Finland\u2019s wood and lumber industry retains strong long-term prospects despite weak construction activity, pressure on pulp producers and high domestic raw-material costs, according to Mets\u00e4 Group President and CEO Jussi Vanhanen. Austrian investment in Finnish sawmills signals confidence in the country\u2019s forests and the future availability of sawlogs.<\/p>\n
In an interview for the Finnish media, Vanhanen said Austrian companies investing in Finland believe that Finnish sawlogs have better long-term prospects than raw material in Central Europe. Forests in Austria and neighbouring countries have been hit more severely by drought, insects, diseases and other climate-related damage, increasing interest in northern European wood resources.<\/p>\n
Demand for Finnish sawlogs is unlikely to decline substantially, he said. Unlike pulpwood, sawlogs used for structural lumber cannot be replaced by fast-growing eucalyptus or other plantation species. Wood construction is also continuing to gain market share, even though total construction activity remains weak in many international markets.<\/p>\n
Vanhanen welcomed the arrival of Austrian sawmill groups, arguing that Finnish producers could learn from their ability to develop markets and generate more added value from lumber and wood construction products. Austrian companies have expanded their position in Finland in recent years through acquisitions and investments in sawmill capacity.<\/p>\n
Finnish sawlog prices have remained comparatively firm, while pulpwood prices have declined under pressure from weak pulp markets. Finland\u2019s forest owners therefore remain in a relatively favourable position, although Vanhanen said wood sales must become more active if the country is to maintain both forest management and industrial production.<\/p>\n
Finland\u2019s forests currently grow by more than 100 million m\u00b3 annually, compared with industrial wood consumption of less than 70 million m\u00b3. Some forest owners sold more wood than originally planned during the previous several years because prices were high. Wood trading subsequently slowed, but Vanhanen said activity had begun to recover during the autumn.<\/p>\n
He also opposed the use of higher-quality industrial wood for energy. Sawlogs should not normally be burned in pulp-mill boilers, although isolated cases may occur, while the continued burning of pulpwood is also undesirable. Wood should instead be directed towards products with greater added value, particularly where it can replace plastics and other fossil-based materials.<\/p>\n
Joutseno pulp mill\u2019s future remains open<\/strong><\/p>\n Conditions are considerably more difficult in the pulp sector. Mets\u00e4 Group\u2019s Joutseno pulp mill has remained idle for an extended period and has now entered another round of change negotiations. Vanhanen offered no timetable for restarting the plant and said its future would depend on global pulp prices, wood costs and the removal of excess capacity from the market.<\/p>\n In practical terms, Finland has already been operating with the equivalent of one pulp mill removed from production because of the prolonged shutdown at Joutseno. Vanhanen nevertheless stressed that no final decision had been taken.<\/p>\n He said the plant performed strongly when it operated during the previous winter and described it as Mets\u00e4 Group\u2019s best-performing mill during that period. Its workforce had done everything within its control, while the factors determining the mill\u2019s future were largely external.<\/p>\n Low pulp prices, expensive Finnish wood and excess global production capacity remain the central problems. Pulp mills have also closed elsewhere, while several international producers are facing financial pressure. The eventual balance between capacity and demand will determine which mills remain competitive.<\/p>\n Vanhanen rejected claims that new capacity in China and South America could displace as much as ten million tonnes of established pulp production. The global northern softwood pulp market totals around 20 million tonnes, and Mets\u00e4 Group does not expect half of that market to disappear.<\/p>\n Most new South American capacity is based on eucalyptus and competes primarily in hardwood pulp. China has also expanded hardwood pulp production but lacks sufficient commercially available softwood resources to replace imported northern softwood pulp.<\/p>\n Northern softwood pulp retains technical properties required in several paper and tissue applications. Vanhanen noted that its share in Chinese tissue production has not declined over the past decade. Demand will remain, although production is likely to become increasingly concentrated among the most cost-efficient suppliers.<\/p>\n Fuel costs could add up to \u20ac300 million annually<\/strong><\/p>\n Finland\u2019s geographical position and energy taxation are adding to the pressure on its forest industry. Vanhanen estimated that higher diesel and other fuel prices could increase Mets\u00e4 Group\u2019s annual costs by \u20ac200\u2013300 million, depending on oil-market developments.<\/p>\n He said the group\u2019s fuel bill would be approximately \u20ac50 million lower if it operated under Swedish conditions, where diesel costs around \u20ac0.50 per litre less than in Finland. The difference directly affects the competitiveness of Finnish wood procurement, road transport and industrial logistics.