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Global Wood Markets Info<\/strong> spoke with Tino Aalto<\/strong>, Managing Director of the Finnish Sawmills Association<\/strong>, the organisation representing Finland's sawmilling industry. Tino Aalto has led the association for the past four years after previously serving as a Special Adviser to several Finnish government ministers and holding senior public affairs and lobbying roles across different industrial sectors.<\/p>\n In this interview, he discusses the challenges facing Finnish sawmills as record-high log costs continue to outpace softwood lumber prices, shares his outlook for European construction demand and export markets, and explains why he believes EU climate and forestry policies are increasingly undermining the competitiveness of Europe's forest industry. He also outlines the policy changes he believes are needed to strengthen the sector and offers his expectations for the market heading into 2027.<\/p>\n<\/div>\n<\/div>\n GWMI:<\/strong> Finnish sawmills have repeatedly warned that log prices have risen much faster than softwood lumber prices. Looking ahead to the next 12\u201318 months, do you expect this gap to narrow, or will margins remain under severe pressure? Which factors could finally restore profitability?<\/em><\/span><\/p>\n Due to competition law, I cannot speculate about future log prices. However, if wood prices in Finland remain at their current high level, this will create serious difficulties for the Finnish sawmilling industry. It should also be remembered that logistics costs play a major role when exporting what we consider to be the world\u2019s best sawn timber from Finland to international markets. In my view, the situation could change significantly if geopolitical tensions were to ease. For example, if Russia\u2019s war of aggression against Ukraine came to an end and the situation in the Middle East stabilised. In summary, wood procurement and logistics costs should not increase; on the contrary, they should decrease. At the same time, sawn timber prices would need to rise. These changes would bring profitability back to a sustainable level.<\/p>\n \n GWMI:<\/strong> Several European sawmills have already reduced shifts or curtailed production because of weak margins. Do you believe Finland will see additional production curtailments this autumn and winter, or are companies prepared to operate through the current market cycle?<\/em><\/span><\/p>\n \u00a0The market situation has been weak for several years, particularly when viewed from the perspective of business profitability. Production volumes are currently below last year\u2019s level, and it appears that total production will remain lower than in the previous year.<\/p>\n \n GWMI:<\/strong> How would you describe the current balance between supply and demand in the European softwood lumber market? Are we approaching a turning point, or does the market still need further production adjustments?<\/em><\/span><\/p>\n What the market needs above all is stronger demand for wood products. In Europe, the focus should be on how to revive construction activity. There is already considerable pent-up demand in many markets, and overall, far too little is being built. We now need to get the wheels of the construction sector turning again.<\/p>\n \n GWMI:<\/strong> Which export markets offer the strongest opportunities for Finnish softwood lumber over the next two to three years? Are there any regions where demand is improving faster than expected?<\/em><\/span><\/p>\n The production facilities of the Finnish sawmilling industry, together with Finland\u2019s high-quality and diverse raw material base, enable Finnish sawmills to respond to the needs of a wide range of markets. All export markets are important. But more than half of the Finnish sawmilling industry\u2019s 20 largest export markets are located in Europe. Naturally, I therefore hope that a recovery in European construction activity can be achieved as quickly as possible.<\/p>\n \n GWMI:<\/strong> Many producers are waiting for a recovery in residential construction to support lumber demand. When do you realistically expect stronger demand to return, and which indicators are you watching most closely?<\/em><\/span><\/p>\n There are simply too many sources of uncertainty in Europe at the moment. The war in Ukraine, the crisis in the Middle East and President Trump\u2019s policies are currently casting a shadow over economic activity and investment more broadly. In addition, it appears that further interest rate increases may be ahead, which is rarely positive for the construction sector.<\/p>\n \n GWMI:<\/strong> The European forest industry often argues that climate, biodiversity and forestry policies are becoming increasingly disconnected from industrial reality. Which EU policy has had the greatest impact on the competitiveness of European sawmills, and what changes would you like to see from Brussels?<\/em><\/span><\/p>\n One particularly topical issue is the restriction of harvesting during the bird-breeding season, which, as I understand it, is currently affecting several countries as a result of EU-level requirements. In addition, all EU Member States are currently preparing their national nature restoration plans. If restoration measures are implemented without taking economic realities into account, harvesting volumes will have to be reduced in several countries.<\/p>\n It may also be impossible to achieve the EU\u2019s current climate targets without significant harvesting restrictions. It has been estimated that, at the European level, annual harvesting volumes could be reduced by tens of millions of cubic metres in total. The current European Commission presents itself as being supportive of industry, but in reality, it has so far been a tremendous disappointment.