Swedish sawmills plan to invest

Swedish sawmills plan to invest

The Swedish sawmills have had a golden 2021 with profit margins way above what they are used to. As the timber prices didn’t follow the lumber prices, the sawmills now have cash. Cash that they will mainly use to increase their productivity, and not so much in value adding products such as engineered wood.

Swedish sawmills plan to invest

We have seen it before, the sawmills have some good months, gives full gas, fill the market with lumber, and the lumber prices go down when the market is full. This time the golden age lasted longer than normal, the lumber prices stayed up and the Swedish sawmill industry managed to keep the timber prices down. So, now they can invest!

And they will do so. But it seems that most of the investments will be to increase the productivity in the sawmills, to get even more lumber out on the market. Torbjörn at the sister-site iSkogen.se took a closer look at the situation. Here is a summary of what he found out:

Increased need for timber

The planned investments are huge. E.g., Setra and Moelven are planning to build new saw lines in existing sawmills. Bergqvist Siljan will increase the production, and Derome in south Sweden are planning to build a completely new sawmill. The list of investing Swedish sawmill companies is much longer and includes also SCA, Vida, Holmen, and some others.

Swedish sawmills plan to invest
Moelven sawmill in Edane, Sweden, will invest 450 million SEK in a new saw line.
Photo: Moelven.com

When we summarize the production increase that the companies themselves have mentioned, the additional need for timber will be approx. 3 million cubic meters (solid wood excl. bark.). That is an increase by 8 percent compared to the latest official figures that are from 2020.

The question is if this will affect the timber prices. As mentioned above, and in a previous article, the Swedish forest industry has managed to hold the timber prices down. Considering that some papermills are closing, especially newsprint mills, one can imagine that there will be more thin timber available for the sawmills. Timber, that before went to the papermills. Maybe that will be enough to cover the increased need for timber?

Many of the announced investments are sawmills for small sawlogs. In other words, it seems that some sawmill companies thought of this.

There might be more

The fact and the figures in this article are based on information that the sawmilling companies share on their homepages, press releases, etc. There might be more coming that is not yet official.

iSkogen.se spoke with representatives of Swedish and Finnish suppliers of woodworking and sawmill machinery, who confirm that there are large investments going on, not only in the Nordic Countries but in the whole World. It´s not only the usual maintenance and upgrading of mills, but large investments in new projects. This has led to long delivery times for sawmilling machinery, up to two years. Something that is unusual according to the suppliers.

Swedish sawmills plan to invest
Spruce sawlogs will be in high demand in the future.
Photo: Skogsforum.se

(Editor Jonsson’s) Conclusion

If we look at the new Taxonomy that is coming along in the EU, and the EU Forest Strategy for 2030, this may be good news as they prefer wood products over paper products. If we also can add higher timber prices to the forest owners, as sawlogs pay more than pulpwood, this could end up in a historical win-win situation – both financially and environmentally.

On the other hand, I think it´s a pity that not more of the investments in Sweden are used to develop more value-added wood products now when the chance is given. We can´t keep increasing the lumber volumes forever. More demands from politicians, environmentalists, and the public will, whether we like or not, probably limit the utilization of the forests in the future. Considering that, it seems strange to just go for volumes.

As for timber prices – the Swedish industry has successfully managed to keep them down before. We can be sure they will stay on that track for as long as they can.

We simply must wait and see what happens.

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