CONFERENCE HELSINKI 2019 14TH FEBRUARY HELSINKI CONGRESS PAASITORNI WELCOME WELCOME
It is absolutely wonderful that the Wood from Finland I wish you warmly welcome to Wood from Finland Con- conference has become an interesting and annual event in frerence Education program event. Helsinki. It tells a lot about how important international trade is to the participants and Finland in general. Sawn timber Finnish Wood Industry is lacking professionals. In recent is a traditional product, but it is still modern, ecological and years, many schools focusing on “wood” have been shut down. an important building material. Its markets are growing. It Professors of main wood universities in Europe and other ed- deserves conferences and shared moments – like the one we are ucation professionals will gather at Paasitorni to discuss how having here today. We are grateful that you have all come to Finnish and whole European Wood education can be improved! Helsinki. Welcome! In the timber trade, economic fluctuation is familiar to us all, but the timing and strength is always a surprise. The individ- Markus Luodelahti uals working with sawn timber, however, are not weak boys or girls. We all have faith in our industry. We are pleased to also The Association of Finnish Sawmillmen, chairman welcome our Minister of Education, Sanni Grahn-Laasonen, to open the conference day – which also has an accompanying event that focuses on making teaching and training stronger in the woodworks industry. It is great that we are all here – in record crowds!
Welcoming you all here with thanks,
Pekka Kopra
Finnish Sawmills Association, chairman EDUCATION Education Conference is part of Sahaajakisälli - program
2 WOOD FROM FINLAND CONFERENCEHappy 2019 Valentine’s Day WOOD FROM FINLAND CONFERENCE 2019 3 PROGRAM PROGRAM
MARKETING & EDUCATION EDUCATION 13 - 16 KARL LINDAHL 9.00-12.OO CONGRESS HALL 13 - 18.30 CONGRESS HALL 13.00 ”Welcome and Education needs of Sawmill Industry” Mr. Tommi Sneck, Koskisen Oy 8.00 Registration and coffee (Congress Hall Foyer) 13.00 ”Softwood outlook, China” 13.15 ”Sahaajakisälli -program” 9.00 ”Welcome” Ms. Anna Ni, Senior Advisor, Ms. Nina Kokkonen, Häme University of Applied Sciences, Mr. Mika Vanhanen, Lahti University of Mr. Pekka Kopra, Managing Director, Westas Oy, Chairman Wood from Finland Applied Sciences of Finnish Sawmills Association 13.25 ” ”Outlook of global chemical pulp 13.30 ”New Vocational Education in Finland” 9.15 ”Economic Outlook” supply and demand – Finnish perspective” Ms. Anni Miettunen & Ms. Inga Sihvo, Finnish National Agency for Education Mr. Jan von Gerich, Chief Analyst, Nordea Bank Ms. Teija Konttori, Vision Hunters 13.45 ”Future of Sawmill Industry Education in Finland” Ms. Silja Kostia, Lahti University of 9.45 ”Opening of the Wood from Finland Conference 2019” 13.50 Coffee (Congress Hall Foyer) Applied Sciences
Ms. Sanni Grahn-Laasonen, Minister of Education 14.20 Market discussion 14.00 Coffee
10.00 ”The Sawmill Industry - Handbook”, 16.00 End of the seminar 14.30 ”University presentation ”Duale Hochschule Baden-Württemberg Mosbach, Germany” Mr. Hubert Speth Mr. Ilkka Tarvainen, Lahti University of Applied Sciences and Chairman of seminar Mr. Pauli Aaltonen, Mr. Esa Mikkonen, Polar Timber, UK 14.45 ”University presentation ”Rosenheim UAS, Germany”
TOGETHER Sales Director, JPJ-Wood Oy EDUCATION 10.10 ”Finnish Sawmill Industry Update” MARKETING Mr. Andreas Michanickl 18.00 Drinks Mr. Kai Merivuori, Managing Director, Finnish Sawmills 15.00 Panel Discussion ”Wood Technology Education” Helsinki Congress Paasitorni, Entrance Hall 10.30 Break (Congress Hall Foyer) Participants: Salzburg UAS, Austria / Günter Berger, Sopron, Hungary / Laszlo Bejo, Zvolen, Slovakia / 18.30 Dinner 11.00 ”Global softwood trade Outlook” Hubert Palus, Rosenheim UAS, Germany / Andreas Michanickl , Mosbach, Germany / Hubert Speth, Helsinki Congress Paasitorni, Congress Hall Mr. Russell Taylor, Managing Director, FEA-Canada Tallin, Estonia / Jaan Kers, Aalto, Helsinki / Lauri Rautkari, Lahti UAS / Ilkka Tarvainen (WOOD MARKETS) 16.00 End of the seminar 12.00 Lunch (Restaurant Paasi) Chairman of seminar Mr. Tommi Sneck, Koskisen Oy changes possible
PEKKA KOPRA JAN VON GERICH SANNI GRAHN-LAASONEN RUSSELL TAYLOR ANNA NI KAI MERIVUORI Managing Director, WESTAS OY Chief Analyst Minister of Education Managing Director Senior Advisor Managing Director
Chairman of Finnish Sawmills Association NORDEA BANK kuvaaja:Lauri Heikkinen/valtioneuvoston kanslia FEA-Canada (WOOD MARKETS) Wood from Finland FINNISH SAWMILLS 4 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 5 DINNER 14th February 2019
Cocktail at 18 Entrance Hall
Dinner at 18.30 Congress Hall
Cold smoked white fish, dill pea purée, white fish roe, sea water jelly and rye bread *** A NEW DIMENSION Grilled Finnish beef tenderloin, cep potato gratin, fried truffle leak and dark sherry sauce OF ROAD TRANSPORT *** LOGISTICS Hazelnut chocolate mousse, mocha cake, The end of era of emails, apricot coulis and vanilla excels and text messages mascarpone in transport *** Coffee & avec *** Riesling vom Kalkstein KWV Cathedral Cellar Triptych ***
6 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 7 FINLAND TOP10 EXPORT TOP20 EXPORT
Whitewood 12/2018 12/2017 change 12/2018 12/2017 change 1000 cbm 1000 cbm % €/cbm €/cbm % CN China 791 1270 -38 198,82 195,71 2 TOP 20 Export Countries of Finnish Sawn Softwood DE Germany 453 437 4 215,78 205,18 5 1 400 1 200 FR France 403 421 -4 216,86 205,99 5 1 000 JP Japan 334 375 -11 233,45 223,78 4 800 GB UK 238 230 3 210,16 199,35 5 600 IL Israel 203 221 -8 181,04 165,55 9 1000cbm 400 EG Egypt 200 145 38 151,41 115,50 31 200 NL Nederlands 195 218 -11 201,46 186,10 8 0
EE Estonia 153 140 9 201,95 186,49 8 UK Italy Spain Israel China Egypt Japan France Poland Algeria Austria Tunisia Estonia Holland Belgium Germany Denmark AT Austria 118 102 16 234,33 220,29 6 Morrocco South-Korea Saudi-Arabia
All countries 3715 4332 -14 206,53 194,08 6 Othercountries Whitewood Redwood Planed Gluelam
Redwood 12/2018 12/2017 change 12/2018 12/2017 change 14.3.2019 Source: EUROSTAT 1 1000 cbm 1000 cbm % €/cbm €/cbm % EG Egypt 1082 1152 -6 165,80 142,69 16 DZ Algeria 517 273 89 222,77 204,51 9 JP Japan 481 488 -1 2 2 7,62 216,17 5 Export of Sawn Softwood from Finland GB UK 382 401 -5 221,51 202,64 9 5 CN China 274 444 -38 189,86 164,53 15 4,5 IL Israel 233 253 -8 188,74 167,57 13 MA Morrocco 229 247 -7 183,67 164,26 12 4 EE Estonia 218 233 -6 214,99 197,37 9 3,5 SA Saudi-Arabia 124 126 -2 194,91 167,95 16 3
TN Tunisia 98 81 21 197,08 193,47 2 2,5 Million Million cbm/12 month All countries 4256 4368 -3 200,87 179,06 12 2
White- & redwood 7971 8700 -8 203,51 186,54 9 1,5 12
source:EUROSTAT 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Whitewood 12 month Redwood 12 month Algeria REDWOOD +89% 8.3.2019 Source: Finnish Customs/EUROSTAT 2
8 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 9 Export from Finland FINLAND 11000 10000 9000 8000 7000 Finland is enjoying its third consecutive year of economic recovery, and the 6000 unemployment rate has declined to its lowest level since 2011. Growth in 2018 is 5000
expected to be 2.8 percent. But it is likely to slow next year as global demand slows and 1000cbm 4000 financial conditions tighten. There are downside risks to this outlook, such as from an increase in trade protectionism. And over the long term, growth is likely to be lower than 3000 what has been seen recently, unless productivity growth permanently increases. 2000 1000 Hence, the challenge is to make the economy more dynamic. Recent reforms have made 0 Finnish exports more cost competitive and helped to boost employment. But the job 2013 2014 2015 2016 2017 2018 2019F is not yet done: unemployment rates remain persistently high in some regions despite ample vacancies in others, and productivity growth is still below what was seen before Whitewood Redwood Planed the crisis rates, despite the strength of the recovery. The focus of reforms should be on increasing labor market dynamism while maintaining a strong safety net. This means more flexibility about setting wages at the firm level and changing unemployment 12.3.2019 Source: EUROSTAT 1 benefits to increase job search soon after losing employment. Other policies maybe needed to aid regional labor mobility. Because growth is likely to slow, there is a need to continue to rebuild fiscal buffers. The 2019 budget implies a moderate tightening; going forward, fiscal policy should concentrate on raising the effectiveness of public spending, alongside policies to boost potential growth.
