In 2004, the Finnish forest industry increased overall production by 6 percent as compared to the previous year. Total stocks of timber are estimated at 2 billion cubic meters (cum), of which 47 percent is pine, 34 percent spruce, 15 percent birch and 4 percent other broad-leaved species.
In 2004, the output from Finnish sawmills amounted to 13.5 million cum, 1 percent less than in 2003. While prices on the European market were low, high prices in non-European markets kept the production level relatively stable. More than 60 percent of the output from Finnish sawmills is destined for Europe. Finland supplies the European Union market with approximately 10 percent of its demand. In 2004, total Finnish exports of sawn softwood increased by 2 percent. Exports to the European market remained stable, while exports to markets outside of Europe increased by nearly 6 percent. Domestic consumption of sawn softwood is still high due to the continued upward trend in Finnish housing construction coupled with an increase in added-value processed wood.
Early this year, a labor dispute developed within the Finnish paper industry resulting in Finnish saw mills closing down operations for several weeks. Sawn softwood production fell by 14% to 6 million cum during the first six months of 2005 as a consequence of lost sales of wood chips and wood residue to the paper industry. Paper and paperboard production fell by 23% to 5.2 million tons. Nevertheless, Finnish production of sawn softwood is expected to remain relatively stable in 2005 and 2006 due to the fact that housing construction in the Nordic countries is expected to remain at a high level.
The total value of forestry exports in 2004 amounted to Euro 11.7 billion (USD 11.0 billion). The forest industry accounts for approximately one quarter (25%) of all Finnish exports. When calculated on a per capita basis, the forestry sector’s share of Finland’s total exports is greater than that sector’s contribution in any other country worldwide.
The production of plywood increased by 4 percent to 1.35 million cum. The use of birch raw material, traditionally used by the Finnish plywood industry, is now being supplemented to a growing extent by spruce. Capacity has increased substantially with the addition of new softwood mills during the 1990's. The industry's main products are birch and softwood plywood in addition to a variety of combi plywoods, for which the surface layer is birch. The plywood industry also manufactures block boards and a product for which softwood veneers are glued together to create panels 27-75 mm thick.
The main market for the Finnish sawmill industry is the European Union, which accounted for 62 percent of exports in 2004. There was no growth in sawn wood exports because of the weak construction sector in Europe. Finnish exporters to Western Europe are confronted with increased competition from exporters in Russia and the Baltics. With their low production costs, these countries are able to increase their sawn wood capacity yearly. Currently, Finland supplies the EU market with about 10 percent of its demand. While the Finnish sawmill industry’s investment in Eastern Europe has a positive impact on market share, it has resulted in lower Finnish export volumes as Eastern European product replaces exports originating in Finland.
Within the EU, the UK, France and Germany are leading customers. However, Finland sees the largest potential for growth to be in the Asian markets, where consumption of forest products is relatively low but rising faster than in other markets. Good economic growth in Asia has boosted exports there, which increased by 8 percent in 2004. The Finnish industry sees huge potential for growth in the Chinese market. While actual exports to China are still small, they increased by 7.2 percent to 55,422 cum in 2004. Exports to the European market remained stable. Finnish exports to Japan increased by 13 percent to 1.165 million cum. Exports to the United States increased by 57 percent to 55,000 cum due to the stronger dollar and increased housing construction. As a result of the continued oversupply situation amongst Finland’s most important export markets within Europe, export prices are down and export volumes are expected to decline somewhat in 2005 and 2006.
Russia is the main supplier of total raw material imports. In 2004, imports of softwood logs amounted to 7.1 million cum. The EU’s new debarking requirement, now scheduled for implementation as of March 1, 2006, might affect Russian exports to Finland since the Russian industry will reportedly face problems meeting this regulation.
Finland also imports raw material from Sweden and Estonia. This year, however, Sweden is taking over Estonia’s market share due to Hurricane Gudran, a highly destructive windstorm that raged through southern Sweden in January 2005. A temporary oversupply of raw material resulted in Sweden due to the widespread fellings.
The import value of U.S. product amounted to USD 7 million. Hardwood lumber for floors, joinery, doors and interior finishes and panel products continue to present the best opportunities for U.S. exports to Finland. In 2004, the import value of U.S. hardwood lumber to Finland increased by 18 percent to USD 5.7 million as compared to the year before. Imports of panel products increased by 14 percent and amounted to USD 671,000.
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