The Finnish forest sector is enjoying a cyclical peak. The production and export volumes of forest industry products are growing, industrial roundwood fellings are increasing, stumpage prices are rising, and the operating profit in non-industrial private forestry is improving. This development is expected to slow down in 2019.
Exports of sawnwood to China in decline
The problems involving the availability of logs that limited the production of sawn goods at the beginning of the year have been resolved, and production in 2018 is expected to grow by a few per cent from the previous year. However, the export volume of sawnwood will not reach the previous year’s level. Sawnwood exports to China are in decline, while exports to other markets, such as North Africa, are up. High demand in many export countries will increase the average export price of sawn goods significantly from the year before.
The export price of sawnwood is expected to stabilise in 2019, while exports and production will grow slowly. The production and exports of plywood will increase in 2018 and 2019, whereas the average export price is not expected to change.
The pulp boom continues – the production and exports of paper and paperboard will increase
This year, the production of pulp will increase by 8 per cent, and its exports will increase by as much as 13 per cent. These high production and exports figures can be explained above all by the significant increase in production capacity resulting from the excellent market situation. The import and use restrictions imposed on recycled fibre in China also increase the demand for pulp.
“This year, the export price of pulp will be nearly one-fifth higher than last year. Production and exports are also expected to show a slight increase next year. However, the export price will decrease slightly from this year’s peak level”, says Matleena Kniivilä, senior scientist at the Natural Resources Institute Finland (Luke).
After a long slump, the production and exports of paper will increase this year. This is explained by decreases in the production capacity as a result of shutdowns in Europe and the competitive advantage obtained from the high price of pulp. In addition, the production and exports of paperboard continue their strong growth, as the export price increases. As a result of the positive development in the demand for and the price of end products, the profitability of the pulp and paper industry will reach a peak level this year and remain high next year
Demand for wood sets stumpage prices high
New investments in the forest industries increase the use of wood, and felling for Finnish markets will increase by 9 per cent this year to 68.3 million cubic metres. Imports of roundwood will also increase from last year.
The higher export prices of pine and spruce sawnwood and growing demand for sawmill chips will increase the average stumpage prices of softwood logs by 9–10 per cent. The increase in the production of pulp, paper and paperboard will increase the stumpage prices of pulpwood assortments by 8–11 per cent. In 2019, industrial roundwood fellings and the stumpage prices are expected to even out as a result of slower economic growth.
In terms of non-industrial private forestry, gross stumpage earnings will increase this year and next year to more than EUR 2 billion. The operating profit of non-industrial private forests is expected to be more than EUR 150 per hectare in 2018 and 2019.
The profitability of forest chips will improve
The prices of emissions rights have nearly tripled during the past year. This supports the competitiveness of forest chips, bark, and dust in heat production.
The use of forest chips is expected to increase by 3 per cent this year and by 2 per cent next year to 8.2 million cubic metres. The price of forest chips in 2018 is expected to remain at the previous year’s level, and to increase slightly next year. The consumption of wood pellets is expected to grow slightly this year and next year.