The financial system is sound. The authorities should continue to keep a close eye on banks’ exposures to real estate. The size of the banking sector has increased 8,7 11,8 2,9 substantially with the recent redomicile of Nordea to Finland, which increases demands Mcbm Mcbm Mcbm on supervision and heightens the importance of continued close regional cooperation (+1 %) and preparedness for crises. Households’ exposures are also important. To protect borrowers, it would be good for the authorities to have more so-called “macroprudential” tools and access to better data, such as from a comprehensive positive credit registry. The growth in consumer credit raises the question of whether some borrowers are sufficiently informed about the conditions of their loans—extra consumer protection FINNISH EXPORT PRODUCTION CONSUMPTION measures should be considered. (Source: IMF/Bank of Finland 6.11.2019) Forest industry 2018 (2017)
Year 2018 was a major economic peak in the Finnish forest sector. Forest industries’ production and export volumes were growing, industrial roundwood fellings were increasing, stumpage prices were rising, and operating profit in non-industrial private forestry was improving. The cyclical peak was driven by growing world economy, which increased the demand for forest products. Brisk demand from China contributed to the development of Finnish forest exports. The current un certainty in exports is related to e.g. the Brexit, looming trade war, geopolitics and the systainability of the financing sector in selected countries. In 2019, the growth in production and export volumes will Export from Finland slow down for most products and the upward trend in export prices will level off. With 220 5,5 M regard to market pulp, the export price will decrease from the record high level of 2018. The pulp and paper industries scored excellent results, while the sawmills remained at (0 %) satisfactory level. (Source: Luke) 210 Sawmills 200 During the 1st half, the Finnish mills enjoyed increasing export demand and prices. Also the domestic market picked up somewhat. The mills produced 11,8 million m3 of sawn 3 3 3 190
sawn timber (11,7 million m 2017) and exported about 8,4 millionm (9 million m 2017). €/cbm (FOB) POPULATION The export prices increased by 9%. The mills suffered from the rapid collapse of exports to China, increasing raw material costs. The revenues from side products started to 180 2018 increase and, finally the market for dust and bark eased. The financial results were mostly satisfactory, but far away from competitors. 170 2013 2014 2015 2016 2017 2018 Red price White price Planed
12.3.2019 Source: EUROSTAT 2
10 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 11 Softwood production and sale 15000 14000 13000 12000 11000 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000cbm (12month cumulative) 1000 0 12 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Production Exports Imports Domestic market
14.3.2019 Source: Finnish Customs, Finnish Sawmills, Finnish Forest Industries 1
1,2% 2,6%
(0,8 %) (2,8 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
12 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 13 Export from Finland to Egypt EGYPT 1600 1400
1200
1000 Economy 800
The GDP growth gained almost 5% in 2018 in Egypt and is expected to accelerate to 5,2% 1000cbm 600 in 2019 and, 5,3% in 2020, respectively. The growth of the Egyptian economy started to slow at the end of 2018. Both output and orders declined at the end of the year, but 400 the decline was slower than in October. It is expected that in 2019 the government will increase spending on investments, the natural gas production will grow, the regulatory 200 environment is expected to improve. All these factors support solid GDP growth in 2019. 0 Inflation decreased from 2017 summer (33%) to 11,4% in 2018 summer. However, high 2013 2014 2015 2016 2017 2018 2019F inflation and high interest rates are still challenging the government. The overnight deposit rate varied between 15 and 17% during the last quarter of 2018. The target for Whitewood Redwood inflation is to reach single digit level in 2019. The structural fiscal deficit also remains a problem for the government. The government aims at increasing taxes to balance the deficit – followed by 60% increase of tax revenues from 2017 to 2018. It is expected that 12.3.2019 Source: EUROSTAT 1 all fuel subsidies will be removed by the end of 2019, which will support the decreasing of the deficit. The government is committed to reforms, thanks to the USD 12 billion back up by the IMF. Other government focus areas are to improve access to industrial land, improve transparency and accountability to state owned enterprises and – importantly – fighting corruption. The government has indicated that no further financing programs from the IMF are needed.
