Finnish Forest Sector Economic Outlook 2010-2011
Slowing of brisk growth in forest products markets
The production and export of Finnish forest industry products began to grow quickly during the first half of 2010 as demand recovered in the main export markets and on the domestic market. The profitability of production was enhanced by a weakened euro, which improved the price competitiveness of exports, and especially
by the higher export prices for sawnwood and pulp. The price trend on the paper market, however, has been more moderate on account of the overcapacity in Europe. The forest industry’s increased roundwood need during 2010 has been met through an increase in commercial fellings in Finland and by importing more wood. Domestic roundwood sales have picked up significantly from 2009, and prices of softwood sawlogs in particular have risen.
Europe’s GDP growth is forecast to slow down in the latter part of 2010 and in 2011, as the various government stimulus packages gradually come to an end. This will also reduce the demand growth for Finnish forest industry products, and indeed the rise in sawnwood and pulp export prices has already tailed off.
The forest industry’s production and exports are forecast to grow more slowly in 2011 than in 2010. Sawnwood production will rise to about 9.8 mill. m3 and paper and paperboard production
to approximately 12.8 mill. tonnes. The upward trend in the forest industry’s profitability will lose momentum. The industry’s roundwood demand and commercial fellings will both be up a little in 2011, but roundwood supply will fall as a result of the discontinuation at the end of 2010 of the tax relief on income from roundwood sales. Stumpage prices of softwood sawlogs and pine and birch pulpwood are forecast to rise in 2011, though more moderately than in 2010. Russia’s policy of export duties on roundwood is nevertheless creating uncertainty in the market. If Russia’s export duty increases come into effect at the start of 2011, there will be a decrease in Finnish imports of Russian roundwood compared with 2010. The use of forest chips is expected to grow in 2011 to about 7 mill. m3 when new subsidies and energy taxes are introduced.
Although the world economy has already passed the worst of the recession, it is entering a period of slower growth, overshadowed by uncertainties
over the future course of the United States economy and the debt-ridden economies of the euro area. Rapid and unforeseeable changes in exchange rates are also a source of uncertainty. There are real risks that the situation
will differ in one direction or another from the forecasts given.