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Volume of round wood, price of pulpwood slide

10 Jun 2019, 06:08 ( 2 Months ago)

DF Report
File Photo UPM/Rami Salle.

The slowdown in global economic growth and increasing instability have curbed the demand for forest industry products, according to Natural Resources Institute Finland (Luke).

Production volumes, however, will not decrease much this year. Compared with last year, the felling volumes of industrial roundwood and the stumpage prices of pulpwood are declining, said a Luke press release.

The most significant factors of uncertainty in the forest industry product market are linked to the international tensions in trade policy that increased during the spring, the confused Brexit situation and debt problems. It is also possible that growth in the global economy and trade will slow down faster than expected.

Exports of sawnwood to China continued to decrease in the beginning of this year, whereas export volumes to North Africa and Germany have increased.

High volumes of timber damaged by storms and insects have flooded the market in Central Europe, which has lowered the average market prices of sawnwood in the area. Domestically, the consumption of sawnwood will remain at last year’s level.

This year, the production of sawnwood in Finland is estimated to decrease slightly to 11.6 million cubic metres. The average export price of sawnwood is estimated to decrease by four per cent compared with the peak of the economic cycle of last year.

The average unit price for Finland’s wood pulp exports will remain lower compared with last year due to the weakened market situation. However, the price of pulp will remain high. Pulp exports from Finland will continue to grow, the production volume will remain at last year’s level and the capacity utilisation rate remains high.

Despite the declining market situation in cardboard, the Finnish production and export volumes, as well as the average unit price for exports, are still growing this year, but growth rates are clearly lower compared with last year.

The production volumes of forest industry products and consumption of roundwood in Finland have stabilised for the moment, due to realised increases in capacity. This year, the felling volumes of industrial roundwood will decrease by five per cent to 65 million cubic metres due to unloading of wood stocks and increasing imports of roundwood.

The decreasing export prices of sawnwood are reflected to the stumpage prices of softwood logs, which are estimated to decrease by 6 to 7 per cent. Despite the decline in paper production, growth in pulp and cardboard exports will strengthen the stumpage prices of pulpwood by 1 to 2 per cent. The use of forest chips and their average plant prices are expected to increase slightly this year.