Signs of improvement have begun to appear in Finland\u2019s wider economy, but little of that optimism has reached the country\u2019s sawmills, where the second half of 2026 is starting with lower production, weaker export revenues and raw-material costs that remain difficult to reconcile with the prices mills are obtaining for softwood lumber.<\/p>\n
Recent company decisions make that divergence increasingly visible. Stora Enso's Veitsiluoto sawmill is currently idle and the group is considering closing the century-old operation permanently rather than making the substantial investment needed to continue production there. Veljekset Vaara has announced 11 redundancies following restructuring negotiations and is preparing for possible temporary layoffs, while other producers continue to adjust output after several years in which the expected recovery in construction demand has repeatedly failed to arrive with enough strength to repair sawmill margins.<\/p>\n
The problem is not simply that lumber demand is weak. Finnish producers are operating in a market where lower sales have not been accompanied by comparable relief in the cost of timber, leaving mills with fewer opportunities to compensate through volume while limiting their ability to raise selling prices. Export prices have not collapsed, but the combination of expensive sawlogs, weak construction, high freight costs and lower mill utilisation is making the economics increasingly difficult for producers whose businesses depend heavily on international markets.<\/p>\n
The latest first-half figures show how firmly this imbalance has become established.<\/p>\n
Finnish sawmills produced around 6.1 million m\u00b3 of softwood lumber between January and June 2026, down 3% from the same period last year. Spruce lumber production fell 6% to approximately 3.0 million m\u00b3, while pine production remained broadly unchanged at around 3.1 million m\u00b3.<\/p>\n
Export revenues weakened more sharply, falling 5% to approximately \u20ac870 million during the first half. The decline was spread across most of Finland's principal markets rather than being concentrated in one destination. During January-May, shipment volumes were lower in eight of the country's ten largest softwood lumber export markets, with deliveries to the UK down 15%, Japan down 20% and China down 27%. Egypt and Estonia, two other important destinations, were also slightly below their year-earlier levels.<\/p>\n
For an industry producing substantially more lumber than the domestic Finnish market can consume, that breadth of weakness matters more than a downturn in any single country. Mills can usually compensate for softer conditions in one market by redirecting production elsewhere, but that becomes much harder when several European and overseas outlets are weak simultaneously.<\/p>\n
The latest numbers show the squeeze clearly<\/strong><\/p>\n Sources:<\/strong> Finnish Sawmills Association, Luke, Finnish Forest Industries Federation. *Purchase totals can vary slightly according to reporting scope.<\/p>\n The difficult part for sawmills is not merely that production and exports are falling, but that lower industrial demand for timber has not yet produced the corresponding correction in sawlog prices that would normally help margins recover.<\/p>\n Roundwood trading during January-June was around 21% lower than in the same period last year and approximately 18% below the five-year average. Log purchases were about 18% below the five-year average, while pulpwood purchases were down around 24%.<\/p>\n Yet June sawlog prices moved higher rather than lower. Pine sawlogs rose 2% from May to \u20ac78.52\/m\u00b3 and spruce gained 1% to \u20ac83.65\/m\u00b3. Birch sawlogs increased 2% to \u20ac64.39\/m\u00b3.<\/p>\n Trading strengthened temporarily in June, but the overall first-half volume remained well behind recent years. Purchasing then slowed sharply as Finland entered the summer holiday period, with Finnish Forest Industries Federation member companies buying around 230,000 m\u00b3 from private forests during the latest reporting week, less than one-third of the preceding week's volume and the lowest weekly level recorded so far in 2026.<\/p>\n Sawlog prices have subsequently shown some easing, but nothing resembling the correction that would materially alter mill economics. Recent average stumpage prices were still around \u20ac78.35\/m\u00b3 for pine, \u20ac82.65\/m\u00b3 for spruce and \u20ac61.12\/m\u00b3 for birch.<\/p>\n The implication for sawmills is straightforward: they are buying substantially less timber, but the timber they still need remains expensive.