“Broadly, when more people want to build more with sustainable materials, demand for forest products will increase,” says Christian Nielsen, Market Expert Wood Products, Swedish Forest Industries Federation.
In 2023, Sweden’s production of wood products amounted to 17.8 million m3, compared to 18.87 million m3 in 2022. Total wood product deliveries decreased somewhat. This decline can be attributed to reduced demand in Sweden due to weak activity in the construction sector. On the other hand, exports of wood products held up well despite tough global economic conditions with annual export growth at 1 per cent buoyed by a weak Swedish krona.
“Reduced construction activity in Sweden and Europe means that we can probably expect a further dip in production in 2024. Even if inflation stabilises, it will take some time before this has an impact on the construction sector,” says Nielsen.
The Single Market and the US are driving growth
In the medium term – five to 15 years – the situation looks considerably brighter for the Swedish sawmill industry. Strong demand in particular from the US and the Single Market is set to drive expected growth. Despite global economic uncertainty, coupled with high interest rates, new production in the US is robust.
At the same time, Europe is showing strong interest in wooden construction. France, for example, has decided that half of all public buildings must be built from wood or bio-based materials. In addition, the EU’s requirements for climate declarations for buildings, and initiatives such as the EU Commission’s measures to increase the pace of renovations with the aim of improving buildings’ energy performance, will also fuel increased demand for wood products.
“The Single Market and the UK currently account for more than 50 per cent of Swedish wood product sales, and we expect increased interest in the US,” says Nielsen.
Weak global supply
The Swedish wood products sector also benefits from other major producing countries facing challenges. Canada is dealing with declining commodity supplies due to insect infestations such as bark beetles and stricter social and environmental requirements. Central Europe has also been hard hit by bark beetle attacks, and imports from Russia and Belarus have effectively stopped due to the war in Ukraine.
“Increased construction in wood is one way to achieve global environmental goals. It will fall to Sweden to take on a leading role to supply Europe and the world with renewable, fossil-free building materials,” says Nielsen.