The Egyptian economy seems to be steaming ahead. However, the foreign debt level 1351 4,0 4,0 exceeds USD billion, the growth outlook depends on the EGP rate and favourable kcbm Mcbm Mcbm construction outlook which is partly based on huge projects like the new administrative (+4 %) capital and other new cities. This does not address directly the key challenges - high unemployment, labour market friction and weakness in education and healthcare systems. The foreign exchange reserves – 44 billion dollars – cover well the 12 billion foreign obligations and needs of imports. However, the reserves are not sufficient to support the economic growth alone . Thus it looks like Egypt is on a good track – but FINNISH EXPORT IMPORT CONSUMPTION with many risks. Construction
The positive development of the Egyptian economy has supported plans to address the serious shortage of housing as the demand for better lifestyle by the middle class increases. The Ministry of housing, Utilities and Urban communities has indicated that 500-600 000 housing units needs to be built per annum to meet the demand. The real estate developers are currently focusing more on selling houses before starting their construction. This should reduce financing challenges of the constructors. However, it looks that stagnation is looming in the resale market as the new housing is often too costly even for the middle class. Export from Finland to Egypt 97 M Sawn softwood 170 Year 2018 was economically less turbulent in Egypt than the two previous years. The 160 (+2,1%) softwood market was quite the opposite. The demand for softwood was brisk at the beginning of the year and prices gained tens of dollars per cubic meter. However, the 150 reselling market and high interest rates disappointed the importers in the summer and 140 high stocks filled the yards, driven by both Nordic and Russian suppliers.. After stagnation, the market started to pick up during the 4th quarter. The year 2019 has started briskly 130
and prices have started to recover from the December slump. €/cbm (FOB) POPULATION In 2018, exports of Finnish softwood remained on the same level as in 2017, around 1, 350 120 million m3. Exports of redwood remained at 1,15 million m3 and whitewood increased 2018 110 almost by 50% to 200 000 m3. According to customs statistics, average redwood export price increased almost by 20%. 100 2013 2014 2015 2016 2017 2018 Red price White price
12.3.2019 Source: EUROSTAT 2
14 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 15 Export to Egypt (sawn and planed softwood) 350
300 2008 250 2009 2010 200 2011 2012 M€/Y 150 2013 2014 100 2015 2016 50 2017
0 Sweden Finland Russian Latvia United Romania Ukraine Belgium Estonia Norway Federation States
1.2.2019 Source: FAO 1
20,9% 5,3%
(23,5 %) (4,2 %)
INFLATION GDP GROWTH Steveco tuottaa pitkällä 2018 (2017) 2018 (2017) kokemuksella kaiken sahojen tarvitseman logistiikan
Tarjoamme kokonaisvaltaiset logistiikkapalvelut jokaiselle asiakkaalle sopivan kokoisena pakettina, yksilöllisesti. Laadukas ja tehokas kontituskeskuksemme sijaitsee Suomen suurimman konttiterminaalin välittömässä läheisyydessä, Kotkan Mussalossa. Lyhyet kontin siirtomatkat ja erinomainen infra mahdollistavat tehokkaan käsittelyn. Haminan satamassa irtolastauksiin erikoistunut henkilökuntamme käsittelee break bulk -laivaukset laadukkaasti. Ammattitaitoinen huolintaosastomme hoitaa rahtibookkaukset sekä dokumentoinnin puolestasi ja pitää sinut ajan tasalla koko logistisen matkan – sahalta vastaanottajalle asti. Ota yhteyttä – keskity olennaiseen.
MYYNTIJOHTAJA MYYNTIJOHTAJA Markus Myllylä Vesa-Heikki Renlund p. 044 2323 785 p. 044 2323 335 [email protected] [email protected]
16 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 17 Export from Finland to China CHINA 2000 1800 1600 1400 1200 Economy 1000
The Chinese economy remained resilient despite the moderation of the GDP growth. 1000cbm 800 According to official sources, the economy grew by 6,5% in 2018, down from 6.9% in 2017. 600 The domestic consumption was increasing but exports and investments contracted. Imports increased driven by the consumption and resulted in a deficit in the current 400 account. Exports of selected products to the USA decreased clearly due to the 25% tariffs. 200 However, products carrying 10% tariff traded briskly. The weakening of the renmimbi 0 against the USD and strong US economy were the drivers for exports. Chinese imports of 2013 2014 2015 2016 2017 2018 2019F American products decreased clearly. Consumer inflation increased during the second half of 2018, based on increasing food and energy prices and ended slightly above 2% in Whitewood Redwood Planed 2018 (1,7% 2017). Core inflation (excluding food and energy) remained stable.
The increasing trade tensions have been followed by capital outflow from China 1 and foreign investors reduced sharply their purchases of bonds and stocks. The US investments in China have remained stabile while the Chinese direct Investment in the US have decreased.
The growth estimates to 2019 and 2020 is around 6,2%. The growth is based on domestic consumption but shadowed by increasing investor uncertainty and slower credit growth. The cooling global economy added by the trade tensions between China and the U.S. will decrease net exports. The government has introduced several measures to 1084 25,1 63,3 compensate the decreasing demand of the external sector. The government’s toolbox kcbm Mcbm Mcbm includes tax incentives for households and firms, additional support for small firms and, (-38 %) encouragement for local government spending. To provide more liquidity, the authorities encourage banks to lend to private and small enerprises. However, according to experience from elsewhere, the impacts will take a lot of time. In the past, China leaned on public investments especially in construction. Now the government tries to improve resource allocation and avoid increasing the financial risk with careful monetary policy FINNISH EXPORT IMPORT CONSUMPTION also to avoid the risk of renmimbi depreciation. Despite the more expansionary fiscal policy in the summer 2018 the government is committed to the budget reform to slow the local government off-budget borrowing. Governemnet spending is being shifted toward health, education and social protection. Better allocation of spending can create jobs, improve public services and provide better support to poor and vulnerable. In the long run, this would increase the disposable income and improve worker productivity and further, the growth potential of the Chinese economy. Sawn softwood
Chinese imports of softwood continued to increase in 2018. However, the imports of 3 sawn softwood in 2018 remained approximately at the same level, in 25 million m , as Export from Finland to China in 2017. Imports of softwood logs increased by 10%. The structure of imports, however, 1397 M changed substantially, while Russian supply again, hit all time records reaching close to 250 16 million m3. On the top of Russia, only Chile, Brazil and Ukraine were able to increase 240 (+0,5 %) deliveries while other major suppliers lost their market shares. China was a challenging 230 market for Finnish shippers in 2018 and exports from Finland decreased from 1,7 million m3 to one million. The main reasons behind the collapse of exports were the 220 competitively priced and increasing Russian supply and increasing shipments by rail, the 210 massive environmental government measures to fight against pollution – eg “Blue Sky 200 Prtection War” closing polluting factories, implications of the trade war between China 190 and the U.S. and customers limited access to credit. On the other hand, the weakness €/cbm (FOB) POPULATION of other markets in 2017 pushed the Finnish mills to allocate more wood to China than 180 planned. However, some positive signs can be seen fro 2019; The government’s actions 170 2018 to “stabilize the leverage” in financing, support for private enterprises amd focus on 160 increasing domestic demand. Also the aim to focus on environmentally friendly products will support the demand of wood products. 150 2013 2014 2015 2016 2017 2018 White price Red price Planed
12.3.2019 Source: EUROSTAT 2
18 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 19 Export to China (incl. Hong Kong) (sawn and planed softwood) 1800
1600 2008 1400 2009 1200 2010
1000 2011 2012 M€/Y 800 2013 600 2014 400 2015 2016 200 2017 0 Russian Canada Finland United Sweden Chile New Brazil Germany Philippines Federation States Zealand
1.2.2019 Source: FAO 1
2,2 6,6%
(1,6 %) (6,9 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
20 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 21 Export from Finland to UK UNITED KINGDOM 1000 900 800 700 600 Economy 500
The outlook of the UK economy depends on the outcome of weather the country leaves 1000cbm 400 the UK with a deal or without a deal – if it leaves at all. Remaining in EU would probably 300 activate delayed investments and improve the consumer confidence sentiment. Leaving without a deal would probably hit UK hardest and cause an economic shock. 200 The government tries to renegotiate the exiting deal wit the EU, but the starting point 100 for the negotiations does not look promising. The economic development during the 0 fourth quarter of 2018 turned out to be a disappointment. The manufacturing sector 2013 2014 2015 2016 2017 2018 2019F was contracting at the end of the year and the PMI index was hardly on positive figures. Consumer sentiment was deteriorating. The labor market remained robust but the retail Whitewood Redwood Planed sector indicated weakness.
