PaperAge Magazine

Finland's Forest and Paper Industry Continues Structural Change

Paper production in Finland The production and export of paper in Finland will reduce by 5–7 per cent this year and 3–4 per cent next year. – PTT

Oct. 19, 2016 - According to a forecast released in early October by the Finnish research firm PTT, Finland's forest industry investments will increase the export of pulp and paperboard this and next year. However, the average export prices will decline. The diminution of the production and export of paper in Finland will continue strong. High demand in China maintains a positive outlook for the export of sawn timber. Demand is growing also because of activation of the construction industry in Finland and in Europe.

Pulp and paperboard exports on the increase

The production and export of paper in Finland will reduce by 5–7 per cent this year and 3–4 per cent next year. This is explained by downward trend in demand, already realized by the conversion of paper machines into paperboard machines and other capacity closures. No significant change in the average export price of paper is expected. A more significant increase would require more closures of machines in Europe and a pronounced rebound in the economy. Despite diminishing production, the paper industry still produces about 40 per cent of the export revenue of the Finnish forest industry. In Finland, the production volume of paperboard will rise this and next year significantly because of expanding production capacity. However, the average export price will decrease.

Decrease in export prices of pulp

Pulp exports from Finland will grow both 2016 and 2017 due to increase in production capacity.

There's increase in capacity in other countries as well, and especially the supply of eucalyptus pulp will be higher than before. Increase in the supply of northern softwood pulp (NBSK), important to Finnish forest industry, is quite moderate in the forecast period. However, the overall increase in supply will lead to lower prices in NBSK as well. The export price in Finland in 2016 will be 7-8 percent lower than last year. The new Metsä Group bioproduct mill in Äänekoski will start production in autumn 2017 and therefore its effects considering Finnish exports or global pricing of pulp are not fully realized in the forecast period. Also, the forest industry company UPM will increase its production of pulp in the forecast period.

New records in sawnwood exports

Sawnwood exports from Finland will increase significantly in 2016 compared to 2015 and will reach new record levels. The increase in demand is especially due to the positive trend in Chinese markets for spruce sawn softwood. The production of sawnwood will increase by 5 percent this year. Increasing construction activity will also raise demand for sawnwood in the domestic market. Downward trend in Finland's average sawnwood export price, already two years ongoing, will reverse only in 2017. Growing demand for wood products in main export markets as well as domestic market will increase the production of sawn softwood next year by 3-4 percent.