<\/p>\n \n GWMI:<\/strong> The debate over reducing harvesting levels has intensified in Finland. What would be the consequences for the Finnish sawmilling industry if annual harvesting volumes were significantly reduced? Could Finland maintain its position as one of Europe's leading softwood lumber exporters under such a scenario?<\/em><\/span><\/p>\n Finland has one of the world\u2019s most ambitious national climate targets: achieving carbon neutrality by 2035. This target cannot be reached without major restrictions on harvesting. When the target was originally adopted in 2019, the assumption was that it could be achieved without restricting harvesting and that harvesting volumes could, in fact, even be increased.<\/p>\n Since then, the underlying data and calculations have been revised, but the target itself has not been changed. It is difficult to have a sensible public discussion about this issue. If you criticise the target, you are easily labelled as a denier of the fight against climate change, even though that is absolutely not what this is about. If logs are not harvested in Finland or elsewhere in Europe, producers in countries such as Canada and Russia will be more than willing to fill the gap left by European industry in markets such as Japan and China. Nevertheless, I believe that Finnish policymakers are wise enough not to impose any significant restrictions on harvesting.<\/p>\n \n GWMI:<\/strong> There is growing concern that Europe is gradually losing industrial competitiveness. Are European sawmills competing today against global producers\u2014or increasingly against European regulation itself? Which structural disadvantages concern you the most?<\/em><\/span><\/p>\n I would encourage everyone throughout the value chain to follow much more closely what is happening and what is being planned on the regulatory side. Although global demand for wood products is growing over the long term and across economic cycles, the opportunities created by this development could be undermined by the EU\u2019s own decisions. Unfortunately, I currently see very few decisions on the horizon that would concretely improve the competitiveness of European industry. From the sawmill sector\u2019s perspective, the fundamental problem with the European Union, and particularly with the European Commission, is that the people preparing regulation often do not understand the practical consequences of their decisions. This has been evident, for example, in the EUDR and the Nature Restoration Regulation. Objectives that sound positive in principle can easily turn into burdensome regulation. Commission officials from countries where forests play a completely different role than they do, for example, in Finland are preparing legislation that directly affects forest owners, the wood-processing industry and the competitiveness of the entire forest sector.<\/p>\n Another problem is that, in Brussels, the competitiveness of the forest sector is too often viewed as an internal EU matter. At the same time, insufficient attention is paid to the decisions and actions of major global players such as the United States, China and Russia. The EU machinery focuses on its own regulations, directives and reporting obligations, but not enough on what is actually happening in the global market economy. The raw material base of the European sawmilling industry is also a structural challenge for the future, although Finland stands out positively in this respect. Our forests are well managed, and the volume of wood growing in Finnish forests is at a historically high level. In addition, Finland has not experienced major forest damage on the scale seen in some other European countries.<\/p>\n \n GWMI:<\/strong> If you could recommend only three measures to the European Commission that would immediately improve the competitiveness of the European sawmilling industry, what would they be?<\/em><\/span><\/p>\n First, the EU should commit to ensuring that politically imposed harvesting restrictions are not introduced under any circumstances.<\/p>\n Second, it should commit to compensating industry for any increases in logistics costs resulting from political decisions.<\/p>\n Third, the EU should introduce binding regulation to increase timber construction and the use of wood in the construction sector.<\/p>\n \n GWMI:<\/strong> If you had to make one forecast for the next twelve months, what is your outlook for European log prices and softwood lumber prices? Do you expect 2027 to be a better year for sawmills than 2026?<\/em><\/span><\/p>\n I would like to hope for a better year, but I am not prepared to make such a prediction. The world is extremely unsettled at the moment. Political decision-making is also short-sighted and too often focused on scoring easy political points. What I do know, however, is that when the market eventually turns, the Finnish sawmilling industry will be ready to respond to the demand. Finland\u2019s sawmills are modern, and our companies are reliable.<\/p>\n In addition, our raw material base is perhaps stronger than anywhere else in the world. Finnish forests contain an abundance of high-quality sawlogs. Our forests grow considerably more wood than is harvested, and Finland is also doing exceptionally extensive work to protect and enhance forest biodiversity.<\/p>\n Every February, we organise Europe's leading and largest annual sawmilling conference<\/strong>, bringing around 600 industry professionals<\/strong> to wintertime Helsinki. You should join us in person next year at the Wood From Finland Conference<\/strong><\/a>, then you will know what to expect from the market in 2027.<\/p>\n GWMI InterviewS Global Wood Markets Info spoke with Tino Aalto, Managing Director of the Finnish Sawmills Association, the organisation representing Finland’s sawmilling industry. Tino Aalto has led the association for the past four years after previously serving as a Special … Continue reading
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