Cross-border trade keeps the domestic market from overheating.
“In Sweden, more is paid for timber imported from Finland than for local, Swedish timber,” says an expert, speaking anonymously, who has followed the cross-border trade in unprocessed timber between the neighbouring countries closely and over a long period. The expert does not wish to be named, because raising sensitive questions could have unpleasant consequences, which in turn could make the job harder. The Metsälehti editorial team knows the expert's identity.
“Just as businesses in Finland used to pay more for timber from the east, in Sweden too the domestic market is managed by importing additional volumes from elsewhere, so that the home market does not overheat.”
A premium of five to ten per cent at the mill gate in Sweden for Finnish timber is nothing unusual. That is enough to make it worthwhile hauling timber out of Finland, past Finland's own mills.
Trade in unprocessed timber crosses the border in both directions, in the form of both logs and wood chips. “In Sweden the quality of Finnish logs is rated highly, because rough timber processing here is stricter – close to three per cent compared with one per cent in Sweden.”
In transport terms, the nearest large buyer of pulpwood in Sweden is the Billerud pulp and paper mill in Kalix, while for sawlogs – it is the Stenvalls sawmill on Seskarö, near Haparanda.
The influence of the krona exchange rate is fading
The Swedish krona has swung about this year, but it is at a higher level than at the start of the year. According to the expert, the impact of exchange rate movements is diminishing and fading because of disruptions to domestic production.
“The krona rate does not affect cross-border traffic; what can affect it significantly are disruptions in the timber market.”
When an accident occurred last year at the Metsä Group pulp mill in Kemi and it had to be shut down, pulpwood processing fell by a hundred thousand cubic metres a week.
“The timber had to go somewhere, because the capital invested was sitting unproductively in storage... Sweden was looking for pulpwood export opportunities.” When the mill was brought back into operation, the opposite effect set in.
Storing timber at roadside landings or terminals can cushion such problems and spread their impact over a longer period, though not far enough for it always to become acceptable. The largest terminal in northern Finland, at Rovaniemi, can take a couple of hundred thousand cubic metres.
The north plans, the south adapts
Despite the intermittent disruptions to the timber trade, the expert regards the overall situation on the timber market in northern Finland as very encouraging for forest owners.
Very large roundwood reserves lie in northern Finland, which is also where the biggest recent investments in the forest industry have been made. Metsä Group in Kemi, Stora Enso in Oulu and the sawmills at Kuhmo, Pelki and Junnikkala have all invested very substantially in development.