<\/p>\n High log costs are colliding with weaker sales<\/strong><\/p>\n Finnish sawmills have complained about the relationship between sawlog and lumber prices for several years, but falling sales volumes make that imbalance harder to carry.<\/p>\n When mills operate at high utilisation, fixed costs can be spread across more cubic metres and strong demand gives producers greater scope to negotiate higher lumber prices. When output is reduced, the opposite happens. Labour, maintenance, energy and other fixed or semi-fixed costs are carried by fewer cubic metres, while customers in weak construction markets resist large price increases.<\/p>\n Tino Aalto, Managing Director of the Finnish Sawmills Association, recently told GWMI that maintaining Finnish wood prices at their current high level would create serious difficulties for the industry. In his assessment, sustainable profitability would require wood procurement and logistics costs to decline while sawn timber prices increased.<\/p>\n That combination has yet to materialise.<\/p>\n The timber market has begun to cool as buyers reduce procurement, but sawlog prices remain high. Lumber prices have provided some support, but not enough to offset the cost base, while exports are weakening across most of Finland's leading markets.<\/p>\n Production is consequently being managed more cautiously. Aalto told GWMI that the market has been weak for several years from a profitability perspective and that Finnish production is currently below last year's level, with total 2026 output likely to remain lower than in 2025.<\/p>\n Asia has become a particular problem<\/strong><\/p>\n The export data also show that Finland cannot rely on its traditional overseas markets to compensate for weak European construction.<\/p>\n Shipments to Japan fell 20% during January-May and exports to China were down 27%. Those declines are considerably larger than the reductions recorded in Egypt or Estonia and underline the difficulty facing a sawmilling industry whose production base was built around broad international distribution.<\/p>\n Asian markets matter for more than volume. They provide outlets for products and qualities that cannot always be redirected easily into Europe, while pine producers in particular have traditionally depended on customers outside the continent.<\/p>\n The logistical cost of serving those markets adds another disadvantage when competition becomes intense. Lumber produced in Finland has to travel long distances before reaching buyers in East Asia, North Africa or the Middle East, meaning freight can consume a meaningful share of the margin even before the cost of the log is considered.<\/p>\n Aalto has identified logistics alongside timber procurement as one of the main obstacles to restoring profitability, noting that the cost of getting Finnish lumber to international markets remains significant.<\/p>\n Europe remains critical as well. More than half of Finland's 20 largest sawmill export markets are located on the continent, which makes the timing of a construction recovery particularly important for Finnish producers.<\/p>\n Construction has still not delivered the expected recovery<\/strong><\/p>\n For several years, sawmills have been told that lower interest rates, accumulated housing demand and improving consumer confidence would eventually bring European residential construction back to growth. So far, the recovery has been too weak and too uneven to materially change lumber consumption.<\/p>\n Aalto argues that stronger demand for wood products is now the central requirement for the European softwood lumber market and that reviving construction should be the priority.<\/p>\n The problem is particularly acute because sawmills cannot simply solve their margin squeeze by passing every increase in timber costs to customers.<\/p>\n Veljekset Vaara managing director Jukka Vaara made that point when the Tervola-based wood products producer announced 11 redundancies following restructuring negotiations. Seven other jobs will be altered, and the company has also prepared for possible temporary layoffs extending through the end of next year.<\/p>\n Vaara argued that lumber-product prices cannot be increased drastically because buyers would eventually be unable to afford them. Instead, he pointed to the underlying cost of housing construction and called for greater timber availability, fewer regulations adding to building costs and easier access to financing for residential projects.<\/p>\n That gets to the central contradiction in the market. Finnish sawmills need higher lumber prices to offset their raw-material costs, but European construction needs to become cheaper before demand can recover strongly.<\/p>\n Large price increases at the sawmill gate therefore risk weakening the very market producers need to revive.