Rapid decline in economic trends subdues timber sales in 2008

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Demand for fibrewood increased because the amount of woodchips produced by sawmills fell. Overall, timber purchases were 13% below the five-year average and 27% below the record volume achieved in 2007.

 

The market situation for pulp, paper and wood products affects short-term demand for timber, but the significance of domestic wood raw material for the Finnish forest industry will grow over the long run. Imports of timber from Russia will decline as unprofitable and the share of the industry’s raw material supplies accounted for by timber sourced in Finland will increase substantially.

 

The need for domestic timber will increase from present levels over the long term. The government has encouraged the market entry of wood by substantially reducing the taxes imposed on timber sales revenue in 2009-10.

 
The industry requires a steady supply of timber at a competitive price. Short-term market outlooks do not necessarily have an immediate effect on wood procurement activities. The raw materials balances of production facilities are managed with the aid of timber harvesting, which is only carried out to meet existing needs.

 

Fibrewood purchases nearly at the previous year’s level, log purchase volumes fall by almost 50%

 

Weakened markets conditions in the sawmilling sector reduced demand for softwood logs in particular and their procurement volumes fell to half of the level reached during the economic boom of the previous year. Demand for sawn timber weakened further in 2008. A high level of costs and a collapse in profitability forced the Finnish sawmilling sector to cut its production volumes more than the competition in other countries. Over the longer term, Finnish sawmilling volumes will depend on the availability of domestic logs at a competitive cost.

 

Purchases of birch fibrewood increased by 7% and pine fibrewood by 1% from the previous year, but spruce fibrewood purchase volumes fell by 25%. The ending of a full tax break for first thinning operations at the end of August spurred the supply of fibrewood to record levels and this caused purchases to also increase to a record.

The share of purchases for delivery in overall procurements increased to 29% from the previous year’s 15%. Total purchases for delivery, in which forest owners deliver their timber to a pick-up location by a transport route, accounted for 8.6 million cubic metres.

In 2008, the price of pine and birch fibrewood as well as birch logs increased by 4-5% from the previous year. The average stumpage prices of softwood logs fell by 12-14%.

Further information: 

Anu Islander, Senior Advisor (Forestry), Sustainable Development & Resources, Finnish Forest Industries Federation, tel +358 (0)9 132 6678 or +358 (0)40729 3678