The wider European softwood sector has been through challenging times since sawn timber production peaked in 2021 when, according to the European Organisation of Sawmill Industries it hit 89.9 million m3 across its member countries. In the interim, mills have faced rising costs, notably for energy but also for raw material, set against a backdrop of sluggish demand, notably from a lacklustre building sector.
With the proviso that costs are still a serious challenge, however, the EOS 2024- 25 report raised the possibility that sawn production may have bottomed out and that 2025 might prove a turning point, albeit a modest one. It reports production up 1.1% in 2024 and in April it forecast that 2025 would see growth of 1.75% , with output at 82.581 m3 million.
This overall performance tallies largely with that of Europe’s second biggest sawn softwood producer after Germany, Sweden. It hit the post pandemic boom heights in 2021 with output of 19.05 million m3. Production then fell to 18.87 million m3 in 2022, with a further drop to 17.8 million m3 in 2023 where it stayed in 2024, despite gross fellings falling about 2% to 88.9 million m3.
The EOS projection is for Swedish output to stick at around the 17.8 million m3 mark in 2025. But writing in its report, Swedish Forest Industries Federation market expert Christian Nielsen, said that, with some significant provisos, there could be reasons for an optimistic view for the year with mills “continuing into 2025 on the more normal trend of the second half of 2024”, when production and shipments improved.
At the same time, underlining a more positive outlook for the longer term, Sweden has recently seen some major capital spending in the sawmill sector.
Mr Nielsen wrote in the EOS 2024-2025 report that Swedish sawn production in 2024 “was essentially saved by surprisingly strong exports”. While overall sawn softwood production was static, total foreign sales were up around 3% at 13.99 million m3. Exports to the UK rose from 2.64 million m3 in 2023 to 2.72 million m3.
“At the same time, Swedish domestic sawnwood demand was almost down to a halt,” Mr Nielsen wrote. “The last time consumption was this low was in the 1990s banking crisis.”
Coming into 2025 there were concerns that strengthening of the Swedish krona (SEK) against the euro could impact export opportunities, however, it has since weakened. The euro, which dipped to SEK10.9 in March 2025, was at SEK11.18 on August 16 and exports have in fact continued to climb.
“In the first six months of this year total exports are up 2%, and to the UK they’re 3% higher for the year to date,” Mr Nielsen told TTJ. “This is a stronger [performance] than was initially feared when the Swedish krona was strengthening, with concerns also due to the high-cost-situation in Sweden at the moment.”
In 2024 the Swedish domestic softwood market was at its lowest ebb since the 1990s banking crisis. The EOS report stated that moving into 2025, there were some signs of a pick-up fuelled by lower interest rates and the prospect of government subsidy for ‘private renovation’. Although it added that it remained unclear if these would be enough to produce a significant turnaround in the sluggish market. This latter view was borne out by the Swedish government’s decision to cut its 2025 GDP growth forecast from 2.1% to 1.8%, with the growth outlook for 2026 cut from 2.8% to 2.3%.
Mr Nielsen said the Swedish domestic sawnwood market has not shown significant improvement in the first half of this year.
“It’s proved to be somewhat of a disappointment during the second quarter despite introduction of subsidies for home renovation from May until the end of year,” said Mr Nielsen. “The market is slightly better than last year, but that was the worst year in the last 30. We expected to see much better domestic demand during the spring, which did not materialise. On the other hand, export volumes have outperformed our expectations, although the high-cost situation in Sweden means that many producers have been struggling to remain profitable.”
An added issue for the Swedish industry, as for European sawnwood producers generally, has been the disruption caused by the on/off threat of imposition of US import tariffs.
“The uncertainty remained even though Trump early on identified the supply of sawnwood to be a matter of national security interest, and as such excluded from any discussions of tariffs,” said Mr Nielsen. “The exclusion was to last at least until further review and the conclusion of a specialised “232 investigation” which would be finalised in November and make sure to not unnecessarily jeopardise the US market from important supplies of sawnwood.”
This did not entirely allay European sawnwood producers’ concerns, however, he added.
