April 16, 2012
Pellervo Economic Research PTT forecasts that recession in Europe will have clear
impacts on the Finnish forest sector this year. In the paper industry there will be
significant decreases both in production and export volumes. This is due to lower
demand as well as capacity closures that have taken place in Finland late last year.
Also production in the sawmilling industry will slightly decrease. However, exports of
softwood lumber outside the Euro zone will increase. Despite the recession, exports
of pulp, paperboard and plywood will increase as well. Next year exports of all other
products except pulp will be higher. Accordingly, the reduced demand for wood will
also slow down commercial fellings in Finland this year. PTT estimates the price of
roundwood to go down as demand for forest industry’s end products diminishes.
However, next year commercial fellings, roundwood trade and private forest owners´
stumpage earnings will increase.
PTT predicts Finnish lumber production to decline this year by one percent to 10 million cubic meters. The demand outlook varies from market to market. Weakening demand in the domestic
housing market decreases the need for sawn softwood this year. Construction will remain
subdued in Europe, and exports to the region are projected not to increase significantly this
year. In overseas markets, however, demand is expected to see a slight upswing from last year.
Overall, PTT estimates exports to grow by 2–3 percent in 2012. The overall weak construction
market in Europe, combined with continuing excess supply, is reflected as a 2–4 percent
reduction in the average export price. Next year, softwood lumber production and exports are
to experience a more rapid growth. The main factor behind this development is the expected
turning point in Europe’s construction activity. The increased demand allows for export price
mark-ups of up to two percent in 2013.
According to PTT estimates, plywood production and exports are to grow by 1–2 percent
and the export price at most a few percent in 2012. This year's prospects have been affected by
the impact of the destroyed plywood mill in Chile at the beginning of the year. This increases
demand for other softwood plywood in Europe this year and possibly next year. In general, the
European market still remains somewhat bleak due to deteriorating construction activity.
Demand in the heavy transport industry is to weaken slightly as well. Estimated growth of
construction activity in Europe will give a subtle boost to Finnish plywood demand next year.
PTT predicts the Finnish forest industry’s wood consumption to decrease to 62.7 million cubic
meters this year due to recession. Next year, emerging economic growth will increase wood
consumption by a million cubic meters. The amount of imported wood will stay at approximately
10 million cubic meters during the predicted period. PTT forecasts domestic commercial
timber fellings to decrease by five percent from last year. Next year’s loggings are predicted to
increase by one to three percent as exports of final products and domestic construction both
Roundwood trade will liven up clearly this year. PTT estimates roundwood trade in nonindustrial
private forests to increase by roughly twenty percent from last year. Next year
roundwood trade will grow moderately. The nominal average price of logs will decrease by
about two percent and that of pulpwood by about four percent from last year’s average prices.
PTT estimates next year’s prices in real terms to stay at this year’s level. Private forests’ gross
stumpage earnings and profitability will reduce by about a tenth this year as loggings and
stumpage prices decrease slightly from last year. Despite the decrease in stumpage prices this
year, the prices of forest estates in the Southern-Finland will increase due to high demand. In
other parts of the country, the increased supply and decreasing stumpage prices will also
reduce the prices of forest estates.