The public debt of the UK is high. It is expected that fiscal consolidation remains 12.3.2019 Source: EUROSTAT 1 important to rebuilding buffers and keeping debt on a downward path. Tax revenues pay a major role in financing the high quality of health services and pensions. Decline in the output would reduce revenues and require further adjustments to maintain fiscal sustainability. The employment rate has remained high despite moderate growth of the economy. While spare capacity in the labor market shrinks, wages and other business costs are expected to increase. Thus, tightening monetary policy would be needed to keep the inflation within the 2% target. Different business sectors will be affected differently by the potential Brexit. The baseline projection of the IMF for the UKGDP 907 7,1 10,6 growth for 2019-2020 is 1,5%. The negative impact of the prolongued Brexit outcome has kcbm Mcbm Mcbm been compensated in the forecast by the fiscal stimulus announced in the 2019 budget. (+1,8 %) Construction
The latest Construction PMI (Markit) report gives a picture of stagnating building sector in Britain. The uncertainty caused by the Brexit has deterred buyers from signing off new projects. The activity in December was, according to Markit, much weaker than FINNISH EXPORT IMPORT CONSUMPTION expected. However, the prospects diverge substantially by sectors. The main drivers of the industry are private housing and infrastructure construction. The government’s Help to By program will continue to encourage housebuilding activity all the way to 2023 and the prospects for growth for 2019 and 2020 are 2% and 1%, respectively. Infrastructure construction is expected to hit all time record (growth 9%) in 2019, driven by large projects such as HS2 and Thames Tideway. However, there are risks related to the government’s ability to finance and deliver major infrastructure projects as highlighted by project overruns and delays. The Brexit risk is expected to affect mainly on the commercial sector, specifically in the office sector and the output is expected to shrink by 20% in 2019. The Brexit impact is not only negative – investments in port facilities and trading- and warehouses are expected to rise. The trend of sustainability continues within the UK Export from Finland to UK construction sector – favoring timber frame housing. The unfortunate fire of the Grenfell 260 66,5 M tower has had implications on timber structures, as the ministry of Housing declared a ban on combustable external cladding for new buildings over 59 feet tall – banning 250 (+0,6 %) the usage of timber, too - even though the accident was related to other meterials and 240 structural errors. 230 Sawn Softwood 220 210 The exports of Finnish sawn softwood remained at the same level in 2018 as in 2017. 200
Exports of redwood contracted by 6% while whitewood gained 3%. Exports of planed €/cbm (FOB) POPULATION timber increased by 10%. The average export prices increased clearly. UK timber demand 190 remained quite stable during 2018. In structural timbers the market was especially lively, 180 2018 as some of the traditional European supply was steered to USA. DIY market remained challenging with decreased demand. In Redwood Finland lost out to Sweden due to 170 currency disadvantage. 160 2013 2014 2015 2016 2017 2018 Red price White price Planed
12.3.2019 Source: EUROSTAT 2
22 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 23 Export to UK (sawn and planed softwood) 700
600 2008 500 2009 2010 400 2011 2012 M€/Y 300 2013 2014 200 2015 2016 100 2017
0 Sweden Latvia Finland Germany Ireland Russian Canada Netherlands Estonia Belgium Federation From A to B made simple. 1.2.2019 Source: FAO 1 The power of direct freight.
DB SCHENKERpart load and DB SCHENKERfull load are our two well-engineered direct freight products – 2,5% 1,4% www.dbschenker.com/fi certainly for sawmill industry as well.
(2,7 %) (1,7 %)
INFLATION GDP GROWTH progressive and competitive port 2018 (2017) 2018 (2017) ready to boost your logistics port of kalajoki hidden gem in the bay of bothnia
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24 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 25 Export from Finland to Japan JAPAN 1200
1000
800 Economy 600
Domestic demand was the main driver of the Japanese economy in 2018. The year started 1000cbm with vague growth but continued to strengthen during the second. The output suffered 400 from natural disaster, typhoons, torrential rain and earthquake in the 3rd quarter. Exports tumbled amid softening external demand and the GDP dropped more than 1% in the 200 third quarter. China’s slowdown started to take a toll in Japan, too. Exports contracted by 1,8%. Record high corporate profits and shortage of labour drove business investments. 0 It is expected that the economy will grow until October 2019, when the sales/consumption 2013 2014 2015 2016 2017 2018 2019F tax hike from 8 to 10% will take place. The current expansion of the economy started Whitewood Redwood Planed in 2012 and is the longest post-war up-turn if growth continues as forecasted in 2019. The growth forecast for 2019 is 1%. The government is prepared for different stimulus measures to compensate the tax increase, including incentives for 2019-2020 to by cars 12.3.2019 Source: EUROSTAT 1 and homes. It is expected that the tax hike will have a negative impact during the fourth quarter but the growth will rebound for 2020. It is estimated that an increase of one percent point in the tax will push the GDP growth down by 0,3%. Government spending is expected to increase in 2020 before the Tokyo Olympic games. Bonus payments in 2018 were a positive sign for the outlook of consumption but wage increases are needed to maintain the private consumption on sufficient level. The high level of public debt (225% of GDP) is still a major risk to the fiscal sustainability 922 6,1 14,6 and financial sector, which if realised, could cause negative spillovers to the global kcbm Mcbm Mcbm economy. The primary deficit is at 3% and the target of surplus has been shifted to 2025. To (-7 %) reduce the risks, gradual consumption tax increases can be expected further. Measures to sustain employment in the ageing population society and structural reforms to boost labour productivity – e.g. through investments - are priorities. The unemployment has remained at slightly above 2%. However, job openings in relation to applicants are at the highest level since 1974. FINNISH EXPORT IMPORT CONSUMPTION Construction
Residential land prices stayed stagnant in 2018 with a slight increase in Tokyo area and slight decrease in Osaka. Only small increases in condominium prices are expected by 2020. The largest cities continue to be the main target markets for real estate investors as rural land provincial areas age. High-end construction is expected to forward well in 2019, partly driven by increasing tourism and – the Olympic Games. The uncertainties related to China have also pushed investors to look at the Japanese market. Facilities for the elderly, data centres, shared offices, student housing, affordable housing and resorts remain active prospects for real estate investors. The housing starts 1-11 2018 reached 864 000, a decrease of 2% compared to 2017. Starts of wooden houses scored 492 000, a decrease of 1%. Thus the share of wooden houses increased from 56,3% to 57,0%. The Export from Finland to Japan 126 M starts (1-11 2018) of post and beam houses - the main driver of Finnish sawn softwood 350 and gluelam demand - were at 374 000, practically at the same level as in 2017. 330 (-0,2%) Sawn softwood 310 290 Japanese imports of sawn softwood decreased 6% to 5.86 million m3 in 2018 (6,21 270 million m3 in 2017). The main suppliers were Canada (31%), Finland (16%), Russia (15%) and Sweden (13%). The Finnish exports contracted by 6% to 940 000 m3. The decline in 250 whitewood was 11% while red remained stable. Exports of planed goods contracted by 230 17%. Imports of gluelam decreased 6% from 2017 to 813 000 m3. The main exporters of €/cbm (FOB) POPULATION 210 gluelam were Finland (313 000 m3), Romania (150 000 m3) and Austria ( 115 000 m3). 2018 190 170 150 2013 2014 2015 2016 2017 2018 White price Red price Planed
12.3.2019 Source: EUROSTAT 2
