Key Trends and Challenges to Watch in the Finnish Forest Products Industry

The Finnish forest products sector plays a crucial role in the global pulp, paper, and forest products market. Its unique landscape is shaped by sustainability objectives, evolving market dynamics, and international regulations.

Understanding and staying up to date on what's going on in various regions is crucial to staying competitive. Below is a high-level overview of different elements shaping the Finnish market.

Economic and Market Trends

The Finnish forest industry is experiencing mixed economic conditions. The sector has seen an increase in sawn softwood production, with a 4% year-on-year growth in 2024. Metsä’s Kemi pulp mill has been ramping up, keeping the wood markets busy. 

Exports have also strengthened, and roundwood purchasing volumes have risen by 17%. However, the market remains volatile. Despite increased production, profitability is still fragile due to higher costs and price pressures. Stora Enso’s packaging board investments are ongoing in Oulu, putting more pressure on the roundwood market in the long term.

At the same time, Finland’s economy is expected to recover slowly, with GDP growth projected at only 0.8% in 2025 after contracting in 2024. But the broader economic uncertainty in the Eurozone and the US trade policies may continue impacting Finnish forest product exports.

Shifting Carbon Neutrality Goals and Forest Utilization

Finland’s ambitious target of achieving carbon neutrality by 2035 faces increasing challenges. According to recent reports, Finnish forests, which traditionally served as carbon sinks, have turned into carbon sources since 2021. Factors such as rising logging rates, emissions from drained peatland forests, and reduced soil carbon sequestration have contributed to this shift.

Additionally, about 90% of Finland’s tree growth is now consumed by logging and natural mortality, a significant increase from earlier decades. This reality raises concerns about the feasibility of offsetting other sector emissions through forest carbon sinks alone.

The European Union’s Land Use, Land-Use Change, and Forestry (LULUCF) regulations pose further pressure on Finland. If the country fails to meet carbon sequestration targets, it may have to purchase emission allowances, adding financial strain. Many EU nations also struggle with these targets, so the regulatory landscape remains uncertain. 

Corporate Restructuring and Investments

Several major companies in the Finnish forest industry are undergoing organizational changes. Stora Enso has reported EUR 724 million in non-cash impairments due to reduced long-term cash flow projections. Metsä Board is shutting down the Tako Board Mill in Tampere, impacting 215 jobs while expanding capacity at its Husum mill in Sweden.

On a brighter note, investments in sustainability-focused financing are ongoing. Metsäliitto Cooperative has recently obtained a EUR 200 million revolving credit facility linked to sustainability goals. This credit underscores the organization’s dedication to environmentally-friendly operations. 

Energy Wood and Bioenergy Developments

Bioenergy continues to be a critical component of Finland’s renewable energy strategy. The share of wood dry matter used for energy has steadily increased, reaching 61% in 2023. Most of this comes from forest industry by-products such as bark, black liquor, and recycled wood.

However, the market for energy wood is showing signs of cooling. Milder winter temperatures have led to lower consumption at heating plants, increasing stockpiles. Additionally, energy companies' investments in electric boilers and heat pumps may reduce the future demand for wood-based energy sources. 

Despite these challenges, Finland remains a major bioenergy consumer, with bioenergy accounting for 38% of its total energy consumption and 74% of its renewable energy use.

Future Outlook: Challenges and Opportunities

The Finnish forest industry faces a complex landscape of regulatory pressures, shifting energy demands, and economic headwinds. While increased bioenergy adoption and wood product exports offer opportunities, concerns over carbon neutrality, rising costs, and market volatility remain significant hurdles.

For a more comprehensive grasp of the forest products industry and to maintain a competitive advantage, visit our Forest Products page at ResourceWise and learn how our valuable insights can help you excel in this ever-evolving sector.