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Feb 23, 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 – MTK, The Central Union of Agricultural Producers and Forest Owners, estimates that there is an oversupply of pulpwood in the market. This is partly due to good logging conditions which increase thinnings, bringing more smaller-sized wood into the market. At the same time, there is some lack of sawlogs due to the good sawn timber market conditions globally.

Good reviews of the sawn timber market were presented again at the Wood from Finland online conference by Finnish Sawmills last week. The general atmosphere in the market seems reasonably good with global demand increasing and Finnish sawmills being able to react to this in a timely fashion. However, the Finnish industry has remained behind the main competitors in investments and, for example, the large US export market is not well available due to a lack of planing capacity in Finland.

Metsä Group has decided to build its new Kemi pulp mill in northern Finland. The new mill will produce 1.5 million tonnes of softwood and birch pulp and other bioproducts using about 7.6 million m³ of wood annually, increasing that number by about 3 million m³ from the current Kemi mill. The increased need for raw material is planned to be covered mostly by domestic wood, but the procurement area will be expanded to Sweden too. Meanwhile on the opposite side of Finland, UPM is planning to close down one of two lines at its Kaukas sawmill in Lappeenranta. With an annual capacity of 500,000 m³, the Kaukas facility is currently one of the biggest sawmills in Finland, and the line up for closure is the smaller one there.

The roundwood total trading volume in January declined from December but remained clearly above the January 2020 volume, according to wood trade statistics from the Finnish Forest Industries Federation. Compared to the previous month, the January trade volume total decreased by 20%, with pulpwood showing a 16% and logs a 23% dip. The biggest dive in an individual grade was 24% in spruce logs. Comparing volumes year-over-year, the total volume went up by 26%, consisting of an impressive 59% increase in logs and a more limited 6% rise in pulpwood. Individual grades varied between -1% in pine pulpwood and +68% in spruce logs. Prices featured both stronger and weaker quotes in January. The PIX Softwood Sawlogs Finland index continued its path upwards, now by 63 cents, or by 1.05%, to 60.38 EUR/m³. The PIX Birch Sawlogs Finland index value weakened by 24 cents, or by 0.54%, to 43.83 EUR/m³. The PIX Pulpwood Finland benchmark value ended at 11 cents, or 0.61%, below that of the previous month, with the index closing at 18.05 EUR/m³.

The Finnish sawn softwood export prices reported to our indices showed changes both up and down. After rising clearly last time, the indices now showed a more mixed development with pine prices displaying some limited increases on average and spruce prices some decreases. The PIX Sawn Timber Pine FAS Finland index strengthened by 38 cents, corresponding to 0.19%, with the index settling at 199.49 EUR/m³. The PIX Sawn Timber Spruce FAS Finland benchmark retreated by 3.84 euros, i.e., by 1.82%, and landed at 207.50 EUR/m³. Despite the drop, this is the highest level recorded by the PIX Sawn Timber Spruce FAS Finland index since more than two years. The PIX Sawn Timber Pine FAS Finland index is also higher than ever since the weighting update two years ago.

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.