<\/p>\n By-products are also worth less<\/strong><\/p>\n The difference between the price of a log and the price of finished lumber is not the only factor determining a sawmill's profitability.<\/p>\n Chips, sawdust, bark and other residual products account for a meaningful part of the value recovered from each log. Strong prices for chips and pulpwood can offset part of the raw-material cost, while weaker by-product markets remove that support.<\/p>\n Koskisen's first-quarter results provided a clear example of how this can affect profitability.<\/p>\n The company increased revenue by around 22% to approximately \u20ac105 million, yet adjusted EBITDA fell about 31% to \u20ac6.6 million. In the sawmilling business, EBITDA declined to \u20ac2.9 million as high raw-material costs coincided with difficult lumber markets and lower revenues from by-products.<\/p>\n This matters because a mill can report relatively stable lumber selling prices while its underlying economics deteriorate. Fewer cubic metres sold, expensive logs and lower side-stream revenues can together reduce profitability considerably even without a dramatic fall in the headline price of lumber.<\/p>\n For independent sawmills, the effect can be particularly important because they have fewer opportunities to absorb wood residuals internally than integrated forest industry groups with pulp, board or energy operations.<\/p>\n Stora Enso shows how the market is feeding into capacity decisions<\/strong><\/p>\n The proposal to close Stora Enso's Veitsiluoto sawmill illustrates a further stage in the adjustment.<\/p>\n Temporary production curtailments have become common across the European sawmill industry during the past few years, but Veitsiluoto is different because Stora Enso is considering removing the production site permanently while moving its pine volumes elsewhere.<\/p>\n Sawmilling has been carried out at Veitsiluoto for more than a century, but continued operation would require substantial investment. Stora Enso now has alternatives following the acquisition of Junnikkala in May 2025, which added the Oulu, Kalajoki and Oulainen mills and approximately 700,000 m\u00b3 of annual sawn timber capacity to the group.<\/p>\n Rather than invest in Veitsiluoto, the company can move pine production to Oulu and Kalajoki, where capacity is newer or already being expanded.<\/p>\n The decision is therefore partly a consequence of Stora Enso's own mill structure, but current market conditions inevitably affect the calculation. It is much harder to justify major capital expenditure at an ageing sawmill when existing mills elsewhere in the group can absorb the volume and the industry as a whole is already producing less lumber.<\/p>\n Stora Enso is also reviewing its Uimaharju operation, where consultations covering the 240,000 m\u00b3\/year sawmill and the neighbouring Enocell pulp mill could result in up to 35 job losses. Unlike Veitsiluoto, there is currently no proposal to reduce sawmilling capacity at Uimaharju, but management is looking at staffing, responsibilities and organisation in an effort to lower costs.<\/p>\n The two cases are different, yet both point to the same discipline being imposed on mill economics: existing capacity has to justify both its operating costs and any additional investment required to keep it competitive.<\/p>\n Large groups have options that smaller mills do not<\/strong><\/p>\n This distinction becomes important when considering what prolonged weak margins could mean for the structure of Finnish sawmilling.<\/p>\n Stora Enso can transfer production between several sites. A large group can close an older mill, raise utilisation elsewhere and continue purchasing much of the same regional timber volume without withdrawing an equivalent amount of lumber from the market.<\/p>\n An independent producer operating one or two sawmills has far fewer alternatives.<\/p>\n If the mill is unprofitable, production can be curtailed, employees temporarily laid off or investment postponed, but the company cannot simply transfer customers and raw material to another plant within the same network.<\/p>\n Financial capacity therefore becomes increasingly important as the downturn lasts longer.<\/p>\n Logs have to be financed before lumber is sold, inventories consume working capital and machinery continues to require maintenance even when shifts are reduced. Lower production also spreads fixed costs across fewer cubic metres, meaning curtailments that protect selling prices can simultaneously increase unit costs at the plant.