timber news 3/2009 - SCA Forest Products AB

Order SCA Timber’sProduct catalogueThe SCA Timber Product cataloguegives a comprehensive presentation ofSCA Timber’s range of products, fromsawn standard products to processed solidwood products in both the Living-with-Wood and Building-with-Wood areas ofuse.The Product catalogue is available inEnglish and can be ordered through yourlocal SCA representative or direct viaingrid.lofqvist@sca.com. The catalogueis also available as a downloadable PDFfile from www.scatimber.com.Cutbacks in European production result ina dearth of sawn solid wood productsAfter a turbulent winter characterisedby the effects of the global financialcrisis, the market underwent radicalchange during Q2. Until the middleof March, the inflow of orders wasquite sluggish. Since then, however,demand for sawmill products hasgradually increased to a level wherewe no longer have the capacity to offera full range.During the past year, profitability inthe industry has been very weak,which has led to extensive productioncutbacks, particularly productionoriginating in the Eurozone.Between January and May, Europeanproduction was at 70 percent of the peakyear of 2007. This fall-off is so extensivethat prices are now rising rapidly, theresult of which is that production levelsare gradually starting to increase again.The financial crisis is having a significantnegative impact on residential andother types of new builds. This affectsboth construction companies and theirsubcontractors, e.g. the joinery industry.Customers’ profitability has been weakenedmarkedly, increasing the risk of sawmillslosing business.All major markets are reporting fallingfigures for the new build sector. Manyforecasts for this sector indicate thatvolumes will be two-thirds down onthose of recent years. Examples of suchforecasts include construction forecastspublished by the Swedish National Boardof Housing, Building and Planning andthe UK’s Construction Products Association.What’s important to remember, however,is that consumption of wood-relatedproducts in Europe is primarily linked tothe renovation, maintenance and conversionsector. Renovation is not monitoredto the same extent as new builds, whichis why these figures are not as readilyavailable. In our opinion, which is partlybased on SCA Timber’s business tobuilder’s merchants and outlets in the UKand Scandinavia, we in this importantsector will be experiencing a decline ofonly 5–10 percent.Production is now increasing again fromthe very low level during the winter andspring. The biggest problems are currentlybeing faced by the Finnish, Germanand Austrian industries, which are hamperedby a strong Euro and the need tokeep the cost of logs at reasonable levels.Russian production will continue toremain low due to a number of internalproblems primarily linked to the supplyof logs. However, Sweden will probablybe up to full production during theautumn. In my opinion, production levels(measured as an annual rate) for Europeas a whole will be down 10 percent duringthe autumn compared to 2008 (asagainst being down 30 percent during thespring). This reduction is on a par withreduced consumption and should constitutea sufficient limitation to balancesupply and demand.The price of sawn solid wood productsgrew rapidly during the latter part of thespring. Since March, the price of pine hasincreased by approximately 30 percentand spruce by approximately 20 percent.This improvement stems from lowerproduction. Following a further marginalincrease in prices during late summer, itis likely that the situation will remainrelatively stable for the rest of the year.The current increase in production willlimit these price spikes as consumptioncontinues to be weak as a result of thefinancial crisis.Anders Ek, Marketing Director, SCA Timber11 | timbernews