26 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 27 Export to Japan (sawn and planed softwood) 700
600 2008 500 2009 2010 400 2011 2012 M€/Y 300 2013 2014 200 2015 2016 100 2017
0 Canada Russian Finland Sweden United Austria Romania Philippines Chile China Federation States
1.2.2019 Source: FAO 1
1,2% 1,1%
(0,5 %) (1,7 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
28 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 29 Export from Finland to Germany GERMANY 600
500
400 Economy 300
The German economic growth slowed clearly in 2018. However, the country was able to 1000cbm avoid technical recession thanks to the brisk domestic demand during the IVth quarter. 200 The growth was weakest since 2013, reaching 1,5% in 2018. The long-term average growth is 1,2%. The industrial production shrank between October and November, indicating 100 the challenges of the German manufacturers. The industries have faced poor sales due to global economic slowdown and,– as many European economies – the euncertainty 0 related to Brexit and the trade war between U.S. and China. The UK, U.S. and China are 2013 2014 2015 2016 2017 2018 2019F all among the biggest export markets of the German industries. The trade balance turned negative as imports outpaced exports. The strong labour market, however, has Whitewood Redwood Planed supported the domestic market and balanced the country’s manufacturer’s increasing pessimism. Unemployment remained at the lowest level since the unification of East and West Germany. 12.3.2019 Source: EUROSTAT 1
The Purchasing Manager Index averaged substantially lower in October-November than in the third quarter and, confidence was expected to ease further in December to its lowest level since June 2017. However, the business confidence still indicates optimistic atmosphere. Unemployment rate continued to fall at the end of the year and retail sale showed positive figures in October. The domestic consumption is expected to support the economy in 2019 which is expected to grow by 1,6% in 2019 and, 1,5% in 2020. 511 4,7 19,3 Construction kcbm Mcbm Mcbm (+3 %) The construction indicators told a positive message in Germany in 2018. However, the main consumer segments of sawn softwood, single and two family house construction have been declining during the last two years. Multifamily house construction grows steadily especially in larger cities. However, timber frame has a strong position in the low-energy and passive house sectors, which continue to grow. Renovation and wood based solutions for improving insulation of old houses are also driving demand of wood FINNISH EXPORT IMPORT CONSUMPTION products. Non- residential construction is expected to remain below-the average. It is estimated that Germany needs 350 000 new housing units per year by 2021, which is officially supported by the German government. The high growth of population in big cities and increasing immigrant population increase the demand of residential housing. One of the major negative factors in the positive landscape is the rising cost of construction, due to increasing costs of both construction materials and skilled labor. The output of the construction sector grew by 2,7% in 2017. The estimate for 2018 is 1,3%, forecast for 2019 0,1% and, 2020 -0,6%, respectively. Sawn Softwood
The German timber trade performed well in 2018. It is estimated that the turnover of the Export from Finland to Germany trade increased by 5%. The demand of further processed goods – planed timber and 270 83 M components grew clearly faster than on average. The German wood construction sector has enjoyed several years of positive growth. In 2007, the output value of the sector was 250 (+0,2%) 7 billion € and employed 67 000 people. The packaging sector has been doing well but is expected to be affected by decreasing output of manufacturing industries, especially 230 exports. The log supply of German sawmills have been abun-dant and prices have tumbled due to major storm fellings in the south. This has resulted in an over-supply of 210 low quality logs and, low quality sawn wood. Thus, the exports of German softwood has
been increasing and the domestic market has faced, to some extent, shortages in higher €/cbm (FOB) POPULATION qualities. 190 3 2018 In 2018, the Finnish mills exported 510 000 m of sawn and planed wood to Germany, an 170 increase of 3% from 2017. The export price of whitewood increased by 5%. 150 2013 2014 2015 2016 2017 2018 Red price White price Planed
12.3.2019 Source: EUROSTAT 2
30 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 31 Export to Germany (sawn and planed softwood) 250
200 2008 2009 2010 150 2011 2012 M€/Y 100 2013 2014 2015 50 2016 2017
0 Austria Sweden Russian Finland Czech Belgium Belarus Poland Latvia Netherlands Federation Republic
1.2.2019 Lähde: FAO 1
1,8% 1,9%
(1,7 %) (2,5 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
32 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 33 Export from Finland to Algeria ALGERIA 600
500
400 Economy 300
The fiscal position of Algeria remained challenging in 2018, burdened by softening oil 1000cbm price at the end of the year, high unemployment especially among young citizens and, 200 continuing lack of economic reforms. The GDP growth in 2018 , according to estimates, was 2,5%, up from 1,7% in 2017. The price increase of oil compensated the decreasing 100 output during the first half of the year. The economy is expected to grow at 2,5% in 2019 and 2,2% in 2020. The growth is mainly based on on the hydro-carbon sector, while the 0 non-hydrocarbon sector remains relatively weak. Despite the trade deficit decreasing, 2013 2014 2015 2016 2017 2018 2019F foreign reserves continued to fall. The foreign exchange reserves hit a record of USD 200 billion in 2014 and fell below 90 million during the 1st half of 2018, which limits the Whitewood Redwood government’s possibilities to stimulate the growth of the economy. This is reflected in the declining forecast for 2020. However, the government spending is expected to remain high, based on positive expectations for the oil-sector and public investments. Algeria 12.3.2019 Source: EUROSTAT 1 has preferred to use monetary finance to external borrowing, which will maintain the inflationary pressure high. The inflation was at 5,6% in 2018. On the other hand, the share of foreign debt, in relation to GDP is only 2%. The country remains still very vulnerable to the changes within the hydrocarbon sector.
Due to the financial limitations and risks related to the oil-sector income, the government continues to drive sreforms aiming at improving the business climate. However, simultaneously, the government hesitates to introduce any radical measures 503 2,1 2,2 to guarantee internal stability. The high level of unemployed young population urges for kcbm Mcbm Mcbm active measures to strengthen the non-hydrocarbon sector. (+84 %)
The next presidential election will take place on the 18th of April, 2019. Speculation around Mr President Abdelaziz Bouteflika’s, 81, potential candidacy to run for the fifth consecutive term started immediately after the announcement of the elections. Recently, Mr Bouteflica informed that he, indeed will run for president. His supporters FINNISH EXPORT IMPORT CONSUMPTION deem it necessary for him to preserve stability in the times of uncertainty despite his fragile condition after a stroke in 2013. President Bouteflika has ruled Algeria since 1999. The Algerian Ministry of Interior has received 32 applications for candidates willing to run in the presidential elections. Construction
