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Danske Bank’s head of the forestry and agriculture business area, Johan Freij, summarizes the situation in the timber market in Sweden – a market that looks set to meet increasing challenges for forest owners.

On the sawmill side, according to Danske Bank, the current situation seems bright:

Johan Freij, Danske Bank’s head of the forestry and agriculture business area.

The doubling in lumber prices in the US during the pandemic, thanks to increased home construction as well as low timber stocks: the Swedish sawmills have increased their exports to the USA by about 80 percent compared with 2019.

Several sawmills in Sweden dampened production when the coronavirus pandemic struck, as a result of which the Swedish timber inventory fell by as much as 18 percent in July and was 26 percent lower than at the same time last year.

“The price trend for pulpwood is falling and for timber rising – a difficult equation because a tree consists of both timber and pulpwood,” Johan Freij writes in Danske Bank’s newsletter. After all, he thinks we should see a bright future for the timber market in Sweden:

“We must remember that the companies that are now implementing changes see that there are other investment alternatives that provide a better return and future. We believe that the opportunities in the [Swedish] forest industry, with the processing of renewable wood raw material, are very great in the future. Here old products are phased out and new ones come instead. In the longer term, it is still a positive change for forest companies and forest owners,” says Johan Freij.

On the pulpwood side, the market offers challenges:

Demand for printing paper fell by more than 30 percent during the spring and three printing paper mills in the Nordic region will be closed at the turn of the year – SCA’s paper line in Ortviken in Sundsvall, Stora Enso’s mill in Oulu and UPM’s paper mill in Kaipiola.

Danske Bank estimates that the closure of Kaipola will make a gap of about 1.4 million cubic meters in demand for pulpwood. However, the bank reminds that at the same time, Metsä Group is planning a new pulp mill in Kemi, with a need for additional wood of about 4.5 million cubic meters per year.

“It must be remembered that companies make changes because they get a better return on alternative investments in the future and because they simply can afford them. It is expensive to stop production in the Nordic region, ”Danske Bank points out in its newsletter.

Danske Bank forecasts that the price of pulpwood will suffer from the current economic cycle.

The post Swedish sawmills to take advantage of opportunities in the US market appeared first on Timber Industry News.