Swedish Forest Industry Bounces Back in 2024

The Swedish forest industry has demonstrated remarkable resilience in the face of ongoing challenges. According to the latest market report from the Swedish Forest Industries Federation (Skogsindustrierna), Swedish forest production levels surpassed expectations in the latter half of 2024, showcasing the sector’s strength and adaptability. Despite strained raw material supplies, elevated costs, and profitability pressures, several segments, particularly wooden products and pulp, witnessed significant growth driven by robust export demand.

Wooden Products Benefit from Strong Export Demand

The wooden products segment experienced increased production after the summer, primarily due to strong export performance. European countries and non-European markets like Egypt have fueled this growth. However, the domestic market painted a contrasting picture, with record-low delivery levels marking the worst year for Sweden’s home market in over two decades.

Christian Nielsen, market analyst for wood products at Skogsindustrierna, highlighted that despite increased production, profitability remains a significant challenge for the wooden products industry. Strained raw material supplies and surging costs are key factors impacting margins. Nevertheless, Nielsen expects export demand to remain an important growth driver in the long term.

Concerns Over U.S. Trade Policies

The potential implications of new U.S. trade tariffs have not gone unnoticed by Swedish industry leaders. Although the U.S. accounts for only a small share of Swedish forest exports, the impact on the wooden products sector could lead to some disruptions. However, U.S. import needs remain robust, as long-term domestic self-sufficiency appears unlikely. This leaves room for continued Swedish exports, albeit at a slower pace.

On a larger scale, the report warns of possible ripple effects stemming from U.S.-China trade tensions. In the event of escalating conflicts, Chinese products could increasingly shift toward European markets. Such a scenario might influence Swedish pulp and paper exports, creating additional complexities for the forest industry.

Pulp and Paper Segment Surpasses Expectations

The pulp and paper sector emerged as a standout performer, with production and exports exceeding projections. The growing demand for packaging materials and graphic paper, primarily from the European market, has been a significant driver. Europe now accounts for nearly 60% of Swedish pulp exports, while exports to China have stabilized at more typical levels.

Charlotte Dickens, market analyst for pulp and paper at Skogsindustrierna, noted that demand growth in this segment is expected to return to steadier levels once global inventory adjustments are completed. However, she also emphasized that ongoing global trade uncertainties, particularly trade conflicts, pose indirect risks to Sweden’s export-oriented industry. "An escalating conflict could have far-reaching consequences for Swedish exports, which are heavily dependent on open and stable world trade," Dickens warned.

Resilience Amid Uncertainty

Despite the challenges posed by high costs, strained supply chains, and an unpredictable global market, the Swedish forest industry has shown admirable resilience. Strong export demand has played a key role in supporting the sector, enabling it to navigate through a landscape of considerable challenges. While the future holds uncertainties — particularly regarding the impacts of global trade conflicts — the Swedish forest sector continues to adapt and leverage global opportunities to sustain growth.