While national and global politics may be experiencing turmoil, Sweden’s timber sector seems to be running smoothly. There are negative factors, notably rising log prices and currency fluctuation, but production is increasing modestly, inventories are controlled, demand generally good and price levels are rising.
Mill production has picked up in 2017 and output for the year is forecast at 18.2 million m3, 2-3% above 2016. The biggest change to report is in south Sweden where previous consolidation resulted in significantly lower production last year.
Despite a cold spring chilling the consumer market, domestic demand has increased due to strong building activity. In addition, wood-based building systems have gradually taken market share. In fact, according to a new report, new capacity in the timber construction sector is expected to bring it 50% of multi-storey building by 2025.
Our hope is also for increased timber sales generally in the UK, our biggest export market, but post-Brexit vote political turmoil has raised some question marks over the future. And, even though there is currently a great need for housing, we see no clear signs of it in the statistics.
However, Sweden currently has a 50% market share of all UK softwood imports. Swedish sawmills, through Swedish Wood, also put substantial resources annually into promotional and informational projects in the market. It maintains close co-operation with the British timber trade and woodworking industries via the Timber Trade Federation, British Woodworking Federation, Structural Timber Association and Confor and has also been a major contributor to the Wood for Good campaign.
Our neighbouring markets of Denmark and Norway are also steady and the German market is solid, providing our members with good business, despite German domestic production of some 20 million m3.
The Netherlands is at the same volume levels and takes similar products and, in both markets, wood is taking construction market share, even though from a low level. France, meanwhile, offers a good niche market for glulam and DIY products.
Egypt, Swedish producers’ second biggest export market, has experienced financial difficulties and its need to prioritise imports is impacting timber purchases. But its substantial joinery industry remains a big softwood consumer. The Egyptian government is also working to strengthen the country’s hub status for east and sub- Saharan African markets, which could strengthen its woodworking industry and trigger increased softwood imports.
Another important MENA market, Algeria, has been severely hit by low oil and gas prices and government trade restrictions have occasionally more or less stopped imports. But there is still good demand for timber in Algerian construction and restricted supply has depressed inventories.
Morocco is in focus too. Considered the most developed and stable market in North Africa, it has ambitions to become the trade hub for West Africa.
The MENA region has for some years accounted for a third of Swedish softwood exports. However, economics and politics have hindered market development recently and Asia has overtaken them in importance. More positive macro-economic developments in Asia are reflected in Swedish export development, notably in China, where softwood imports have been boosted by policies to increase timber construction and restrict logging in natural forests.
Underlining China’s continuing importance, Swedish Wood has been active in European Wood, a Swedish, Danish, Norwegian and Austrian marketing collaboration. Among its goals is introduction of a Chinese standard for timber in construction, focusing recently on high-rise.
Swedish exports to China have gone from 100,000m3 in 2012 to 800,000m3 in 2016 and it has not yet really penetrated the construction market. Even with container shipment issues, Sweden will probably exceed its 2016 China export totals this year.
Japan has also been a cornerstone for Swedish Asian business and this year Swedish Wood is launching projects in the Vietnamese market. Next year it’s India’s turn.
Its strong economy, building activity and dollar have combined to boost US demand for Swedish timber too. Last year it imported 250,000m3, a figure set to double this year and to go still higher longer term in response to forecast lower Canadian output.
To sum up, the Swedish timber industry is confident for 2017 and further ahead, with its global timber trade status based on sustainable forestry, modern industry structure and good relations with the wider wood working industry.
