According to customs statistics, forest industry exports were worth 6,8 billion euros in January-July 2015.
The increase was 4 percent compared to the corresponding period in 2014. Pulp exports to China in particular are driving the growth.
Largest exporting countries 2014. Source: Customs
Export value 11,3 billion euros
- Germany 16,0%
- United Kingdom 9,4%
- China 5,4%
- United States 5,4%
- Russia 5,3%
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Analysis
Middle-class Chinese
“The growth in pulp exports this year has been supported primarily by the weakening of the euro against the dollar.
Demand for pulp has grown, especially in China. Globally, demand for hardwood pulp has grown more than softwood pulp, driven by the increasing supply of softwood pulp, mainly from Latin America.
Pulp demand is consumer-driven, with tissue and packaging being the most popular end products. Softwood pulp prices have been trending downwards over the year. New capacity is coming into the hardwood pulp market, which could put pressure on prices, but if Chinese demand continues to grow at the current pace, the market can still absorb the new capacity.
China's printing paper production is no longer growing strongly. Instead, the production of tissue paper and packaging board is increasing as China's middle class grows. China is also closing its old polluting pulp and paper capacity. Pulp production in China is not expected to grow strongly because there is not enough wood or land for plantations.
In Finland, where trees grow slowly, the focus is on softwood pulp. It is needed in tissue papers and packaging materials due to its strength properties.
The strength of China's growth may fluctuate in the future. This may have a cyclical impact on pulp demand and prices, but the growth of the middle class and urbanization are expected to continue.
Pulp as a bulk product does not represent highly processed biomass. However, the downside of bulk production is the large scale, which leads to significant impacts on the Finnish economy.
The investment phase itself creates significant employment, as do logging and logistics once production has started.
Pulp production is also very capital-intensive – once investments are made, production will continue far into the future. In part, investments rely on skilled personnel and existing infrastructure, such as in Äänekoski and in paper-to-board conversions. Expansions in pulp production will also secure wood demand in Finland far into the future.
In addition to pulp and energy, a modern pulp mill also aims to produce other bioeconomy products on a large scale, the added value of which may eventually become significant.”
Markku Jarvinen
analyst
Evli Bank Plc
Text by Jaakko Liikanen
Image Shutterstock
