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Sverige Trä Nyheter Europe feels pressure as global softwood trade thrives

Europe feels pressure as global softwood trade thrives

Never has Europe felt the global nature of timber supply more than in 2017. Despite record world softwood production of 350 million cubic meters in the past 12 months, supply is only getting tighter and stocks in Europe are significantly lower than at the end of 2016.

“Demand in central Europe for softwood has been quite steady in 2017, with demand growing for construction timber but at a fairly slow rate” said Andreas Jonasson, marketing manager of Södra Wood Business Area. “There are highlights such as in Sweden, where housebuilding has been very strong in 2017. In the UK also, timber construction has gained market share as it has substituted tradition methods. This is partly due to sustainability concerns but also because a labour shortage has encouraged the use of off-site construction methods, namely timber-frame housing.” 

Andreas Jonasson.

However, while almost 75 percent of Swedish softwood production is still sold to Europe, it is global factors that have conspired to put pressure on the world’s lumber basket, and Europe has felt the effects. “China’s imports of softwood have increased five-fold in the last 10 years,” continued Jonasson. “With per-capita consumption still very low in China, this market has the potential to continue its dynamic import growth for the foreseeable future. Russia has met much of China’s demand by steadily raising production since the turn of the century. But there are doubts how much more Russia can produce which, combined with declining exports from Canada, means pressure on supply is unlikely to ease.”

North Africa and the Middle East have been the most uncertain markets for softwood in 2017 and are likely to remain so in 2018. “There is strong demand from Egypt,” said Jonasson, “but problems with the economy in Saudi Arabia and inspite of new import licenses in place in Algeria the banking system is now demanding more liquidity from the customers to be able to import. Russia is a important supplier to these countries, but its attention is being diverted to China.

“At Södra we are marginally increasing production and while our product is very much subject to global factors, our commitment to European customers is absolute. In addition, our initial investment in CLT is very much with European customers in mind. Current market conditions remind us how important it is that we as a company own and manage our supply of timber.”

Södra Wood Värö.

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