Metsä Group, one of Europe's largest forest industry companies, is planning two major investments that have the potential to change the way the industry does business. These investments will focus on processing cellulose into new pulp products, which has been a challenge for the industry for many years due to declining demand for paper. While demand for traditional paper products is declining, the opportunities to focus on developing new higher value products are great.
Cellulose has long been a mainstay of the Finnish forest industry. Last year, as much as 54% of the pulp produced in Finland was exported abroad, especially to China, where demand has remained high. This clearly shows the important role that pulp continues to play in Finland's export economy. However, at the end of one era and the beginning of a new one, the pace is changing: domestic processing activities are being enthusiastically developed to meet changing market needs.
In the past, the forest industry has been strongly linked to paper and board production. Until about 15 years ago, most pulp was processed domestically into paper. Now, as the situation has changed, the sector is undergoing a transformation in which paperboard and paper remain important exports but have had to adapt as part of a new product development. In 2023, paper and board exports were worth a staggering €5.9 billion, comparable to the cost of building three or four ships in the Turku shipyard. This underlines the importance of traditional forest industry products for the Finnish export economy, but also the pressure to invest in new ones.
Much more can be created from cellulose than just paper and cardboard. Who would have thought that a traditional material could be used to develop new innovative products that can compete in global markets? Bio-plastics, textile fibres and bio-refinable chemicals are examples of products derived from cellulose that promise significant growth and value. Many forest industry companies around the world, not only in Finland, have started to invest in research and development in these areas. The results are mixed, but the potential is undeniable - if sustainable and profitable business models can be developed.
Nevertheless, change also brings challenges. Developing new products requires huge investments in research, scaling up production and market access strategies. Competition is fierce and the keys to success lie with those who can respond quickly to market needs and innovate effectively. Large players like Metsä Group are well positioned because they have the resources and capacity to adapt to new environments and meet these challenges.
All in all, Metsä Group's plans and the near future for the industry as a whole look bright. The move towards a more diversified product portfolio, going beyond the traditional paper and board industry, will open up new markets and opportunities. But this transformation will require courage, investment and a concerted effort of innovation from the whole industry.
