Swedish sawmills are currently grappling with diminished profitability, primarily due to escalating log prices. In the third quarter of 2024, the average operating margin for these sawmills declined sharply to 2.2%, a significant drop from 6.7% in the previous quarter. This downturn is largely attributed to record-high raw material costs.
The surge in log prices has compelled several Swedish companies, including Södra, VVDS, and Nordic Wood Supply, to increase their softwood log price lists. Holmen, another key player, has raised prices in Götaland, while Sveaskog, operating extensively across the country, has also adjusted its prices upward.
Holmen, which operates five sawmills, reported sustained low demand for wood products in the fourth quarter of 2024, leading to a reduction in timber production. The company’s timber deliveries decreased to 1,348,000 cubic meters for the full year, down from 1,498,000 cubic meters in 2023. Consequently, Holmen’s wood products division saw its operating profit for 2024 reduced to SEK 2 million, compared to SEK 6 million in 2023.
Despite these challenges, there are positive indicators. Swedish average softwood lumber export prices in the first nine months of 2024 were 8% higher than the same period in the previous year. Additionally, markets such as Japan are showing signs of recovery, potentially offering new opportunities for Swedish sawmills.
However, the persistent high costs of raw materials continue to pressure profitability. Sawmills are exploring strategies such as diversifying product mixes and optimizing supply chains to navigate these challenges and capitalize on emerging market opportunities.