The demand within the construction sector remains high for low-income units, which the government has addressed. However, supply has remained constrained due to shortage of land for new development. As a result, the private sector investors and construction companies have had to give space for government-built social housing in greenfield areas. The National Agency for Housing Improvement and Development has published Export from Finland to Algeria to start a program to build 90 000 housing units under a rental-purchase program. The 42 M program is expected to start during the first quarter of 2019. 230 Sawn Softwood 220 (+1,9 %) 210 In 2018, Algeria gained back its position as one of the main export redwood markets for thr Finns. In 2017, the Finnish sawn softwood exports to Algeria suffered substantially 200 because of the trade barriers, set by the Algerian government, in. Exports collapsed from 2016 level of almost 0,5 million m3 down to less than 0,3 million m3. In 2018, exports 190 recovered above the 2013-2016 average level and reached 0,5 million m3. The average €/cbm(FOB) 180 POPULATION export price increased more than 10%. 170 At the beginning of 2019, the sawn softwood stocks are relatively high and reselling 2018 is slow due to customers’ financing challenges, which reflects the government’s fiscal 160 state. It is expected, thanks to the elections, that promises of new investment projects and finalizing of old projects will start to emerge. However, the new president will start 150 2013 2014 2015 2016 2017 2018 his term in May, just before the Ramadan. Thus the sawn timber market outlook is dull until the 3rd or 4th quarter. Red price
12.3.2019 Source: EUROSTAT 2
34 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 35 Export to Algeria (sawn and planed softwood) HACKLIN PORT SERVICE 160 Stevedoring ● Warehousing ● Containers ● Ship agency 140 2008 120 2009
100 2010 2011 80 2012 M€/Y 2013 60 2014 40 2015 2016 20 2017
0 Sweden Finland Slovenia Germany Belgium Croatia France Portugal United Latvia States
1.2.2019 Source: FAO 1
www.hacklin.fi
6,5% 2,5% Pori • Hamina • Kotka • Helsinki • Moscow • St.Petersburg • Shanghai (5,6 %) (1,4 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
36 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 37 Export from Finland to France FRANCE 600
500
400 Economy 300
The growth of the French economy slowed clearly form 2017 (2,3%) to 1,5% in 2018, 1000cbm which was slightly below the government’s expectations. The growth slowed slightly 200 in household consump-tion as well as in government spending while growth in fixed investments decreased by more than 1,5 percent units. Growth in imports decreased 100 much faster than growth in exports. The GDP growth scored 0,9% during the last quarter of 2018, compared to the last quarter of 2017. The growth exceeded expectations but, 0 however, was the slowest year-on-year quarterly expansion since the 3rd quarter 2016. 2013 2014 2015 2016 2017 2018 2019F The expectations have been deteriorating due to the protests of the gilets jaunes, yellow vests, who accused president Macron of forgetting ordinary French citizens and Whitewood Redwood favouring the wealthier people. However, the brisk export demand compensated the stalling domestic demand. The better-than-expected development of the economy – despite the globally eroding economic atmosphere and challenges in export markets 12.3.2019 Source: EUROSTAT 1 and the domestic protests – was good news for President Macron. Mr Macron promised to ease the pressure by injecting 10 billion euros – increasing minimum wage, cutting taxes etc - to the economy in 2019 to please the protesters and managed to calm the protesters. However, the promise will increase the budget deficit in 2019 to higher than 3% which is the not-to-be-crossed EU-set maximum level. This may result in increasing interest rates which, in turn, could hamper the growth of investmensts. The inflation hit the lowest monthly level in December, (1,2%) driven by lower energy prices. 478 2,4 8,2 The government’ forecast for the GDP growth in 2019 is set at 1,7% - supported by kcbm Mcbm Mcbm president Macrons 10 billion boost to the domestic demand. The consumer confidence (-5,3 %) has been weakening in 2018, but improved slightly in Jan 2019, which can be seen as a sign of the impacts of Mr Macron’s actions. However, many economists are more pessimistic and see a lot of uncertainties in the future as external-sector risks ar mainly on the down-side. FINNISH EXPORT IMPORT CONSUMPTION Construction
The recovering trend in the construction market continued in 2018. In 2019, it is expected that the housing market will stabilise but the civil engineering market will continue to grow. One of the drivers behind the positive trend is the public “Grand Paris” project, which is expected to thrive based on the planned 26 billion € investment by 2030. The construction sector is also driven by the principles of resource efficiency and sustainability as well as housing energy efficiency renovation thus construction output should look positive during the coming years. However, the uncertainties of the market are reflected by the weakening constructor’s confidence indicator.
Sawn Softwood Export from Finland to France 65 M The deman of sawn softwood was brisk at the beginning of the year. However, the 220 atmosphere in the softwood market started to erode during the summer but has 215 remained satisfactory. Sawn softwood prices continued to increase during the 1st half 210 (+0,5 %) and stabilised durning the 2nd. Imports of sawn softwood increased strongly (by more than 1/5) during the first half of 2018 with Germany in the lead. However, it is estimated 205 that domestic mill continued to gain market share in 2018. It is expected, that the French 200 10 million € promotion initiative “Pouir moi, c’est le bois” –“For me – it is wood” (by 195 ADICBOIS) will have a positive impact on the demand. The domestic output of sawn 3 3 190
softwood is estimated to have reached 6,9 million m and imports 2,2 million m in 2018. €/cbm (FOB) POPULATION 185 According to preliminary estimate, Finnish mills exported 402 m3 of sawn whitewood 2018 to France (-4%). The price development was positive and whitewood prices gained 5%. 180 175 170 2013 2014 2015 2016 2017 2018 Red price White price
12.3.2019 Source: EUROSTAT 2
38 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 39 Export to France (sawn and planed softwood) Specialist in logistics 250
200 2008 for forest industry 2009 2010 150 2011 Services in port of HaminaKotka 2012 M€/Y - Break Bulk loadings 100 2013 2014 - Warehousing 2015 - Forwarding 50 2016 2017 - Container stuffing
0 Germany Belgium Finland Sweden Russian Austria Latvia Poland Lithuania Switzerland Inland logistics Federation - Tailored train services
1.2.2019 Lähde: FAO 1 - Nurmes terminal services
1,9% 1,6% Contact: Sanna Selenius +358 400 490 610 / [email protected]
(1,2 %) (2,3 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
40 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 41 Export from Finland to Israel ISRAEL 500 450 400 350 300 Economy 250
The Israeli economy continued to grow wll in 2018 an GDP growth scored 3,6% (3,3% in 1000cbm 200 2017). Also projection for 2019 is positive; 3,5%. The projection for 2020 is 3,3%. Consumer 150 prices increased by only 0,2%. The positive development is based on domestic consumption. The financial conditions remained favorable and the consumption is 100 expected to benefit from lower taxes also in 2019. Gas- and oil related projects should 50 maintain the positive drive in fixed investments. Fixed investments are expected to 0 increase almost 5%. Expansionary fiscal policy and low interest rates will support 2013 2014 2015 2016 2017 2018 2019F dometic demand, as well. in 2019. The fiscal deficit will remain at its ceiling, 2,9%. Thus, sooner or later the government will need to start to reduce the government debt and Whitewood Redwood increase the low interest rates.
The PMI (Ourchasing Managers’ Index) scored 57,0 in December an increase of 3,3 12.3.2019 Source: EUROSTAT 1 points from November, the highest level in five months, reflecting strong outlook fro the manufacturing sector. The index figures above 50,0 indicate growth and lower indicate contraction. The positive numbers followed the improvements in output, domestic demand and employment as well as decreasing stocks. The negative news came from the external sector as exports decreased, despite the slight imporovement in outlook, which is related to the global economic cooling. The expected interest rate increases will help to coll the private consumption and 469 0,3 0,3 investment growth. Domestic demand is expected to gradually decline. The developmet kcbm Mcbm Mcbm of the new gas fields are expected to reduce energy imports and improve the negative (-1,1 %) trade balance, which has been driven by consumption-led imports. It can be expected that the gas fields may also boost the economy – but in a more sustainable way than by using expansive monetary policy.
