The pellero Institute of Economics (PTT) has recently made a forecast on the Finnish forest products industry. The forecast results show that the demand for forest products will be weakened in 2019 due to the world economic slowdown. The paper production data of Finland in 2020 will clearly reflect the decrease of demand for paper products, and the pulp price will drop to the bottom in 2019.
The destruction of European forests by snowstorms and pests has led to an oversupply of timber.
Paper demand continues to decline, Finnish paper exports will fall again
Due to the increasing uncertainty of economic development, the decline of paper demand will continue to intensify in 2019. As a result, paper prices in Europe, which continued for several years, reversed in the summer of 2018 and began to fall.
By the end of 2019, Finnish paper export prices have also declined.
Reduced demand has given rise to plans for major paper companies to close some of their paper mills in Finland by 2020.
The closure plan includes UPM paper mill in Rauma and two paper mills under Stora Enso in Oulu, which will reduce paper production by 10% in Finland and reduce the export value of forest products industry.
From the perspective of cardboard export volume and export price in 2019, the growth of private consumption in Europe will slow down.
However, in the long run, the overall export prospect of paperboard is still optimistic.
Pulp prices fall and bottom in 2019
European softwood pulp prices peaked in November 2018, close to EUR 1100 per ton, and fell by 30% by the end of September 2019.
The decline was mainly due to the rapid decline in Chinese demand, which surprised the market, and the fact that capacity growth has outpaced market demand in recent years.
At the beginning of 2019, China’s pulp export was limited, and now it has recovered. The decline trend of softwood pulp price has tended to ease, but the inventory of producers is still at a high level.
Due to the slow response to changes in international prices, Finnish pulp export prices will continue to decline in the last quarter.
The pulp market is expected to return to normal in 2020.
According to forest economist Emmi haltia, this means that the price of pulp export is expected to rise in 2020, and the export volume can also be expected to increase slightly.
However, this is only possible if there is no significant change in China’s economic development.
Timber prices will fall sharply
Due to a good start in early 2019 and the fact that timber mills have sold off a large number of stocks, Finland’s timber exports increased slightly in 2019.
However, due to oversupply in central and North Africa, Finnish mills began to cut production in the second half of 2019.
Forest economist Matti valonen said timber production would fall by 2% in 2019 due to production constraints and reduced inventories, with a larger decline in 2020.
Post time: Aug-04-2020