Oct 11, 2004. /Lesprom Network/. The growth of the global economy has boosted the export of the Finnish forest industry to a strong growth. In 2005 the growth is forecast to continue but not as briskly as this year, according to forecast by Finnish Pellervo Economic Research Institute (PTT). The prices and the profitability of the sector will improve next year. Still, the sawnwood industry will not share this upswing due to keen competition on the markets. Expiration of the transition period of the forest taxation system in 2005 is not expected to have any remarkable impacts on the Finnish roundwood markets. The average stumpage price will drop this year but grow slightly in 2005. The growth of the Finnish forest industry will lean increasingly on the imported roundwood. The export of the Finnish forest industry has been boosted by the strong economic growth in the USA and Asia to a brisk growth: on the first half of 2004 pulp and paper exports were seven percent over the last year’s figures. PTT expects the downward trend of pulp prices that started in summer to be a temporary one. Distinct growth in paper export – prices rise slowly Both the paper demand and export will increase this year clearly more than in 2003. Also in 2005 there will be a growth of a few percent. The capacity utilisation rate in the Finnish paper industry will exceed the 90 % level. Still, the price climb will start slowly due to strong Euro and free capacity that tighten the competition. PTT expects the average export price of paper to drop further this year. Next year, the average price and the profitability of the sector are forecast to finally improve more clearly. However, if the growth of the global economy will slow down due to unbalanced trade in the USA, and oil prices, the outlook will be endangered. Sawmills face still tight times The views of the Finnish sawmills are not essentially improving as to profitability, regardless of the strong demand. This year, construction and demand for sawnwood have grown. Still, the increasing supply of sawnwood from both eastern and western Europe will drop the average sawnwood export price by a couple of percent in 2004. In 2005 PTT forecasts the weakening growth of construction and demand for sawnwood to keep the sawnwood prices on this year’s level. Consequently, the tight times will continue in the sawmilling industry. PTT expects, however, the production to grow further from last year’s record level approaching 14 million cubic meters. The transition period of the forest taxation system will expire without dramatics PTT expects the demand for roundwood of the Finnish forest industry to increase by a few percent in both 2004 and 2005, pushed by increasing export volumes. This is expected to increase the annually imported volumes of roundwood and chips by about one million cubic meters. The domestic commercial fellings will increase a little. In 2004 roundwood trade has slowed down from last year. The expiration of the transition period of the forest taxation system has not markedly strengthened the supply of roundwood this year, and the research institute expects that it is not likely to happen next year either. The average annual roundwood price will, however, drop this year clearly, although PTT expects roundwood prices to rise a little during this autumn pushed by the strong demand. In 2005 PTT expects a slight rise in the average roundwood price as a result of the strong demand. The roundwood trade is likely to recover by a few percent in 2005.