The downside risks are related to high fiscal deficit, regional tensions and geopolitics and, negative growth outlook of the global economy. FINNISH EXPORT IMPORT CONSUMPTION Construction
In July 2016,Israel’s finance minister Moshe Kahlon declared thet the real estate market creates a major risk to the economy because of overheating. However, no bubble has burst yet, mut the real estate market is still considered as a main threat for the long-term sustainability of the economy. However, the real estate price development has stalled – thanks to the mass production of houses in 2018. Eralier, the average production has been around 30 000 units per year. The Israeli market has also been strongly driven by real estate investors – one third of the housing market was dealt by investors in 2010. The government has pushed investors out of the market by implementing a tax on people who own more than three houses and incentives to people who shift their capital from Export from Finland to Israel 9 M housing to stocks. Benefits are also offered to people buying their first home. 200 Sawn Softwood 190 (+1,9%) Finnish exports to Israel contracted by 10% to (estimate) 420 000 m3. 47% was whitewood 180 and 53% was redwood. Whitewood volume decreased on average by 2% and average 170 price increased by 10%. In redwood, the export volume decreased by 8% and prices increased by 13%. The logistics connections to Israel caused major difficulties for many 160 shippers. The expectations of export volumes to Israel are positive, thanks to the positive POPULATION outlook of the economy. €/cbm (FOB) 150 140
2018 130
120 2013 2014 2015 2016 2017 2018 White price Red price
12.3.2019 Source: EUROSTAT 2
42 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 43 Export to Israel (sawn and planed softwood) 90
80 2008 70 2009 60 2010 50 2011 2012 M€/Y 40 2013 30 2014 2015 20 2016 10 2017
0 Finland Sweden Russian Latvia Ukraine Romania Germany Austria United Lithuania Federation States
7.2.2019 Source: FAO 1
0,9% 3,6%
(0,2 %) (3,3 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
44 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 45 Export from Finland to Estonia ESTONIA 400 350
300
250 Economy 200
The economy of Estonia has gathered steam after several years of subdued growth. 1000cbm 150 Real GDP grew by 4.9 percent in 2017 and 3,2 in 2018, which was below earlier forecasts. However, the industrial output accelerated to 17 month high in November 2018, driven 100 by energy and manufacturing sectors. Retail sales was strong, as well. The external sector was supported by strong demand from non-EU area. The growth is expected to 50 slow down but to remain relatively strong, at 2,9%, in relation to EU average. However, 0 the indicators of the whole 4th quarter indicated weakening growth and deteriorating 2013 2014 2015 2016 2017 2018 2019F sentiment among consumers. The tightening labor market is setting a negative tone on the development of international competitiveness. Whitewood Redwood Planed
Growth remains broad based and is supported by strong private and public investment— the latter partly reflecting increased absorption of EU structural funds—and favorable 12.3.2019 Source: EUROSTAT 1 external conditions. However, output runs above its sustainable level, and supply- side constraints have become more binding. Private consumption remained relatively weak, reflecting to some extent the impact of rising inflation on real wages. Inflation declined to 3.2 percent in the first quarter of 2018, but was well above the EU average throughout 2017 and increased during the second half of the year, mostly driven by higher food and oil prices, one-off excise tax hikes, services, and wage increases. The external position remained substantially stronger than implied by medium-term fundamentals and desirable policies. The outlook is positive. The growth has been 380 1,2 1,8 supported by the continuing recovery of main trading partners, domestic investment, kcbm Mcbm Mcbm accommodative financial conditions, and continued strong market sentiment. Wage (+0,8 %) growth declined slightly in 2018, while labor market structural reforms are expected to alleviate constraints on labor supply, but also to contribute to higher unemployment in 2018. Inflation was expected to decelerate to 3 percent at the end of 2018, inline with expected stability in food prices and a slowdown in energy price rises. However, potential growth over the medium term is forecast at about 3 percent, constrained by FINNISH EXPORT IMPORT CONSUMPTION labor supply and slow productivity growth. Construction
Construction output increased briskly 2018. During the first quarter the growth peaked close to 30% and in the second and third quarters 22 and 18%, respectively. The large construction project of Rail Baltica will boost the investments in the construction sector in 2019 and 2020. The wooden house cluster has been growing systematically since the financial crisis. A decision of focusing on exports was made and an ambitious vision of becoming the biggest exporter of wooden houses in Europe was launched. The Estonian Wooden House Cluster has been the backbone of the positive development, supported by the state, and the industry is heading toward its vision. However, the increasing Export from Finland to Estonia labor costs will effect the international competitiveness of the sector. Estonian Wooden 220 1,3 M Houses Cluster is a network that connects local strong wooden houses producers, supply chain members, science- and educational institutions. 210 (0 %) Sawn softwood 200 Estonia has become one of the key export market for Finland. The Estonian timber frame prefab industry has developed positively, as well as other woodworking sectors. Thus 190 Estonia has become a “value adding hub” for many Finnish shippers. A good example
of the Estonian skills and competitiveness is the construction project of nine wooden €/cbm (FOB) POPULATION blocks of flats in Riihimäki, Finland, which will be implemented by an Estonian company, 180 Astel Modular. 2018 170 The Finnish exports sawn softwood to Estonia increased of whitewood increased by more than 10% while exports of redwood contarcted by 4%. The whitewood prices 160 advanced by 8% and redwood prices by 9%. 2013 2014 2015 2016 2017 2018 Red price White price
12.3.2019 Source: EUROSTAT 2
46 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 47 Export to Estonia (sawn and planed softwood) 120
100 2008 2009 80 2010 ABOUT DHL 2011 60 2012 M€/Y MEET THE LEADING GLOBAL 2013 2014 40 LOGISTICS COMPANY 2015 DHL Global Forwarding is the air and ocean specialist of Deutsche Post DHL Group. 20 2016 2017 Our air and ocean freight forwarding services include standardized transport as
0 well as multimodal and sector-specific solutions, together with individualized Russian Finland Latvia Belarus Germany Lithuania Sweden Slovenia New Poland Federation Zealand industrial projects. With our broad product range we cover different equipment types and consolidation services to ensure your cargo reaches the right place, at the right time in a cost-efficient way. Our global network allows us to offer 1.2.2019 Source: FAO 1 efficient routing and multimodal transport. Our on-the-ground presence in over 190 countries, over 60 national gateways and 9 multinational gateways mean we are where our customers and their cargo need us.
3,0% 3,7%
(3,7 %) (4,9 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
48 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 49 Export from Finland to Holland THE NETHERLANDS 300
250
200 Economy 150
The growth, according to forecast, will declined from 2.6 per cent in 2018 to 1.9 per 1000cbm cent in 2019. In 2020, the economy is expected to move closer to its long-term growth 100 trend and GDP growth to decline to 1.7 per cent. The growth in household consumption remains healthy, but is softening because low unemployment is only moderately 50 reflected in higher wage growth. The tightness in the labor market is becoming more acute, leading among other things to a decline in housing investment. Economic activity 0 is also slowing in neighboring countries. Together with continuing growth in imports, this 2013 2014 2015 2016 2017 2018F 2019F cuts the contribution of trade to GDP. With these figures, the Netherlands will still be above-trend economic growth and outperform most of the rest in the Eurozone. Whitewood Redwood Planed
Household consumption will continue to be an important driver for the Dutch economy in the coming years. Following higher taxes and unemployment after the crisis, the 12.3.2019 Source: EUROSTAT 1 coming years should be when consumers are happy to spend: unemployment is close to an all-time low and the government has planned a reduction in taxation for most households. Consumer confidence is therefore relatively high, but nevertheless seems to have peaked. Lower income tax will help households, but this will be offset to some extent by the increase in the of VAT. Low unemployment is another factor that bolsters confidence, but it also means that it is increasingly difficult to find new personnel. Thus consumption is expected to provide less of a contribution to growth in the coming years 268 2,8 2,4 Economic growth is expected to slow in other countries in the coming years, and the kcbm Mcbm Mcbm Netherlands will feel the effects of this due to its open economy. This means the growth (-4,3 %) of exports will not be able to keep pace with the growth of imports. As a result, net trade will have a slight slowing effect on economic growth in the years to come. Besides the expectations of only mediocre exports, international uncertainty is also a major factor undermining confidence. With the trade tensions between China and the US, the political unrest in Italy and the Brexit saga there are plenty of international factors to throw the FINNISH EXPORT IMPORT CONSUMPTION Dutch growth locomotive off course. (Source: economics.rabobank) Construction
The outlook of investment in housing is optimistic, partly due to the shortage of labour. Investment in new houses and renovation of existing properties is expected to stagnate in 2019 year and decline slightly in 2020. According to estimates, home sales declined to 225,000 in 2018 and 210,000 in 2019. There is also a shortage of construction workers: the number of building permits issued for new homes remained stuck around 70,000 – well below the 87,000 homes that the government has set as its annual target. Only a slight increase in the number of new homes is expected. Together with falling home sales, this low growth in new homes is hindering an increase in the volume of housing Export from Finland to Holland investment. The continuing mismatch between high demand and limited supply in the 210 17 M Dutch housing market implies that house prices will continue to rise. (Source: economics. rabobank.com) 200 (+0,3 %) Sawn softwood 190 Year 2018 started well with positive price trend because customers expected a shortage in sawn and planed timber which trickered early purchases. However sawmills were late with deliveries and consequently customers had to make last minute extra purchases. 180 During third quarter mills caught up with deliveries and goods arrived on top of extra €/cbm (FOB) POPULATION volumes resulting in higher stocks. Together with higher production levels and storm 170 timber from middle Europe this resulted in price corrections for Q4 & Q1. Orderfiles and 2018 demand is still good and the economy performing well. Still all indicators positive so 160 the expectation for 2019 is in general good and market expect that the positive trend in demand and consumption. Finnish exports of whitewood declined by 8% from 2017 150 and prices increased by 8% while exports of redwood remained on stable. Total export 2013 2014 2015 2016 2017 2018F volume in 2018 was, according to estimates, 270 000 m3, including 10 000 m3 of planed Red price White price goods.
