Last year saw a significant increase in the price of timber production in Finland, which led several industries to worry about cost efficiency and profitability. The Natural Resources Institute Finland (Luke) reported that prices for all timber species reached exceptionally high levels. This development has been noteworthy as it has affected both the domestic construction sector and international markets.
The increase in pulpwood prices was particularly marked in the vertical sector, where prices rose by around 20% compared to the previous year. This was the most significant increase of all timber types. Demand for pulpwood such as spruce, pine and birch increased significantly, which contributed to the price increase. Many in the industry have described the development as a surprise, as such a large price fluctuation had not been seen for a long time.
In particular, prices for spruce fibres reached their highest level since 2007, while pine prices rose to levels last seen in 1990. Birch prices reached their highest level since the early 1980s. On average, the price of spruce fibre in vertical sales was €32.7 per cubic metre, which was easily exceeded as demand increased.
The highest monthly prices for spruce reached almost €54 per cubic metre in the supply trade. This price difference is mainly explained by increased demand and logistical challenges, especially in export markets.
Although pulpwood prices increased significantly, log prices rose at a much more moderate pace. This difference in price trends between pulpwood and logs reflects the market dynamics and the variation in the uses of the different timber species.
The volume of industrial wood purchased last year was 18% up on the previous year, making it the busiest period in recent decades. The total volume was the second highest in the history of the statistics, and only slightly lower than the record year of 2018, indicating high demand and market volatility.
In light of high prices and demand, the timber industry is expected to continue its upward trend in the current year. High prices are expected to encourage forest owners to become more active and increase trading in the market. On the other hand, higher prices may have longer-term effects on the competitiveness of raw materials and the profitability of the industry.
The Natural Resources Institute Finland reports that "high prices are not only a sign of increased demand, but also a reminder of the limited supply of raw materials and the industry's adaptability to changing market conditions."
However, continued price increases can put pressure on investment and lead the sector to seek new innovations and efficiencies to improve sustainability.
