Commercial fellings together with the production and export volumes of the Finnish forest industry will rise sharply compared to last year, with the exception of paper. However, the export prices of the main forest products will remain weak due to intensified competition and oversupply in global markets.
In 2017, China will become the most important destination country for exports of sawnwood, both in terms of export volume and value. In addition to spruce sawnwood, the exports of pine sawnwood to China are also growing strongly, with pine sawnwood flows being directed there from the troubled North African market.
The tightening of competition and the oversupply of sawnwood in the main export markets have pushed down the export unit price of pine sawnwood in particular, which affects the profitability of the sawmilling industry negatively. Towards the end of the year, price development is expected to stabilize.
“In 2017, exports of Finnish sawnwood are projected to increase to as high as nine million cubic metres, which is a new all-time record. Next year, export volumes will continue to grow slightly,” envisages Antti Mutanen, a researcher at Natural Resources Institute Finland.
The recovery of construction activity in Europe and the high level of demand for industrial applications maintain the production and export volumes of plywood at a good level.
Production and export volumes of cardboard and pulp are growing
The production and export volumes of pulp will grow this year and next year in particular, when new production capacity in Finland will be in full production. The unit price of pulp exports will increase this year after the drop experienced last year. In 2018, export prices are expected to decline slightly as the production volumes of both softwood and hardwood pulp will increase globally.
The growth in production capacity in Finland together with worldwide growth in packaging will increase Finnish cardboard production and export volumes both this year and next year. However, the introduction of new capacity and the conversion of paper machines to cardboard production will increase supply in Europe and the development of market prices of cardboard remains weak. The declining worldwide trend of consumption of printing papers will continue. In Finland, both paper production and exports continue to decline. Thanks to the positive demand for pulp and cardboard, the profitability of the pulp and paper industry will remain good this year and next year.
Commercial fellings towards new record – a slight increase in roundwood prices
Along with the increasing use of roundwood in forest industry production, commercial fellings will rise to 63.6 million cubic metres in Finland this year and to 65.0 million cubic metres next year. Roundwood import volumes will decrease slightly from last year.
As a result of good demand for spruce sawnwood, the stumpage price (over bark) of spruce sawlogs will increase most pronouncedly with respect to the other timber assortments. The increasing use of pine and spruce pulpwood in cardboard and pulp production will increase their stumpage prices this year. In 2018, any significant changes to stumpage prices are not projected.
In non-industrial private forestry, gross stumpage earnings will rise to about EUR 1.9 billion this year and next year slightly more. The per hectare operating profit in non-industrial private forestry will increase to EUR 126 in 2017 and EUR 129 in 2018.
The use of forest ships is growing slowly
The low prices of fossil fuels, cheap emission allowances and uncertainties concerning subsidies policies have hampered both the investment decisions and the growth of forest energy use.
In 2017, the use of forest chips is expected to increase by two percent with respect to last year, and to grow to 8.5 million cubic metres in 2018. This year, the average purchase price at plant of forest chips will remain at the previous year’s level, while in 2018 the price will rise only slightly. The production of wood pellets in Finland will recover this year after a sharp decline in production volumes the previous year.