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Apr 27, 2021

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 – Stora Enso is planning to close its Veitsiluoto paper and pulp mill in northwestern Finland during Q3/2021 due to the decline in global printing paper demand. The sawmill at the site will continue its production. Elsewhere, after employee co-determination negotiations, UPM has decided to close another one of its Kaukas sawmill lines by the end of June. Meanwhile, Metsä Fibre is proceeding with its large Rauma sawmill project, with construction proceeding according to schedule. The new 750,000 m³/a pine sawmill will be operational in Q3/2022.

According to the latest Fastmarkets Random Lengths weekly report, its Framing Lumber Composite Price was record-high at 1,188 USD/mbf. During April, the CME lumber futures also reached their all-time highs. There are very limited market offerings of European spruce boards to the US, according to the Random Lengths International report. The reasons for this include strong domestic demand and shipping delays. Aside from the US sawn timber market turmoil, many Finnish sawn timber export markets have also been heating up. Japanese importers are facing severe sawn timber shortages as export supply issues prevail and domestic production is limited through bottlenecks in e.g., drying.

The roundwood total trading volume in March continued to decline from the previous month but was above the March 2020 volume, according to wood trade statistics from the Finnish Forest Industries Federation. Compared to the previous month, the March trade volume decreased by 9%, with both pulpwood and sawlogs showing decreases in the same ballpark. The declines in volumes of individual grades were between 1% for pine logs and 14% for birch pulpwood. Comparing volumes year-over-year, the total volume went up by 12%, consisting of a 20% increase in logs and a more restrained 6% rise in pulpwood. Individual grades varied between increases of 5% in birch pulpwood and 35% in pine logs. Regional prices per grade had changes in both directions but the upward ones were bigger. The PIX Softwood Sawlogs Finland index kept climbing upwards, this time by 74 cents, or by 1.21%, to 61.79 EUR/m³. The PIX Birch Sawlogs Finland index value got stronger by 1.02 euros, or by 2.34%, reaching 44.70 EUR/m³. The PIX Pulpwood Finland benchmark value strengthened by 28 cents, or by 1.53%, with the index closing at 18.54 EUR/m³.

With the booming global sawn timber market, the Finnish sawn softwood export prices consisted almost completely of quotes that clearly strengthened in March. Both main indices saw unprecedented month-on-month increases, reaching their highest-ever levels. The PIX Sawn Timber Pine FAS Finland index increased by 38.27 euros, corresponding to 18.45%, with the index settling at 245.67 EUR/m³. The PIX Sawn Timber Spruce FAS Finland benchmark went up by 43.64 euros, or by 20.57%, landing at 255.79 EUR/m³. During this price rally, the difference between the spruce and pine indices seems to have remained stable in percentage terms.

The PIX Wood Finland price indices are based on the monthly wood trade data by the Finnish Forest Industries Federation, which Fastmarkets FOEX converts 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.