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global market

Sweden does not fear Brexit

Article by Gerd Ebner (translated by Eva Guzely) | 20.02.2019 - 09:31

The group of timber exporters expected that the two big Scandinavian producing countries, i.e. Sweden and Finland, are going to have different market developments ahead.

Strong domestic market, hardly volatile export

Sweden has a strong domestic market which is characterised by a stable development and never “overheated” lately. Contrary to Finland, the country is not dependent on the volatile Chinese market. Instead, 60% of its exports go to European countries.

The UK will always need a lot of wood

When it comes to exports, Great Britain is on top of the client list with about 15% of Swedish exports. Still, Swedish suppliers are a little nervous. Due to the lack of resources, the UK has to import wood. The renovation and residential construction sectors will continue to grow and Sweden plans to deliver the required products.

“Also, Sweden has a currency advantage compared to the euro and therefore always an extra margin of 2%”, timber exporters analysed.

Finland bet on the wrong horse in 2018

Finland supposedly is much more nervous right now. In the last few years, it put “all its eggs in the Chinese basket”. China thus became the number one market. Last year, however, Finland was knocked out by Russia through lower prices. Finnish suppliers were used to prices of about 265 US-$/m³, but in 2018, they fell to around 230 to 235 US-$/m³.

Two weeks ago China celebrated the New Year. Right now orders are taking off again. “In terms of prices, developments on the Chinese market are absolutely relevant for Europe. If sales don’t go too well, there’s automatically pressure on other overseas markets.”

Due to its dependence on Asia, Finland has less room for manoeuvre than Sweden. Additionally, it has a shipping disadvantage of almost 10 €.

Supply not an issue right now

Both Scandinavian countries are well supplied with log wood. If, however, this year’s summer is as dry as last summer, the situation will be critical in the forests of Southern and Central Sweden.