Forest Products Industry
Intel Stock Just Got Crushed. Here Are 3 Reasons It Could Go Even Lower.
Why the Japanese yen is pushing around the US stock market: Morning Brief
Steven Mnuchin Says It’s Time to Kill the New Treasury Bond He Created
I Can't Think of a Better Vanguard ETF to Buy During the Stock Market Sell-Off Than This One
Here's the Hands-Down Best Stock-Split Stock to Buy in August Despite the Market Sell-Off
Stock Market Sell-Off: 2 Top Stocks I Plan to Buy if the Market Keeps Melting Down
MicroStrategy's 10-for-1 Stock Split Is Imminent: 10 Things You Need to Know
Prediction: This Will Be One of the World's First $5 Trillion Artificial Intelligence (AI) Stocks
Warren Buffett Just Sold $90 Billion of Apple Stock. Could This Be the Biggest Investing Mistake He's Ever Made?
Nasdaq Market Correction: 1 "Magnificent Seven" Stock to Buy Now, and Another to Avoid
1 Stock-Split Artificial Intelligence (AI) Stock to Buy Before It Skyrockets 67%, According to One Wall Street Analyst
The Nasdaq Is Plunging: 3 No-Brainer Hypergrowth Stocks to Buy Right Now to Take Advantage of This Sell-Off
The Market Situation In The Sawmill Industry Is Very Difficult And Dark Clouds Are Gathering On The Export Market Horizon
In the May Business Cycle Barometer of the Confederation of Finnish Industries EK, the business outlook for the sawmill industry and sales price expectations are in steep decline, and the order backlog compared to normal is well below zero, writes Tino Aalto, CEO of the Finnish Sawmill Industries Federation.
Companies in the sawmill industry have invested exceptionally much in their operations in recent years. Global demand for wood products will increase in the long term. The investments will enable sawmills to be technically competitive as the situation in export markets improves.
Unfortunately, the sawmill industry is currently going through exceptionally difficult times. According to many public estimates, this year will be bad and dark clouds are rapidly gathering on the horizon of next year’s export markets.
At the beginning of the year, it looked as if the market situation would improve and interest rate cuts would be made rapidly. It turned out differently.
In addition, the functioning of the market is challenged by many uncertainties, such as the prolonged crisis in the Red Sea, which disrupts logistics flows.
The Natural Resources Institute Finland also recently drew attention to the difficult situation. According to the report, the demand outlook for 2024 is subdued in the sawmill industry. The recovery in construction in both Europe and the United States is expected to begin only with a delay after the central banks’ key interest rate cuts.
In the May Business Cycle Barometer of the Confederation of Finnish Industries EK, the business outlook for the sawmill industry and sales price expectations are in steep decline, and the order backlog compared to normal is well below zero.
The production volume of sawn timber has been falling despite dozens of investments. In 2021, the sawn timber production volume was 11.9 million cubic metres, in 2022 11.2 million cubic metres and in 2023 10.4 million cubic metres.
Between January and April, the production volume has already decreased by seven per cent compared to the previous year.
At the same time as production volumes have fallen, the prices of raw materials, i.e. logs, and end products have taken on a life of their own. The price of logs has risen significantly more than the price of the end product, i.e. sawn timber, even though the use of logs has fallen by more than four million cubic metres since the record year 2021.
The index comparison of log and sawn timber prices, where 2010 is expressed by 100, shows that the index number for pine logs is 152 and for pine sawn timber the index number is 108. For spruce, the corresponding figures are 156 for logs and 123 for sawn timber.
The ratio between log and sawn timber prices has grown higher than in more than 15 years. In other words, from the point of view of the competitiveness of enterprises in the sawmill industry, the situation is extremely difficult.
The rise in the price of logs is due to something other than the market situation in the sawmill industry.
The chemical forest industry has a great need for wood.
The most significant change in the timber market in recent years has been the collapse in the amount of imported wood following Russia’s invasion of Ukraine. As recently as 2021, nearly 10 million cubic metres of wood were imported from Russia, mainly birch fibre and wood chips for the pulp industry.
The wood market has also been disrupted by the faster-than-expected phasing-out of peat and the resulting increased demand for wood in energy use. Significant amounts of logs are also directed to the pulp boiler instead of being processed into wood products with a long cycle time.
From the perspective of the future of the timber market, one interesting issue to monitor is the timber market study to be launched this year, which will be led by the Ministry of Agriculture and Forestry. In the study, it is important to review the functionality and competitiveness of the Finnish timber market.
In addition to an independent investigator, it is good that the Finnish Competition and Consumer Authority is involved in the work, as it has strong expertise in investigating whether practices in the timber market, for example, are sound from the point of view of competition law.
The sawmill industry uses one-third of the timber but is responsible for two-thirds of the base income. Finnish forestry needs a vibrant sawmill industry to run.
Tino Aalto
CEO
Finnish Sawmill Industries Federation
This article was originally published in Maaseudun Future 17.6.2024
To read other Finnish Sawmill Industries Federation related posts click here
Follow IFI on Twitter | LinkedIn | Instagram
The post The Market Situation In The Sawmill Industry Is Very Difficult And Dark Clouds Are Gathering On The Export Market Horizon appeared first on International Forest Industries.
Novo Nordisk shares slide after rare miss on obesity drug Wegovy sales
China Wants to Raise Its Retirement Age. A Pension Crisis Looms.
Stocks Advance After BOJ Eases Worries Over Rates: Markets Wrap
Why a full-fledged bear market is still unlikely even after the latest sharp sell-off
Watch These Super Micro Computer Price Levels as Stock Slumps After Earnings
Pages
![Subscribe to ForestIndustries.EU aggregator - Forest Products Industry](https://forestindustries.eu/misc/feed.png)