To rebalance inventories and adapt to current demand, Södra Wood is now adjusting its production. For the remainder of 2022, sawn timber production will be reduced by approximately 100,000 m³.
Timber is gaining ground as the most sustainable construction material and demand for Södra Wood’s products is experiencing longterm growth. In the short term, however, Södra now expects weaker demand for wood products due to rising inflation and higher interest rates in Europe and the US. As a result of these factors, the sawn timber market was already slowing in the second quarter of 2022 and Södra Wood expects the negative trend to continue throughout the rest of the year. So far, Södra Wood expects the biggest impact on the building materials trade, but also predicts a negative trend in the wood products industry in the second half of the year. Hence the decision to reduce the production rate.
Södra Wood has therefore decided to now reduce sawn timber production by approximately 100,000 m³ for the remainder of 2022. The adjustment is being made to create a balance between production and customer needs.
Due to the current uncertainty of the business environment – where the sawn timber market could both rapidly deteriorate or improve – Södra Wood is not ruling out the fact that further measures may be required or that planned shutdowns may not occur during the autumn if the market take an unexpected turn.
“We know that demand for Södra Wood’s products will be favourable in the long term and that confidence in timber as the most sustainable construction material is strong. But although the long-term trend is positive, we must work actively to counter market volatility and balance production with customer needs. We are doing this by reducing production temporarily. We are following developments carefully and continue work actively with what we can influence,” said Peter Jhaveri Business Area President for Södra Wood.
Södra Wood produces more than 2 million m³ of wood products per year at its eight sawmills. Production will now be adjusted at most of these sawmills and each sawmill will be adjusted individually. Production will be individually adjusted depending on the assessed development of demand for each product and market segment.