Ominous comments are being made in Russia about the situation in the forestry industry in Finland. Today, wood prices are very high, which is partly due to Russia's aggression in Ukraine and the suspension of wood imports from Russia.
On Wednesday, the Central Statistics Office of Finland reported positive news for the country's economy: according to preliminary data, gross domestic Finland's GDP grew by 0.4% in the second quarter of 2024.
Despite this light at the end of the tunnel, the country's economic situation remains difficult. The unemployment rate is rising, and the number of companies that have declared bankruptcy continues to grow rapidly.
This situation has also been noticed in Russia, where the state media is gloating over Finland's problems. In particular, the Kremlin-controlled publication Ria Novosti notes that Finland's forestry industry is in deep crisis due to the cessation of timber imports from Russia.
This news spread in the Russian media and was cited, in particular, by the Gazeta web publication, which covers the topic under the headline "massive crisis" in Finland.
Timber prices remain high
In its original material, Ria Novosti quotes both Russian experts and and the project researcher from the University of Eastern Finland, Jacob Donner-Amnell.
Donner-Amnell, in his interview for Metsälehti magazine in early 2024, described the situation in the forest industry as a crisis.
An expert who has been researching the forest industry for more than thirty years notes that there is enough wood in Finland, but after the cessation of imports from Russia, prices for wood have increased significantly.
Prior to the beginning of the war in Ukraine, pulp wood and wood chips were mainly supplied from Russia to Finland. Russia was the main supplier of imported wood for Finland, providing about three quarters of the volume of imports. Already in 2021, the import of wood from Russia exceeded 9 million cubic meters.
The significant increase in the cost of raw materials due to the cessation of imports is the main reason for the difficult situation in which the sawmill industry found itself.
According to Donner- Amnella, the business model of the Finnish forest sector was partly built on the fact that wood imports from Russia would be available in sufficient quantities to contain the rise in prices in Finland.
Difficult economic situation
According to the statement of the association "Sahateollisuus ry" in early August, the price of wood in Finland has increased so much that the production of sawn timber has started to decrease.
At a time when wood prices are high, the cost of final products for companies is low. During an economic boom, sawmills can withstand high prices better than during a recession.
According to Donner-Amnell, in addition to the cessation of imports from Russia, the problems of sawmills are also affected by the general economic situation and difficulties in export markets.
Finland is not the only country facing these problems. In Sweden, timber prices have also reached record levels.
- Although Sweden has not imported as much timber from Russia as Finland, it has also seen significant price increases, with many timber companies complaining of timber shortages or that the prices are so high that they cannot afford it, Donner-Amnell notes.
The increase in wood prices is also due to increased demand from the energy industry.
- Companies complain that when energy companies buy wood chips at high prices, it affects the supply of pulpwood and increases its cost, he adds. Donner-Amnell.
Donner-Amnell also notes that some cases demonstrate that even pulp and wood for construction could be used for incineration.
The crisis in the forest industry can be quickly resolved with improvement of economic conditions, but currently the situation remains difficult.
