First, Finland. After the upheavals of recent years, the Finnish forest and timber market, along with the wood-processing industry, is going through a marked stratification and an uneven stabilisation. While sawnwood exports are showing modest signs of recovery, forest owners are facing falling returns, and the market as a whole is weighed down by high logistics costs, weak demand in construction and stricter environmental regulation.

Timber purchasing and sawmill activity in Finland

Both timber purchasing and production are currently in decline. At the start of the year, purchase volumes of industrial roundwood from private forests fell by around 20% compared with the previous year. Sawnwood production contracted early in the year because of weak market conditions and unfavourable weather. After dropping over the winter months, saw log prices began to climb again in the spring. The average standing price for spruce saw logs exceeds EUR 80/m³, while pine stands at around EUR 75/m³. Pulpwood prices, by contrast, have seen sharp swings and have settled at a lower level.

Overall, profitability in the sector remains low. Over the past 15 years, saw log prices in Finland have risen by almost 80%, while prices for the finished product — sawnwood — have gone up by only around 40%, creating what is known as a "cost squeeze".

Finnish timber exports and imports

Exports are up in Europe and the Middle East. Finnish sawnwood export volumes show a fairly modest 4% increase in value. The main driver is higher deliveries to Egypt, the United Kingdom and Estonia. Asian markets, on the other hand, are down, with exports to Asia slowing considerably at the start of the year. Exports to China have fallen by 48% and to Japan by 21%. This is a direct consequence of the problems in the Middle East and the need to reroute logistics, which increases both transport times and costs.

Imports have undergone structural change. Since the halt to imports of Russian timber, which historically made up the bulk of imports, Finland has been forced to rely on consolidating domestic resources and stepping up imports from the Baltic States and its Nordic neighbours. The region's internal timber balance has also become strained.

What might happen next?

The Pellervo Economic Research Institute forecasts a gradual recovery in the sawnwood market in the second half of the year, while overall forest-sector volumes in value terms will remain fairly modest because of a weak pulp and paper market.

It should be noted that the European construction market has still not fully recovered from high interest rates, and consumption growth in Europe is forecast at only around 2.5%, which is too little for rapid growth.

The pressure from environmental regulation is being felt keenly. Finland's forest and timber industry is concerned about government proposals to restrict logging during the bird nesting season, which could legally "freeze" harvesting operations for several months of the year and further tighten timber availability.

The sector's solutions and plans

Finnish foresters are busy rescuing road infrastructure. Because of this spring's thaw and the generally unstable financial situation, companies are taking the risk of hauling timber over "broken-up" forest roads and then investing in resurfacing them with gravel to keep timber flowing to the mills without interruption.

Companies in the sector are investing actively in their existing plants — Keitele is choosing to modernise its existing sawmills rather than build new ones, conserving capital and optimising efficiency.

Forest ownership, meanwhile, is consolidating. Investment funds such as United Bankers are actively taking advantage of Finland's fragmented forest ownership structure and generational change to buy up and merge forest holdings, creating more stable and predictable timber supply chains.

This year the Finnish forest sector is lobbying particularly hard for the government to introduce commercial diesel for transport, in order to cut rising logistics costs and maintain competitiveness on the global market.

The situation in Sweden

The Swedish forest and timber market is currently in a deeper and more prolonged downturn than Finland's, although the first price corrections are now visible, signalling attempts at market stabilisation. Trends in the Swedish market have a direct and immediate "ripple effect" on the Baltic and Latvian timber sector.

The market and sawmill activity

The Swedes believe that confidence in the market is now at a historic low. The forestry sector's confidence index in Sweden has slid to its lowest point since the Covid-19 pandemic. The industry is being squeezed by the high raw material costs of recent years and weak demand globally.

After record highs in 2025, the major state and private players in the timber market, such as Sveaskog and Södra, have cut purchase prices for saw logs and firewood at the start of this year in order to salvage sawmill profitability. Pine saw log prices, for example, fell to around EUR 91/m³ in the first quarter. Spruce saw logs, buoyed by demand for structural materials, are holding a higher value at around EUR 113/m³. Individual sawmills, such as the one in Mora, and processing plants have been closed or have suspended operations.

Sweden's foreign trade

Export volumes fell by around 15.8% at the start of the year, particularly to the United States (because of the threat of new tariffs) and Japan. The largest export markets remain the United Kingdom and Norway. Swedish imports of wood products fell by 16.8% at the start of the year, chiefly because of reduced domestic production capacity (and thus lower demand for raw material). Over the year as a whole, the largest import partners are Norway and the Baltic States.

What are the Swedes forecasting?

The Swedish Forest Industries Federation is warning of an additional burden of 2 billion kronor this year, created by the new EU transport and climate regulation (ETS) reforms, rising rail tariffs and so on.

To deal with the situation, Swedish companies are focusing on curbing capacity and aligning production with real demand — for instance, processing pine where spruce is in short supply. Investment is being channelled into higher value-added products, such as the manufacture of CLT, or cross-laminated timber.

Swedish and Finnish market trends and the "rules of the game" in the Baltics

The direct effects are falling export volumes, the "roundwood problem" and competition in third markets. Sweden has historically been one of the largest buyers of Latvian timber and building materials. The collapse in Swedish imports — imports from Latvia to Sweden fell by around 60% at the start of the year — is a heavy blow to Latvian exporters. Until activity returns to Sweden's construction sector, Baltic producers will struggle to sell their output at high prices. And since the Swedish and Estonian markets are currently seeing a deliberate reduction in harvesting volumes and a levelling-off of prices, pressure to cut saw log purchase prices is being felt in the Latvian market too. Latvia's forest owners and managers should expect more modest revenues than last year. As Swedish and Finnish exports to the United States and Asia are currently running into tariffs and logistical problems in the Red Sea, these Nordic giants are trying to sell more of their timber output here in Europe and in the Middle East, which creates extremely tight competition for Latvian companies on the European market — the scale of the Nordic sawmills allows them to offer lower prices.

Will Latvia have an advantage in future?

With Estonia having decided this year to cut harvesting in state forests by 10% for environmental reasons, and with strict restrictions in the Nordic countries, a shortage of timber resources is building up in the Baltic Sea region over the long term. Latvia's forest sector needs to hold out against pressure to expand restricted areas in its forests. Those Latvian sawmills that can survive this low-price phase will be well positioned in late 2026 and in 2027, when global demand starts to recover more rapidly.