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November 7, 2019

Downturn in the Swedish forest industry as recession in Europe progresses

Downturn in the Swedish forest industry as recession in Europe progresses

The recession in Europe, in particular, is noticeable in the Swedish forest industry. The sawmills partially compensate for this through increased deliveries to new markets. The pulp mills are increasing their exports to China, but at lower prices. Paper deliveries have so far decreased by four percent compared to 2018.

- Demand for the forest industry's products has been affected by the global economic slowdown, including a decline in construction. This is partly a natural consequence after a few years of strong growth. The slowdown in the economy is compounded by trade conflicts, which have resulted in increased customs duties, lower efficiency gains from global trade and increased uncertainty, says Kerstin Hallsten, chief economist at the Swedish Forest Industries.

- Exports of timber products to Europe have fallen by seven percent, of which exports to Germany have fallen by about 20 percent. This has been partly offset by rising exports to Egypt of just over 70 percent and to the US of just over 30 percent, says Jacob Andrén, a wood products analyst at the Swedish Forest Industries.

Spruce bark outbreaks in Europe and Sweden have resulted in unusually high felling levels. Therefore, there is a large selection of spruce timbers and the total production level of Swedish sawmills is now at 19 million cubic meters per year, which is the highest level in 10 years.

- The production of spruce trees stands out with an increase of six percent, while pine production is at unchanged levels compared to last year, says Jacob Andrén.

The brightest figures for the Swedish forest industry show the Swedish market mass. Market pulp is the pulp that the mills produce for external sales, unlike the pulp they produce for their own paper production.

- So far this year, there has been an increase in production and deliveries of Swedish market pulp by about 13 percent. This is due to the sharp increase in the Chinese market. At the same time, prices have gone down sharply. However, prices have been record high and are now approaching 2017 levels, says Katrin Heinsoo, pulp and paper analyst at the Swedish Forest Industries.

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