Europe has continued to feel the impacts of Russia’s war against Ukraine. The consequence is a full cessation on the import of wood raw materials to countries like Finland.
Looking to Finland can reveal just how dramatic the market has shifted.
Finnish pulpmills and sawmills have long been dependent on imported wood raw materials to meet their wood fiber needs. In 2021, as much as 23% of the pulp sector relied on foreign logs and wood chips. The stock came predominantly from neighboring countries.
From 2018 to 2021, the total import volume was over 11 million m3 annually. Hardwood logs accounted for about 50% of the volume. However, the historically stable foreign fiber supply changed swiftly in early 2022.
Finland’s wood raw-material imports from Russia fell dramatically in 2022 following many years of active trade between the two countries.
Russia decided to halt softwood log exports starting January 1, 2022 to support the domestic forest industry with lower-cost wood raw-material. Hardwood logs and wood chips were exempted from that export ban.
After Russia invaded Ukraine, Finland boycotted the importation of Russian goods like most European countries. This ban included forest products, and trade started to dwindle between Russia and Finland in Q2 2022.
By Q3 2022, shipments were down to zero between the two countries.
The strong pulp market made the Finnish pulp industry search for alternative supply sources to keep operating rates high. As expected, it has been difficult to find over 10 million m3 of pulplogs and chips (annualized) on such relatively short notice.
Companies have used different strategies to tackle the tight fiber supply. This includes the following:
In Q3 2022, imports were mainly up from Sweden and the Baltic States. But there were also a few shipments of logs and wood chips from Brazil, South Africa, and Uruguay.
In 2022, the total imports will likely be down almost 60% from 2021. Hardwood log supply declined even more with a 70% drop.
In the coming years, it is possible that Finnish pulpmills will increase the share of softwood fiber in the market. This means more mills domestically sourcing products and less reliance on unstable imports.
This post comes from Wood Resource Quarterly (WRQ), a regular publication from ResourceWise's Wood Resources International.
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