The Nordic timber industry has an interesting year ahead in promoting timber but will Finland, Norway and Sweden agree, and will the money be available?
Finland’s industry is closer to agreement on how to do this job than the other two countries. This is partly because in Finland the three largest forest industry companies account for 60% of production, while in Sweden the top three account for only 20%.
Also, the Finnish industry has a tradition of co-operating. It has been used to this since the last world war, when it had to learn to handle the pressure from its Soviet neighbour. Also, consultants and architects have co-operated very well with the timber industry since the last war.
It is also interesting to note how Stora Enso is eager to solve the problems faced by the Swedish sawmilling sector. Since Finnish management became involved it has put constant pressure on the sawmilling division, which has a capacity of about 950,000m³, to find a solution. The work Stora Enso is doing in Sweden has also had an influence on other Swedish firms such as AssiDomän (capacity 1.2 million m³) and SCA (capacity 640,000m³). In a few years the structure of the Swedish sawmill industry could be very different – more like its Finnish counterpart, with more capacity owned by fewer and larger companies.
Once the structure has changed, promotional campaigns will be more effective. However, it is still uncertain whether the large companies favour a united approach or whether they will run their own campaigns, together with building products companies and firms such as IKEA.
At the moment the roll call of the leading firms in the forest industry sector in the Nordic countries is: Stora Enso, Finland; UPM-Kymmene, Finland; SCA, Sweden; Metsälitto, Finland; and AssiDomän, Sweden. However, the Swedish companies seem to be more interested in developing the pulp and paper sector than the timber sector. Finnish companies are interested in both sectors. There are several reasons for this, but the main ones are the close connection between forestry and industry and the connection established years ago between politicians and the industry.
“As shown in ECE Timber Committee forecasts, exports from Finland will be up on 1999, but this is largely because of an increase in trade with countries outside Europe, especially Japan” |
The market for timber products is stable: demand has remained high and prices have been stable – until recently. There is now a change, both on the export and domestic markets. As shown in forecasts presented at the meeting of the ECE Timber Committee in October, this year exports from Finland will up on 1999 but this is largely because of an increase in trade with countries outside Europe, especially Japan. Supply and demand have also been kept in balance because of strong activity in Finland’s building sector.
But the outlook for the domestic market for 2001 is not as bright.
In most other countries in Europe there could be a slow down in activity, and the US is also showing some signs of slowing. The main reason is that the IT industry has reached a peak. There are also many more ‘uncertainties’: changes in the way of living and the high cost of homes have also influenced demand among young people. Many are more interested in spending their money on consumables rather than buying houses and apartments.
Prices of roundwood moved up for a while. On the pulp market prices have tended downwards and the Nordic pulp mills have been forced to slow down the production of pulp to stop prices from falling further. For forest owners, the pulp industry has been the most important buyer for a while. The industry has been eager to pay high prices for pulpwood to secure a steady supply of raw material but it is now reaching a turning point. To get a sufficient supply of logs sawmills have to pay higher prices. The large amounts of timber in France and some other countries, brought down in last year’s storms, kept roundwood prices down in the first half of this year. There has been some supply from eastern Europe but this is slowing as these countries invest in their own sawmill and pulp sectors.
The Finnish timber industry is used to importing logs but it is facing stronger competition and, if demand continues to grow, prices will rise soon. Those who wish to buy high quality logs will have to pay for that quality.