Page 13 - FDMAsia May/Jun 2026

MARKET BEATS 11
www.fdmasia.com | FDM ASIA MAY/JUN 2026

Sawmills squeezed by new cost crisis in Finland could gradually recover if interest rates continue to ease.
Finland’s sawmill industry is heading into another period of However, any recovery is expected to be slow and uncertain.
economic uncertainty. After several years of weak construction Costs rising faster than prices. For many sawmills, the core
activity and falling demand, the sector is now facing fresh problem is that operating costs continue to rise faster than
concerns that smaller and mid-sized sawmills could be pushed selling prices.
towards bankruptcy, according to Talouselämä. In addition to higher transport expenses, electricity, fuel and

The latest pressure comes from sharply rising oil prices financing costs have increased sharply over the past few years.
and transport costs following escalating tensions in the Middle At the same time, many markets require further investment
East. The geopolitical turmoil has rapidly affected energy in energy efficiency, digitalisation and climate-related measures,
markets and global logistics chains, directly hitting Finland’s placing additional strain on company finances.
export-dependent timber industry. Larger forestry groups still maintain relatively strong
Finland is one of Europe’s largest exporters of sawn timber, balance sheets, but smaller sawmills may struggle to survive
with much of its production shipped to construction markets a prolonged period of weak profitability.
across Europe, North Africa and Asia. As freight and energy A Finnish review of the country’s 20 largest sawmill
costs rise, profitability deteriorates quickly in an industry where companies also showed that new names have entered the

margins are already thin. rankings while some established operators have lost ground
At the same time, the European construction market during the crisis years.
remains weak after several years of high interest rates and The industry remains crucial for employment in many smaller
declining residential development. Finnish communities where sawmills and wood processing
The downturn in Sweden, Germany and parts of Central are central parts of the local economy.
Europe has hit Finnish timber exports particularly hard.
Many sawmills have already been forced to reduce Potential bankruptcies or production cuts could

production or implement temporary shutdowns in recent years. therefore have significant regional consequences.
Concerns are now growing that additional cost increases In addition, construction slowdown weighs on timber market.
could become decisive for many smaller operators. During the pandemic, timber prices surged to record levels
Industry representatives say transport and energy expenses as housing construction and renovation activity accelerated
have become an increasingly heavy burden following the latest sharply. But the market reversed quickly when inflation,
oil market disruptions. rising interest rates and economic uncertainty slowed the
Timber exports rely heavily on shipping and long-distance construction sector.
logistics, making the sector highly sensitive to changes in fuel At the same time, timber products have been promoted
prices and global transport conditions. as part of the transition away from more carbon-intensive

At the same time, international competition has intensified. building materials such as steel and concrete.
Producers in Canada and Central Europe are also searching Even so, the weak European construction market has
for new export markets as construction activity weakens at demonstrated how vulnerable the timber industry remains to
home, further increasing pressure on sawn timber prices. economic cycles and high borrowing costs.
Despite the weak market conditions, there are some signs Many sawmills are now hoping for a cautious recovery
that the downturn may be stabilising. Several analysts point to over the coming years. But the latest geopolitical tensions and
declining inventory levels in certain markets and believe demand rising energy costs risk delaying any improvement even further.