<\/p>\n A market that remains difficult for several months can normally be managed through production adjustments. A market that remains difficult for several years starts to influence employment, investment and decisions about whether individual plants still make economic sense.<\/p>\n The timber market may finally be beginning to loosen<\/strong><\/p>\n There are tentative indications that one part of the squeeze could begin to ease.<\/p>\n The sharp decline in recent weekly timber purchases suggests that the aggressive procurement period seen earlier in the market has ended. Better wood availability and lower immediate production requirements appear to have reduced the willingness of buyers to pursue timber at almost any price.<\/p>\n Average sawlog prices have already moved slightly below their earlier peaks.<\/p>\n For sawmills, however, a modest decline is not the same as a meaningful reset. June pine sawlogs were still close to \u20ac79\/m\u00b3 and spruce almost \u20ac84\/m\u00b3, levels that remain difficult when export revenues are falling and important customers are buying less lumber.<\/p>\n The next few months will therefore show whether the slowdown in timber trading finally translates into a larger adjustment in sawlog prices or whether forest owners continue to hold back supply in expectation of stronger bids later.<\/p>\n If prices remain sticky despite lower purchasing, mills will have little choice but to maintain discipline on production.<\/p>\n A better Finnish economy does not automatically mean a better sawmill market<\/p>\n The disconnect between Finland's improving economic expectations and conditions in sawmilling is ultimately explained by the industry's exposure to markets outside Finland.<\/p>\n Domestic economic growth can support construction and consumer confidence, but Finnish mills need much more than a local recovery. They require stronger residential building across Europe, healthier demand in major overseas markets and a cost structure that allows them to compete after freight is included.<\/p>\n Aalto has been reluctant to predict that 2027 will necessarily provide that improvement, arguing that geopolitical and economic uncertainty remains too high for a confident forecast. He nevertheless maintains that Finnish mills are well placed to respond once demand eventually returns because the industry has modern production facilities and access to a strong sawlog resource.<\/p>\n That longer-term strength does not remove the immediate financial pressure.<\/p>\n The first half of 2026 has already produced lower lumber output, a 5% decline in export revenues and substantial reductions in shipments to markets including the UK, Japan and China. Timber purchasing is well below last year, but sawlog prices remain high enough to prevent mills from receiving much benefit from weaker procurement.<\/p>\n The industry is therefore entering autumn with fewer cubic metres being produced, fewer being sold into several important markets and only limited relief from its largest cost.<\/p>\n A recovery in construction would help volumes. Lower freight costs would improve Finland's position in distant markets. A meaningful fall in sawlog prices would provide the fastest relief to mill margins.<\/p>\n Until at least one of those changes becomes substantial, the improvement visible elsewhere in Finland's economy is unlikely to feel much like a recovery inside its sawmills.<\/p>","protected":false},"excerpt":{"rendered":" Signs of improvement have begun to appear in Finland\u2019s wider economy, but little of that optimism has reached the country\u2019s sawmills, where the second half of 2026 is starting with lower production, weaker export revenues and raw-material costs that remain … Continue reading \n\n
\n \nFinland sawmill market \u2013 H1 2026<\/th>\n Latest figure<\/th>\n Change<\/th>\n<\/tr>\n<\/thead>\n \n Softwood lumber production<\/strong><\/td>\n 6.1 million m\u00b3<\/td>\n -3% y\/y<\/strong><\/td>\n<\/tr>\n \n Spruce lumber production<\/strong><\/td>\n ~3.0 million m\u00b3<\/td>\n -6% y\/y<\/strong><\/td>\n<\/tr>\n \n Pine lumber production<\/strong><\/td>\n ~3.1 million m\u00b3<\/td>\n Broadly unchanged<\/strong><\/td>\n<\/tr>\n \n Roundwood purchases<\/strong><\/td>\n ~20.4 million m\u00b3*<\/td>\n ~5 million m\u00b3 below H1 2025<\/strong><\/td>\n<\/tr>\n \n Pine sawlogs \u2013 June<\/strong><\/td>\n \u20ac78.52\/m\u00b3<\/strong><\/td>\n +2% m\/m<\/td>\n<\/tr>\n \n Spruce sawlogs \u2013 June<\/strong><\/td>\n \u20ac83.65\/m\u00b3<\/strong><\/td>\n +1% m\/m<\/td>\n<\/tr>\n \n Birch sawlogs \u2013 June<\/strong><\/td>\n \u20ac64.39\/m\u00b3<\/strong><\/td>\n +2% m\/m<\/td>\n<\/tr>\n \n Roundwood trade vs five-year average<\/strong><\/td>\n H1 2026<\/td>\n -18%<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n