Good demand for pulpwood – difficult times for sawn timber

After the completion of repair work due to the gas explosion, the Kemi bioproduct mill has got off to a good start, and we have succeeded in normalising wood flows in Finland. The market for sawn timber is extremely weak, and the record-high logwood prices have begun to decline in Finland. In the pulp market, low demand from China and decreasing prices have led to production curtailment at mills. Sawn timber production will also be curtailed in the latter part of the year.
  • Wood market review
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EVP, Metsä Forest

Wood market prices remain close to all-time highs. We are actively purchasing birch logs and wood from thinned stands and through delivery sales. We are also purchasing regeneration felling sites across Finland, although our main focus is currently on pulpwood purchases.

In the Baltics and Sweden, the increase in wood prices ended in the summer. In the Baltics, roadside prices of overbark pulpwood are at the same level as in Finland, and demand for energy wood has decreased. Harvesting conditions were good in the early part of the year, except in January. Forest services sales have been exceptionally high this year.

I am pleased to note that our customer feedback from forest owners has broken a new record. It is great to see that our cooperation is working well. We actively develop our operations with our owner-members, introducing new services and operating methods to the market.

The Metsä Group Plus management model, which increasingly emphasises forest biodiversity, continues to enjoy strong popularity. In the first half of the year, around a third of wood sales, measured in cubic metres, were concluded in accordance with the Metsä Group Plus model. At the beginning of September, the management model was expanded to felling on lush, drained spruce-dominated peatlands, where an additional bonus is now paid if continuous cover methods are used instead of clear cutting. Earlier this year, we also made stem volume-based pricing available for regeneration felling and first thinning sites.

Another great achievement for us was that the AI application for detecting insect damage, which is available to our owner-members in Metsäverkko, won the international Innovation of Innovations prize in the Quality Innovation Award (QIA) 2023 competition. Remember to actively use this application to prevent widespread damage!

We aim to considerably reduce fossil-based carbon dioxide emissions in harvesting and transport. In our most recent action, we announced our joint commitment with Navalis Shipping to reducing carbon dioxide emissions from the sea transport of wood by 30 per cent by 2030.

The divestment of our wood supply business in Estonia to Combi Forest OÜ, a subsidiary of Combiwood Grupp OÜ, was concluded in May. This contributed to greater flexibility in the Baltic wood supply in different market situations.

The consultation round for the revised act on the forestry incentive scheme and the criteria for old-growth and primary forests is now behind us, and we are awaiting the outcome. Lobbying for the national implementation of the EU’s Nature Restoration Law will begin this autumn.

Wood will continue to be purchased, and forest management work sold actively in the latter part of the year. It is important to maintain strong forest growth. Thank you to our owner-members for your good cooperation. Have a successful rest of the year!

EVP, Metsä Forest
Juha Jumppanen, EVP, Metsä Forest, is responsible for Metsä Group’s wood procurement and forestry services. He has worked his entire career at Metsä Group. He started in the forestry service business, and since then he has gained experience in harvesting, industrial customer relations, member services and wood trade. Continuous improvement and the development of customer experience and employee satisfaction are particularly close to his heart.