The shutdown of economies around the world due to the virus pandemic has affected Swedish sawmill companies to a lesser extent than the sawmill industry in other large forest countries.
Some products, especially tissue, packaging materials and wood products for the Swedish construction trade, have even had an increased demand. But the pandemic is also clear in the forest industry and the consequences are likely to be greater the longer it takes before global demand and production starts again.
”The [Swedish] forest industry started the year strongly, but in March we see that the industry is affected by the coronavirus pandemic and how it is handled around the world. Then, for example, annual growth in mass deliveries is clearly dampened and exports to China went from an annual growth of 20 percent in February to a fall of 30 percent in March. We can conclude that the world economy needs to get started again and soon, says Kerstin Hallsten, chief economist at the Swedish Forest Industries.
Increased production of tissue and packaging materials
”At the same time, it should be pointed out that many companies in the pulp and paper industry together made a good result during the first quarter of this year and some parts went really well. Tissue and packaging materials were strongest and increased by up to 23 percent in March compared to March 2019,” says Katrin Heinsoo, pulp and paper market analyst at the Forest Industries.
The mood in Sweden’s forest industry was clearly worse in April than at the beginning of the year. However, the forest industry’s view of the economic situation is not as negative as in the manufacturing industry or during the 2008 financial crisis.
Swedish construction trade a glimmer of light for the sawmills
During the first quarter of this year, Swedish sawmills largely maintained their high production and delivery rates from 2019. In late March and into April, important export markets such as the United Kingdom began to introduce restrictions in their countries and at their borders. Several industries in the UK closed down, which reduced the demand for wood products. As a result, Swedish sawmills announced that they intended to reduce their production.
”There has also been a shift between export markets at the same time as we see that sales of timber products in Swedish construction trade increased by almost 12 percent over the same period last year,” says Christian Nielsen, a market analyst of timber products at the Skogsindustrierna.
”The limited flow to the UK is partly offset by the high demand for construction materials in the construction trade and that other important export markets such as China and Japan are now starting to ease their restrictions,” says Christian Nielsen.
It is crucial for the continued development of the entire forest industry that demand is maintained throughout the complex value chain. The pulp and paper industry, for example, is dependent on raw material from the sawmills. Here, investments in increased wood construction in Sweden are a very important instrument.
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