Long-term decisions, short-term uncertainty
The attention-grabbing story in this newsletter regards the preliminary project to investigate conditions for a new large-scale sawmill on our Kinda site in Östergötland, Sweden. If it goes ahead, this investment will significantly increase Södra’s capacity and have positive ripple effects in terms of our ability to serve customers in all the product and geographical markets we serve.
The fact that we are investigating the feasibility of a new mill demonstrates our long-term confidence in the market for wood as the material which holds the key to a sustainable future in construction. Whatever current conditions, the effects of a project like Kinda will span decades of market cycles and our decision will be based on the cross-generational approach which our ownership structure supports.
Returning to the current market situation, demand has been better than expected since December 2022. We cannot foresee with any accuracy how inflation and interest rates will affect confidence, nor whether the pandemic DIY boom sapped demand for decking, for example, but we enter the European building season with stocks under control and a good supply/demand balance as a result. So even if demand is uncertain for the near future, we are well prepared if slower demand occurs.
Our sales to non-Europe markets including the Middle East, Asia and the USA continue to grow in importance for the European sawmill industry, and many of these markets are in a better position with less impact from the war in Ukraine and the energy situation in Europe. There are good reasons to believe we will see better demand in our overseas markets than in Europe.
Even if we cannot expect a house-construction bonanza in 2023 and the near future for the market is uncertain, we have learnt a lot from the last turbulent years how to tackle different market scenarios. We are confident we will manage the coming quarters too, and we are long-term committed to this market. With the plans for future investments in Kinda, Södra shows the way forward.
Market Manager Södra Wood Phone: +46 470 892 77