Robert Allinson, UK Sales Manager, UPM Plywood, gave delegates at the TDUK Global Market Conference an overview of the Finnish softwood plywood sector, outlining its importance to the UK market, and the recent changes seen since the pandemic.
He also highlighted raw material supply as one of the biggest challenges currently facing the industry, along with rising costs and high log prices in particular.
UPM Plywood manufactures high-quality WISA plywood and veneer products for a number of industries, including construction, vehicle flooring, shipbuilding and other industrial applications. It owns seven mills across Estonia and Finland, owns 900,000 hectares of forests in total, 600,000 of this within Finland and also manages 500,000 more.
Forestry is a significant industry in Finland, which has an overall forest cover of 75% – or 22.8 million hectares. This compares to 39% forest cover across the EU, and just 13% in the UK.
Robert said: “Finland is reasonably unique in that 60% [of its forest cover] is in private ownership. There are about 620,000 individual forest owners, which for a population of about 5.6 million is about one in nine – so obviously Finland is culturally very invested in forestry. Around 15.9% of all exported goods from Finland are from the forest product sector.”
The UK imported around 1.16 million m3 of plywood in 2023. Around 321,000m3 of this was softwood plywood, 12% of which came from Finland. Hardwood plywood imports were 839,000m3, of which Finland contributed 2.7%.
Robert noted that Finnish plywood imports to the UK have fallen since their high in 2021, but that this largely followed the COVID disruption seen across large parts of the industry.
“Interestingly, the value of the softwood imports into the UK from Finland is about £16 million, and hardwood is about £26 million, reflecting the high value of some of those birch products,” Robert said.
This year, Robert continued, for Finnish exports a lot of markets have been very strong.
“The birch side of things is up slightly in Europe, though down across some other markets. Softwoods are mostly up in European markets, but down for the UK, where softwood plywood from Finland generally has seen a decline reflective of the conditions here.”
Facing the challenges
Like a number of other speakers at the Global Market Conference, Robert highlighted raw materials as a big challenge for the industry.
“Raw material supply is a big issue,” he said. “We hope that prices will stabilise this year but the industry also needs to look at how to best use the resources we have to allow everybody in the supply chain to get a return, because otherwise we won’t get the investment we need.”
While Robert noted that economic slumps aren’t new to the forestry industry, other issues were also playing their part in making the sector a challenging one.
“Import sanctions on Russia, although vital, have caused some issues in coal markets, and log prices have been particularly high, affecting availability. There’s hope that Spruce prices will stabilise this year, with only small increases into next year. But raw material availability is definitely a challenge for all manufacturers.
“The aftermath of the pandemic, as we know, has also caused some issues in the markets, particularly around the ability of companies to get gain credit for trading purposes, and we’ve certainly seen construction, distribution and manufacturing businesses failing as a result.”
Despite this, Robert does believe that an upturn is on its way. He said: “I don’t think the upturn is going to catch anyone out, unfortunately, but there’s certainly a backlog of construction across the UK and most of our core markets in Europe, and obviously in the US. And there’s some positive projections and I think the wood panel sector is likely to improve through next year with levels being predicted to return to pre-COVID levels by 2027.”
Embracing the environment
The growing move towards renewables and low-carbon materials also offers some positive hopes for the timber sector, Robert said, with a strong focus on wood products for construction that are certified, environmentally sustainable and dependable.
“Legislative changes across Europe are certainly enforcing embodied carbon limits in construction and this will create further opportunities for wood. Denmark, for example, has already written limits on embodied carbon into their building codes, and I think Sweden, the UK and France are not far behind, which is good news.”
Robert then turned to the question of whether, once the market does improve, we will have enough wood to meet the demand. “Supply is as always going to be key, and strong reciprocal relationships with customers will hopefully prove to be fruitful once the upturn comes and supply gets tight.”
He explained that in Finland, only 75% of the annual growth of the forest is harvested, so it has a good model in terms of sustainability of supply. But, he noted that log production is declining in Europe, and log prices are kind to rise.
“The expectation is that wood products will play an increasing role in construction due to their sustainability credentials, but with no forecasted increase in log availability as an industry, we’re just going to need to find ways to use what we have to our best advantage and more efficiently. So perhaps the question should be how we use the wood we have to the best effect. The reality is that resources are limited, and we need to ensure there’s room to build profitability throughout the supply chain so that everybody is able to get a return and be profitable.”
