Almost 500 million cubic meters of lumber were produced worldwide last year, of which almost three quarters were coniferous lumber. Last year more than 12 million cubic meters of lumber were produced in Finland. Finland’s share of total world production was less than three percent. This ongoing year Finnish lumber production will decline, because of the industrial action at the beginning of the year, the corona crisis, and the closing of Stora Enso’s Kitee sawmill, which was closed last year.
The weakened ability of sawmills to pay for timber due to the current low export prices of lumber may slow down the timber trade towards the end of the year. In addition, buyers and sellers have differing views on wood prices, which is common after a drop in prices from the higher level of the previous years.
Next year lumber production will rise from this year’s low quantity. The share of exports in lumber production will decrease this year, as domestic demand has held its ground better than the export market. However, the share of exports will grow again next year.
At the turn of the year, the supply of lumber was higher than demand. Supply was boosted by increased sawing of storm and insect damaged wood in Central Europe and Sweden. Last year the increased supply lumber made of damaged wood intensified competition, especially in the North African and Chinese markets. Export prices fell sharply because of this.
This year damaged wood has been sawn in abundance in Central Europe, and last summer there was extensive insect damage in Central Europe. Relief from these climate-accelerated damages is not forthcoming unless drier and hotter summers than normal are avoided in the coming years. To meet the increased need for sawmilling due to the supply of damaged wood, companies are investing in new capacity. If the investment plans materialize, Europe’s lumber production capacity will increase by more than three million cubic meters this year and next. This is approximately the same amount produced in Finland in one quarter.
In early March crude oil prices plummeted due to the oil price war between Russia and Saudi Arabia and declining demand. Since then, the price of oil has risen somewhat. It was feared that the low price of oil would significantly weaken exports to oil-dependent countries in North Africa and the Middle East. As of yet this has not been the case, which is probably due in part to the low price level of lumber.
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