The Finnish forest industry will be bouncing out of the coronavirus crisis this year and next, as the economies of the world’s countries open up. The export volume and price of Finnish pulp and sawn timber are growing strongly.
However, paper exports continue to decline rapidly, leaving the value of exports lower than before the coronavirus, says the Pellervo Economic Institute (PTT) forest sector forecast..
“This year, the value of Finnish forest industry exports will recover by seven per cent from 2020, and next year we will see growth of about four per cent. The price of pulp in particular is rising sharply. However, the recovery depends on the growth of the world economy,” says Matti Valonen, PTT’s forest economist.
The value of exports will be significantly lower than in the pre-pandemic period of 2019, as growth in other products will not be enough to compensate for the gap created by the downturn in graphic paper. Finnish paper exports experienced an unprecedented collapse of about a quarter in 2020, and the decline will continue this year at a rapid pace as production capacity has been dismantled.
Demand for graphic paper will recover slightly as interest rate restrictions ease and people return to their jobs, but the downward trend will not reverse and there will be no return to the pre-corona situation.
Finland’s pulp prices are rising sharply
The price development of market pulp in Finland has been strong in recent months. A significant factor is China, where economic growth is strong again and the use of paperboard and tissue is increasing. This will increase the demand for long-fiber pulp suitable as a raw material. The prices of short-fiber pulp are also rising. Rising market prices for pulp are hitting the already weak profitability of paper producers using it and putting upward pressure on paper delivery prices.
“During the first half of the year, the dollar price of long-fiber market pulp has risen by as much as 40 percent in China and by about a quarter in Europe. In Europe, therefore, we are approaching the peak prices of 2018, ”says forest economist Marjo Maidell.
There are still question marks about pulp in the near future. Although market demand for pulp for the production of paperboard and tissue paper is strengthening, it is uncertain how the use of pulp in the production of printing and writing papers will develop during this and next year.
Construction is recovering and demand for sawn timber is growing
The revival, the opening up of societies and the good mood of the housing market are boosting construction and demand for Finnish sawn timber. On the other hand, the sharp increase in do-it-yourself construction during the coronavirus will return to its normal level as consumers regain a taste of services.
“This year, there will even be a spike in sawn timber exports and prices, when demand for products is growing strongly and stocks are even record-breaking in some places,” says Matti Valonen.
The situation in North Africa, which is important for Finnish exports, is weakened by the stagnation of tourism that has continued for more than a year. In addition, the sawn timber market is significantly affected by the storm and insect pests of Central Europe in recent years: pests are still abundantly available. In 2022, the start-up of Metsä Group’s Rauma sawmill will begin to show in Finnish production volumes, although it will not reach full speed until 2023.
Exports of board and plywood are clearly increasing
In the next few years, Stora Enso’s machine for the production of corrugated board surface material, ie kraftliner, which started up in Oulu, will have the greatest impact on board exports. It will pull board exports up more than ten percent this year.
Finnish plywood exports are also clearly recovering. During the coronavirus period, plywood exports were hampered by, among other things, reduced production in the furniture and automotive and transport equipment industries. The situation was facilitated by the fact that construction in an important export area of plywood in Europe remained vigorous even during the pandemic.
The post Forecast: Finland’s exports and prices of sawn timber expected to rise this year appeared first on Timber Industry News.