The coronavirus crisis strikes Finland’s forest sector with varying degrees of impact. On the whole, the sector is likely to overcome the problems caused by the coronavirus better than many other industries, but the differences between companies are large. The mechanical forest industry, such as sawmills, is hardest hit. However, the forest sector can recover from the crisis very quickly if the smaller companies in the production chain are not going bankrupt.
The outlook for chemical and mechanical forest industry is very different. Exports of pulp and paperboard will be moderately pulled this year as the coronavirus crisis is likely to increase demand for tissue and the growth in e-commerce will keep packaging sales up. On the other hand, newsprint is already showing a decline in demand: its price has fallen much faster in Europe in recent weeks than other types of
“Tissue produced in Finland is mainly used domestically. But the increased use of tissue paper worldwide means that there is a demand for softwood pulp, ”says Emmi Haltia, a senior researcher at the Finnish PTT (Pellervo Economic Institute).
In the mechanical forest industry, the situation is more difficult. As a result of the pandemic and early year strikes in Finland, exports and production of lumber and plywood will be severely reduced. The export prospects for lumber to Europe in April-June are weak, as construction in many European countries has almost stopped. In Finland, too, coronavirus has slowed down construction. In China, on the other hand, construction work is already being restarted.
“The outlook for exports to China and Japan is moderate, as the epidemic has been moderately contained in these countries. However, exports to them are limited by a shortage of containers, ” says forest economist Matti Valonen.
The wood market is slowing down, making it difficult for harvesting entrepreneurs
Already at the beginning of the year, the initial situation in felling was poor, as the warm weather prevented the harvesting of winter in much of Finland. The situation for harvesting entrepreneurs can be very difficult if the felling is dampened by the coronavirus. Harvesting will be reduced this year, especially in the case of harvesting regeneration stands, as lumber production will fall at least during the first half of the year.
For wood trading, the direct effects of the coronavirus crisis in Finland are less, but uncertain demand will slow down the market and wood prices will fall this year. Gross income from private forests will also fall.
“However, the recovery in wood sales is more rapid than in production or export figures. Harvesting will revive next year if harvesting and transportation companies survive the crisis, ” says Paula Horne, Senior Vice President at PTT.
Transport, labor and spare parts as a burden on the whole sector
In addition, the entire forest industry and harvesting is plagued by labor, transport and foreign component availability problems.
Large-scale morbidity, quarantine and isolation measures are reducing industrial production in Europe. Even in Finland, special arrangements are made at the mills to safeguard production, but the risks of disruption will increase as the epidemic continues. Getting workers into production facilities and transport jobs can be difficult, which can, at worst, have a significant impact on production.
Production may also be adversely affected by possible delays or interruptions in the supply of imported intermediate products and spare parts for production machinery and equipment. Prolonged pandemics can affect wood harvesting as machine maintenance slows down.
In addition, world trade has been severely disrupted. For example, it affects the availability and price of containers, and thus the Chinese trade. In Europe, land transport has slowed down due to border clearance, but on the other hand, there has been a loss of capacity for freight transport.
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