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Mar 24, 2020

Market Comments

PIX Wood Finland and PIX Sawn Softwood Timber FAS Finland

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PIX Wood Finland and PIX Sawn Softwood Timber FAS Finland – The strikes and lockouts in January and February had a significant impact on Finnish wood trade and forest industry production. The extremely mild and rainy winter in many parts of Finland contributed to the situation by limiting the logging possibilities and these challenges still continue today. The impact of the current coronavirus pandemic will also act as a major brake for hopes of increasing industry actions and global trade. On a positive note, some reports tell that there is still demand for sawn timber and the improved Covid-19 situation in China gives some hope for things to start normalizing at some point. The situation with damaged wood in central Europe has not seen any improvement, though. The exceptionally mild winter weather also in central Europe did not limit the infestation of the bark beetle, and the hoped-for improvement was not realized.

While the public discussion over Finnish logging volumes has quieted down a bit after the Finnpulp project cancellation, reduced production, strikes, and other events, Luke has published its estimate for the Finnish highest total possible annual logging volume for the next 10 years. According to Luke, this would be 80.5 Mm³, down by 3.5 Mm³ from the previous estimate in 2019. The change is reported to derive from changes in the calculation model. Last year the total loggings in Finland were 62.8 Mm³ so for now, this is not close to the upper limit. Meanwhile in the neighbouring Sweden, their roundwood stocks have increased to the largest level in 12 years. The stocks increased by 15% to 9.5 Mm³ by the end of 2019. There has recently been some increase in the exports of roundwood from the west coast of Finland to Sweden, and there could be some downward impact on this from the increasing Swedish domestic stock.

The roundwood trading volumes in February 2020 continued to decrease compared to the previous year and also turned to point downwards from the previous month, according to the wood trade statistics from the Finnish Forest Industries Federation. Compared to January 2020, the latest monthly volume decreased by 17% in sawlogs and 29% in pulpwood with the total volume pointing down by 25%. All individual grades went downwards by 15-30%. Comparing the volume year-over-year, the total decrease was 37%. Both pulpwood and log volumes showed the same, about 37% decrease from January 2019. Here, the individual grades showed decreases of 25-40%. Despite the dropping volumes, prices showed some positive development. The latest sawlog prices made the PIX Softwood Sawlogs Finland index strengthen by 80 cents, or by 1.45%, to 56.10 EUR/m³. The PIX Birch Sawlogs Finland index value increased by 47 cents, or by 1.11%, landing at 42.86 EUR/m³. The PIX Pulpwood Finland benchmark value moved upwards by 12 cents, corresponding to 0.71%, with the index closing at 17.08 EUR/m³.

The Finnish sawn softwood export prices reported to us included more increases, even though the reported volumes came tumbling down as the job actions seemed to have a clear impact here. Based on February data, the PIX Sawn Timber Pine FAS Finland index strengthened by 57 cents, corresponding to 0.34%, to 167.27 EUR/m³. The PIX Sawn Timber Spruce FAS Finland benchmark bounced up more, by 4.56 euros, or by 2.63%, to 177.64 EUR/m³.

The PIX Wood Finland price indices are based on the monthly wood trade data by the Finnish Forest Industries Federation, which we convert to a volume weighted 3-month moving average for our benchmark values, after removing the extreme highs and lows before the index calculation. The PIX Sawn Softwood Timber FAS Finland indices are currently based on monthly price reporting from Finnish export sawmills. The indices are calculated with fixed weights on six sawn timber quality grades, which are individually weighted by the volumes reported by the sawmills.