Demand for forest industry products slowly recovering

Demand for forest industry products is recovering slowly as inflation slows, interest rates decrease and the destocking ends. However, a large leap in growth is not expected, and the recovery of the construction sector and the wood product industry will not begin until next year. Domestic harvesting volumes, timber trade and stumpage prices are affected not only by the increase in wood demand, but also by the decrease in roundwood imports and increases in production capacity.

Production and export of sawn timber will decrease in 2024, growth will be slow next year

Construction and demand for sawn timber will continue to decline in Europe and other export markets with the exception of Japan in 2024. In 2024, Finnish exports of sawn softwood are expected to decrease by four per cent, but the average export price will increase by nine per cent compared to 2023. The production of sawn timber is expected to fall to about 10 million cubic metres this year.

Although interest rates have decreased, its effects on construction are delayed. In Europe, construction is expected to start slow growth in 2025. Construction volumes in Finland are also expected to increase slightly next year after the fall in 2023 and 2024. Next year, Finnish sawn timber production and exports are expected to grow moderately by three per cent, and the average export price is expected to rise by one per cent from the current year.

The lag in construction in Europe is particularly reflected in the production and export volumes of coniferous plywood. In addition to construction, the market situation of birch plywood is affected by the demand in the transport industry and the sanctions against Russian birch plywood, for example. Finnish plywood production is expected to remain at last year’s level this year, and plywood exports are expected to grow by two per cent, and next year by three. The average export price of plywood is expected to decrease by seven per cent from last year.

Production and exports of the chemical forest industry will grow next year, with the exception of paper

Paperboard production and exports will grow by 11 per cent this year compared to last year as high stock levels normalise, and consumption recovers. Although the prices of paperboard grades have started to rise after the summer following a weak start to the year, the average export price will decrease by four per cent this year. Stora Enso’s investment in Oulu, due to be completed next year, will increase the production capacity of folding boxboard in Finland, which is why production and export volumes will continue to grow by 15 per cent. The growing demand in the paperboard market will raise the average export price of paperboard by five per cent next year.

Although paper industry production and exports are affected by the uncertainty of demand, capacity closures and industrial struggles, volumes will increase this year by five per cent from last year’s low figures. Next year, the demand, exports and production of paper will decrease in line with the long-term trend. Prices are not expected to change significantly in the autumn, and the mood in the market is expectant. The high price of pulp is pushing paper prices up, but the demand does not support this. The export price will be seven per cent lower this year than last year and will decrease further next year.

Pulp production in Finland will increase by four per cent this year as paper and paperboard production revives, and Metsä Group’s Kemi mill restarts. Exports will remain close to last year’s levels. In 2025, pulp production and exports will increase significantly as the effects of the Kemi mill are fully realised. This year, the average export price of pulp will increase slightly from last year and, in 2025, by a couple of per cent from this year.

The growth in wood trade raises stumpage prices and gross stumpage income

In the roundwood market, stumpage prices have continued to rise, and wood trade has increased this year. Removal volumes of industrial roundwood are expected to increase by one per cent this year from last year, amounting to 61.7 million cubic meters. Felling of logs will increase by two per cent to 27.8 million cubic metres, and by one per cent to 33.9 million cubic metres for pulpwood. The stumpage prices calculated as an annual average for softwood logs will increase by six to eight per cent in the current year. The stumpage price of birch logs will increase by 14 per cent, and that of pulpwood by 18 to 22 per cent. Imports of roundwood will remain almost at last year’s level, at 4.2 million cubic metres.

In 2025, felling volumes for logs are expected to increase further by three per cent, and by five per cent for pulpwood. In total, industrial roundwood removals will increase by four per cent to 64 million cubic metres. The average stumpage prices of softwood logs will increase by two to three per cent as the production of sawn timber increases. The stumpage price of birch logs will increase by four per cent as the scarcity of birch raw material in the production of leaf plywood continues. The stumpage prices of pulpwood will increase by five to six per cent as the production volumes of pulp and paperboard increase. Imports of roundwood will increase to 4.6 million cubic metres.

In 2024, due to the increase in roundwood prices, the gross stumpage income of private forestry is expected to rise to new record levels to a total of EUR 2.9 billion, which is almost EUR 220 per hectare. In 2025, gross stumpage income will exceed EUR 3 billion for the first time ever. The operating profit of private forestry will increase to nearly EUR 200 per hectare in 2024 and further to approximately EUR 210 per hectare in 2025.

Use of forest chips and prices increasing

In 2024, the use of forest chips in heat and power plants is expected to increase by five per cent from last year to 11.5 million cubic metres. In 2025, the use volume of forest chips will remain at the current year’s level, but its plant gate price and energy wood prices will continue to rise slightly. Domestic production of wood pellets is expected to decrease in 2024 by one per cent from last year to 350,000 tonnes, with the supply of by-products continuing to be scarce. As it strengthens, the production of pellets is expected to increase slightly in 2025.