“Considering that Canada over the last decade has faced tariffs ranging from 15-40%, it was unclear if sawnwood tariffs [on] US imports from Europe could actually become higher after the November investigation,” said Mr Nielsen.
As of the joint statement from the US and EU on August 21 much of the uncertainty has been resolved.
“The US has agreed that sawnwood from the EU will be subject to a 15% tariff ceiling as applied to other products, and this is [generally regarded] as good news for European sawmillers,” said Mr Nielsen. “The uncertainty was hurting the markets more than any actual potential tariffs would. Also, with the 15% tariff level being significantly lower than that applied to Canadian suppliers for the last decade, it can be expected that the majority of the cost will be carried by the American consumer.”
Some concerns remain, however. These include how tariffs could potentially harm the US economy and decrease total sawnwood demand.
“There is also the consideration of how the global trade environment is moving away generally from free trade and internationalisation, which has already left its mark on other international trade relations,” said Mr Nielsen.
As for the immediate outlook for the industry, it looks less positive than it did in the spring.
“At this point much comes down to what can be expected from the global economy and what the impact will be from an increasingly tense global trade situation with trade conflicts and uncertainty,” said Mr Nielsen. “From a Swedish perspective it’s important to see the European economies and markets pick up, and especially how the UK construction sector develops, which will be an important indicator for what can be expected by the Swedish sawnwood industry through the rest of the year into 2026.”
However, longer term, he said, there are grounds for greater positivity.
“Although cost levels remain high and sawmills are struggling to remain profitable, despite slow demand sawnwood prices are fairly strong compared to before the pandemic,” said Mr Nielsen. “I believe this is an indication that we are now taking the first few steps towards the expected future balance, with a globally constrained timber supply and growing demand.”
That would be essentially good for Swedish and other European sawmills.
“Increasing global demand for sawnwood, while supply remains stable, or in many regions decreases, leads to a future of higher competition for available sawnwood sources,” said Mr Nielsen.
INDUSTRY INVESTMENT
Among the businesses investing in this bolder future are SCA, which in late 2023 unveiled a new trimming line at its Bollsta sawmill, installed at a cost of SEK750m (€66.75m). The line features five robot handling devices and other ‘digital tools,’ plus advanced X-ray technology to explore logs in 3D. The new technology will boost throughput from 500,000m3 to 700,000m3 per year.
In 2024, Norra Timber spent SEK400m on new X-ray technology at its Sävar and Kåge mills, capable of examining a log every two seconds. The primary purpose of the technology would be to link production data to each log, but the company says it will also enhance its timber traceability performance.
“If something goes wrong in production, we can, by mapping all the planks, easily go back to see where,” said Norra Timber. “We can also see how much energy was used for each product and thus have better cost and environmental control.”
And it goes further than this, with each log possibly being given an ID number.
“Traceability and information about the wood’s environmental impact will be a competitive advantage and [this investment] will be a driving force for us to work more on how we can enhance our capabilities in this respect,” said industrial manager Henrik Jönsson.
Norra Timber parent Norra Skog also recently announced investment of SEK100m to boost the output of its Hissmofors mill by 10,000m3 a year.
At its Edane mill, Moelven is investing in new channel dryers, a new saw line, new timber sorting and new facilities for further processing of construction wood. It forms, says the company, part of a competitiveness drive and a strategy to “make Moelven Scandinavia’s leading manufacturer and distributor of construction wood”.
At the Hilmer Andersson mill in Lässerud, SEK40m new kilns are intended to give the business added flexibility, while lowering energy consumption and enabling the facility to reduce waste. They will boost mill annual drying capacity to 300,000m3.
Derome Timber has spent over SEK600m upgrading its plant to support “more sustainable and competitive timber building”.
“With increased demand for wooden houses and building materials with low climate footprints, competition for raw material is becoming greater,” said CEO Linda Andersson. “That is why we strive to maximise the value of the raw material.
“With our new saw line, we are increasing production capacity while increasing the yield of boards from each log. This is good for both the climate and the economy. If everyone in Sweden sawed each log uniquely the way we do, we could build 30,000 more wooden houses with the same amount of raw material.”
