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Demand for sawnwood has recovered since the beginning of the year, but this year Finnish exports will decrease sharply from the previous year. Finland’s exports of sawnwood are limited by the uncertainty associated with the coronavirus, the increased supply of sawnwood in Europe due to the sawing of damaged wood, and the low price of crude oil.

The decrease in wood use and the increase in wood imports have slowed down the harvesting of wood in Finland. Timber trade and harvesting volumes will rise next year if forest industry exports recover. Changes in wood prices are smaller than changes in volume, so this year’s slight decline will be followed by a slight increase next year. Gross stumpage earnings of private forest owners vary more sharply due to the combined effect of logging and prices.

Do-it-yourself construction boosted domestic consumption of sawnwood

The volume of Finnish sawnwood exports will fall by 13 percent this year. Restrictions imposed in the spring to curb the pandemic reduced construction in all of Finland’s important sawnwood exporting countries, which reduced exports. Of the major export destinations, exports increased in January-June only to Saudi Arabia, Estonia, and Israel. Since the spring, demand for sawnwood has slowly recovered. Next year, Finnish exports will recover by eight percent, but will be lower than in 2019. However, the recovery requires keeping the disease situation under control. In addition to the corona crisis, the growth of exports will be slowed down by the increased supply of sawnwood in Europe due to the sawing of damaged wood.

Do-it-yourself construction and renovation, which has intensified due to corona, has increased domestic consumption in Finland of sawnwood this year. In Finland, construction increased in the second quarter and, according to preliminary data, construction output continued to grow in the summer. However, the number of building permits has started to decline, which anticipates that housing construction will settle at a longer-term level. (see PTT economic forecast). Next year, domestic consumption of sawnwood will start to decline, because of decreasing housing construction.

In the second quarter construction in Finland’s most important European export destinations fell the most in the United Kingdom and France. Germany and the Netherlands managed with a relatively little decrease. The Euroconstruct network forecasts that construction volume in Europe will fall by almost 12 per cent this year, only to grow by six per cent next year. Next year, the recovery will be stronger in countries where the decline in construction was stronger in the first half of this year. Nonetheless, the intensity of the recovery depends largely on the development of the corona epidemic.

In Japan, the number of construction starts of timber-framed buildings fell by 15 per cent in January-June and that of timber-framed residential buildings by 14 per cent. However, in January-June, Finnish sawnwood exports to Japan declined moderately. The increased supply of damaged wood in Central Europe was not reflected in exports to Japan, as the country has high quality requirements that the damaged wood does not meet.

In China, the corona epidemic was effectively curbed and construction investment grew by almost two percent in January-June compared to the same period the previous year. As already last year, the competitive situation in the Chinese sawnwood market is tight. The Chinese market in tightened by Russia’s strong market position and Central Europe’s increased exports of sawnwood to China. Tight competition has kept the price level low. Finland’s export price to China fell by 12 percent between January and June.

Export prices for sawnwood will fall this year. The average export price of whitewood will fall by three percent and that of redwood by four percent. The rise in export prices is limited by the uncertainty surrounding the corona situation, the increase in the supply of sawnwood in Europe due to increased sawnwood production, and the low price of crude oil. Next year sawnwood export prices will rise moderately.

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