<\/p>\n Electricity presents a different situation. Mets\u00e4 Group is slightly more than self-sufficient and accounts for approximately 5% of Finland\u2019s electricity production, largely through its bioproduct mills. The group would therefore face limited direct exposure to rising power prices.<\/p>\n Indirect costs could still increase through higher rail tariffs and other services. Vanhanen also warned that more expensive electricity could weaken the economics of electric boilers installed during periods of low power prices, creating additional pressure to burn industrial roundwood.<\/p>\n Restoration rules could cost Finland up to \u20ac1.5 billion a year<\/strong><\/p>\n Vanhanen also warned about the possible cost of implementing the EU Nature Restoration Regulation. Estimates discussed during the interview placed the direct additional cost to Finnish society at between \u20ac400 million and \u20ac900 million annually.<\/p>\n If implementation restricts forest use, Finland could lose another \u20ac150\u2013500 million annually through reduced economic activity and tax revenue. The combined impact on public finances could therefore reach approximately \u20ac500 million to \u20ac1.5 billion per year, depending on the criteria eventually adopted.<\/p>\n The Finnish forest sector generates around \u20ac10 billion in annual added value and provides a net tax contribution of \u20ac3\u20134 billion. Restrictions on wood supply would consequently affect industrial production, forest-owner income and government revenue.<\/p>\n Vanhanen supported the restoration of poorly performing drained peatlands. Finland has approximately 700,000 hectares of peatland drained between the 1950s and 1980s where forestry results have been economically and environmentally disappointing. Restoring these areas would not create a major problem for wood supply, he said.<\/p>\n He was more cautious about restrictions covering boreal forests. Mets\u00e4 Group favours criteria consistent with Finland\u2019s existing definition of old-growth forests and accepts restoration measures where they are properly targeted. The main risk, according to Vanhanen, is an implementation model that removes large areas from wood production while creating substantial compensation liabilities under Finnish property-rights rules.<\/p>\n Wood-based products must compete with plastic on price<\/strong><\/p>\n Mets\u00e4 Group is seeking new uses for its wood raw material as demand for printing paper continues to fall. Vanhanen expects future bioproduct mills to look substantially different from present pulp mills, with a growing share of revenue generated from materials now treated as side streams.<\/p>\n The group is investing in moulded wood-fibre packaging at \u00c4\u00e4nekoski. Potential applications include packaging for meat, vegetables, yoghurt and other food products. Disposable plates manufactured with the technology are already available, although several years will be required before the new plant reaches full-scale production.<\/p>\n Environmental credentials alone will not persuade most consumers to switch from plastic, Vanhanen said. Wood-based products must approach the price of conventional plastic packaging before sustainability, rigidity, appearance and performance can influence purchasing decisions.<\/p>\n Mets\u00e4 Group has suspended plans for a commercial textile-fibre plant in Kemi after concluding that the product could not compete with fossil-based polyester on cost. A demonstration facility continues to operate at \u00c4\u00e4nekoski, but Chinese industrial investment costs are less than half those in Europe, making bulk textile-fibre production difficult to justify in Finland.<\/p>\n The premium paid by customers seeking a more sustainable textile fibre was not sufficient to support the proposed commercial investment. Vanhanen nevertheless defended the project, saying Finnish industry must continue testing new products even when some concepts do not proceed to full-scale production.<\/p>\n Carbon capture project planned at Rauma<\/strong><\/p>\n Mets\u00e4 Group has reduced its carbon dioxide emissions by approximately one million tonnes since establishing its current climate targets in 2019. Fossil-free sources now provide 94% of its energy globally and 97% in Finland.<\/p>\n The Finnish government has granted Mets\u00e4 Group \u20ac21 million for a carbon-capture project at the Rauma pulp mill. The planned facility would capture around 100,000 tonnes of biogenic carbon dioxide annually for use as a raw material in chemical production.<\/p>\n Investment decisions by Mets\u00e4 Group and its customers could follow in 2027. The company ultimately wants to apply the technology on a larger scale but argues that EU policy must create commercial demand for recycled biogenic carbon.<\/p>\n Vanhanen criticised the EU\u2019s emphasis on storing captured carbon beneath the North Sea. Greater attention should be paid to circular applications in which biogenic carbon replaces fossil raw materials in chemicals and other industrial products.<\/p>\n For Mets\u00e4 Group, these new products will become increasingly important as traditional pulp and paper markets change. However, the company\u2019s industrial strategy will remain centred on Finland and the northern forests owned by the approximately 90,000 members of Mets\u00e4liitto Cooperative.<\/p>\n Finland\u2019s wood and lumber industry retains strong long-term prospects despite weak construction activity, pressure on pulp producers and high domestic raw-material costs, according to Mets\u00e4 Group President and CEO Jussi Vanhanen. Austrian investment in Finnish sawmills signals confidence in the … Continue reading