together could add another 0.6 million m\u00b3 of sawn timber. In total, all projects, the majority of which are approved, could increase wood consumption in Sweden by nearly 5 million cubic meters, with about 1.5 million in G\u00f6taland.<\/p>\n The challenge lies in how to secure enough raw material, especially in G\u00f6taland, the region already suffering from the most significant wood shortage today. Increasing timber extraction by 1.5 million m\u00b3 solid volume in that region seems quite challenging.<\/p>","protected":false},"excerpt":{"rendered":" There is anxiety throughout the Swedish sawmill industry. – Where is the market heading? After a cautious optimism in the spring, where lumber prices rose somewhat, the situation has become more challenging in the market. Buyers are increasingly pressured by … Continue reading