The roots of the sharp increase in inflation lay in the overly expansive economic policies that were pursued during the pandemic years. On top of all this misery came the energy crisis and everything together created a toxic cocktail that has resulted in the tough market conditions we find ourselves starting this new year with.
At Norra Timber we’ve felt the effects of the slowdown firsthand, above all here in Europe, where the demand for products has weakened significantly. The sawmills in Europe are suffering in unison from higher costs - mainly made up of rocketing electricity prices. Production costs in some regions have increased by upwards of 25 per cent, while the price of raw materials is stagnant or continues to rise. For many sawmill companies a very challenging period lies ahead, but hopefully stocks were filled during the previous two bumper years.
In the midst of such extensive turbulence we need to try to find any signs of hope on the horizon. At Norra Timber we are determined to continue to work to increase sales to prioritized customer segments. We see a welcome growth in volumes of construction products in Norway. Our Nordic neighbors have many satisfied customers and more and more are looking to work with us, which makes us incredibly grateful and humble. Our sought-after brand and recognizable high-quality products have also gained new customers in Iraq, Jordan and Pakistan, while our existing North African customers are buying slightly higher volumes.
Exports to Europe from Russia and Belarus have now essentially ceased entirely. This has driven new demand and prices of, for example, side boards have unexpectedly received a substantial boost. We see that demand for our slow-grown timber and quality wood products produced in northern Sweden remains strong after all. We have a lower total inventory compared to 12 months ago, while the industry’s inventory has simultaneously increased by 35 per cent. Overall, from a sawmill perspective, I can say that we are back to ”normal levels” after being in a dream for a couple of years. If we look ahead to 2023 I believe, unfortunately, that it has the potential to be a really challenging year for all of us - especially the first half of it.
But despite the recession our company’s development strategy continues undiminished. In Kåge we have now installed new camera sorting equipment from Micro Tech, plus a CT Log scanning system. We have also replaced the resaw with a new one from Link, as well as built a large new unloading bay. These investments will further strengthen our offer to you. We will achieve even higher quality with better sorting, while excessive wood dust in Kåge is now a thing of the past and the plant’s total capacity has increased. Investments continue within all our units as part of a multi-year program which aims to put us at the forefront of development in the longer term.
Sales Director Norra Timber