12.3.2019 Source: EUROSTAT 2
50 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 51 Export to Netherlands (sawn and planed softwood) 250
200 2008 2009 2010 150 2011 2012 M€/Y 100 2013 2014 2015 50 2016 2017
0 Sweden Germany Russian Finland Belgium Latvia New France Estonia Canada Federation Zealand
1.2.2019 Source: FAO 1
1,4% 2,8%
(1,3 %) (2,9 %)
INFLATION GDP GROWTH 2018 (2017) 2018 (2017)
52 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 53 MORROCCO Export to Morrocco (sawn and planed softwood) 100
90
80 2008 2009 70 Export from Finland to Morrocco 2010 60 300 2011 50 2012 M€/Y 2013 250 40 2014 30 200 2015 20 2016 150 2017 10 1000cbm 0 100 Sweden Finland Portugal Spain Germany Croatia Brazil France Slovenia Belgium
50 1.2.2019 Source: FAO 1 0 2013 2014 2015 2016 2017 2018 2019F Whitewood Redwood
12.3.2019 Source: EUROSTAT 1 2,4% 3,2% 1,1 Mcbm (0,8 %) (4,1 %)
35 M 225 1,1 kcbm Mcbm INFLATION GDP GROWTH CONSUMPTION (+1 %) (-12 %) 2018 (2017) 2018 (2017)
POPULATION 2018 FINNISH EXPORT IMPORT
Export from Finland to Morrocco 190 185 180 175 170 165 160 €/cbm (FOB) 155 150 145 140 2013 2014 2015 2016 2017 2018 Red price
12.3.2019 Source: EUROSTAT 2
54 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 55 SAUDI-ARABIA Export to Saudi Arabia (sawn and planed softwood) 90
80 2008 70 2009 Export from Finland to Saudi-Arabia 60 2010 2011 500 50 2012
450 M€/Y 40 2013 400 2014 30 350 2015 300 20 2016 2017 250 10
1000cbm 200 0 150 Finland Sweden Brazil Chile Romania Germany Canada Slovenia Lithuania Croatia 100
50 1.2.2019 Source: FAO 1 0 2013 2014 2015 2016 2017 2018 2019F Whitewood Redwood
12.3.2019 Source: EUROSTAT 1 2,6% 2,2% 1,5 Mcbm (-0,9 %) (-0,9 %)
33 M 224 1,5 kcbm Mcbm INFLATION GDP GROWTH CONSUMPTION (+2 %) (- 40 %) 2018 (2017) 2018 (2017)
POPULATION 2018 FINNISH EXPORT IMPORT
Export from Finland to Saudi-Arabia 200 190 180 170 160 150 140 €/cbm(FOB) 130 120 110 100 2013 2014 2015 2016 2017 2018 White price Red price
12.3.2019 Source: EUROSTAT 2
56 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 57 FINNISH SAWMILLS MEMBER COMPANIES 2018
1 Akonkosken Saha Oy, Töysä 2 FM Timber Oy, Pihtipudas 3 Hasa Yhtymä, Eskola 4 Hasa Yhtymä, Haapajärvi 5 Hasa Yhtymä, Haapavesi 6 Herralan Saha Oy, Hollola 7 Iisveden Metsä Oy, Iisvesi 8 Isojoen Saha Oy, Isojoki 9 JET-Puu Oy, Perho 10 JPJ-Wood Oy, Juupajoki 11 Junnikkala Oy, Oulainen 12 Junnikkala Oy, Kalajoki 16 akonkoskensaha.fi fmtimber.fi hasa.fi herralansaha.fi iisveden fi 13 Kampin Saha Ky, Lavia Tuotantomäärä 1000 m3 14 Keitele Group, Alajärvi Production volume 15 Keitele Group, Keitele 32 KAMPIN SAHA 16 Keitele Group, Kemijärvi 0 – 49 38 17 Kieppi Sawmill Oy, Mäntyharju 33 18 Kinnaskoski Oy, Vilppula 50 – 99 isojoensaha.fi jet-puu.fi jpj-wood.fi junnikkala.com 19 Koskisen Oy, Järvelä kampinsaha.fi 20 Koskisen Oy, Kissakoski 34 21 Kotkamills Wood Oy, Kotka 100 – 199 22 Kouvolan Saha Oy, Kouvola 23 Kuhmo Oy, Kuhmo 200 – 299 24 Lapuan Saha Oy, Lapua 25 Luopajärven Saha Oy, Jalasjärvi 26 Luvian Saha Oy, Luvia keitelegroup.fi kieppisawmill.com kinnaskoski.fi koskisen.com kotkamills.com 300+ 27 Misawa Homes of Finland Oy, Mikkeli 23 28 Multian Saha Oy, Multia 12 11 31 29 Mäntsälän Saha Oy, Mäntsälä 5 30 Ab Påras Oy, Kruunupyy 30 3 31 Pölkky, KajaaniWood Oy, Kajaani 4 32 Pölkky, KitkaWood Oy, Kuusamo
kouvolansaha.fi kuhmo.eu lapuansaha.fi luopajarvensaha.fi luviansaha.fi 33 Pölkky Oy, Kuusamo 2 34 Pölkky, Ulea Oy, Taivalkoski 15 35 Sahakuutio Oy, Kerimäki 9 24 14 36 Södra Wood Ab, Hamina 37 Tiaisen Saha Oy, Savitaipale 38 Veljekset Vaara Oy, Tervola 25 43 1 39 , Otava 8 7 Versowood Oy 28 misawa-homes.com multian.fi paras.fi polkky.fi sahakuutio.fi 40 Versowood Oy, Vierumäki 42 41 Versowood Oy, Riihimäki 18 42 Versowood Oy, Hankasalmi 35 43 Viitala Forest Oy, Peräseinäjoki VIITALA FOREST 13 10 39 27 44 Westas Pihlava Oy, Pori 44 20 45 Westas Raunio Oy, Koski TL 17 46 Ålands Skogsindustrier Ab, Godby 26 sodra.com/en/wood tiaisensaha.fi veljeksetvaara.fi versowood.fi 47 Ålands Skogsindustrier Ab, Önningeby 40 37 6 22 19 45 41 29 21 36 47 westas.fi skogindustrier.ax 46
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58 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 59 SPONSORS EXHIBITORS 1. DB Schenker 2. DHL 3. Euroports 9. 4. Kalajoen Satama 5. MSC Finland Oy 8. 6. Nurminen Logistics 7. Raahen Satama 7. 8. RP Timber Oy 6. 9. Scan Global Logistics 10. 10. Trans.eu Coffee 5.
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60 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 61 Notes Notes
62 WOOD FROM FINLAND CONFERENCE 2019 WOOD FROM FINLAND CONFERENCE 2019 63 www.finnishsawmills.com [email protected] päivitetty 13.3.2019