Koskisen Group14.01.2013

Sawn timber markets living a life of their own

Tommi Sneck, Sawn Timber Director, Koskisen Oy

Tommi Sneck, Sawn Timber Director, Koskisen Oy

The sawn timber markets have, in the last few months, experienced somewhat of an upswing, despite the rather negative general sentiment about how the economy is developing, particularly in Europe. The boost in demand for sawn goods that began in late 2012 can be attributed to the increase in activity seen in the Asian and North American markets.

Specifically an economic and construction upswing in the US has a considerable influence, albeit indirectly, on the situation of Finnish sawmills. Construction of some two million new detached houses was started up every year as of the mid-2000s in the US. Within a few years, that figure dropped to a quarter. This dramatic downward spiral resulted in the shut-down of half of North America’s sawmilling capacity. The remaining sawmills were also forced to seek alternative markets for their sawn timber, and Canada, for its part, targeted the Chinese markets with the help of a massive marketing campaign.

In 2012, roughly 8 million cubic metres of sawn timber was exported from Canada to China. This amounts to nearly the entire annual production of Finland’s sawmilling industry. Now, as construction in the US again approaches the million mark for annual housing starts, Canadian sawmills have strongly shifted their volumes back to the reviving US markets. This has opened up opportunities for Finnish sawmills in China. Finnish sawmills have often been accused of lacking marketing savvy. Nevertheless, Finland’s sawmill exports to China in 2012 were 30% greater than Sweden’s. We are still far from Canada’s volumes, but we are headed in the right direction, and the massive demand in China will definitely offer a lot of new opportunities in the coming years.

Japan has been recognised as an important market area for the Finnish sawmilling industry. Much to everyone’s surprise, our two nations share a certain “kindred spirit”. We both value silence, among other things, and we don’t see it as a problem. More than two years ago, Japan’s eastern coast was devastated by a tsunami. After anxiously awaiting reconstruction in the area, it seems that the rebuilding work has finally begun, following massive clean-up efforts in the area. Japan’s economy in general is beginning to pick up. The Japanese government’s extensive stimulation packages coupled with the rise in the construction sales tax, expected to take effect in about a year, have prompted the Japanese to start building “like mad”. For Koskisen, that means that in the first half of 2013 alone, we will be shipping to Japan an amount corresponding to what was invoiced to the country in practically all of 2012.

Europe’s economy is struggling, and news on the economy is very negative. Once-strong economies, like France and Germany, appear to be on a downward trend, at least in terms of construction. Fortunately, Finnish sawmills are receiving a boost from far-off lands. The trend has been the same for years: within a period of ten years, the share of sawn timber exports outside Europe has increased from 35 per cent to 53 per cent. Over the last few years, the markets outside of Europe showing the strongest development have been in Northern Africa and the Middle East, and in recent months in even more distant regions than these. Hopefully the European economy will pick up soon. Distant countries cannot be the drivers of the Finnish sawmilling industry forever.

Tommi Sneck