New Investments Will Affect the Supply-Demand Balance of Sawdust in Finland and Sweden

August 20, 2019

Posted By Matias Pekkanen

Sawdust is a sawmill by-product, and it has several industrial uses. In recent years, some of the Finnish sawmills have been struggling to find a buyer for their sawdust. In Sweden, the demand for sawdust is higher than in Finland and there are more companies using sawdust in their production. The supply-demand balance of sawdust is subject to change in Finland and Sweden with many planned investments.

By-products sales usually account below 20 % of sawmills’ revenues, and although most of this comes from selling wood chips, low price and weak demand of sawdust can lead to notable losses. Reasons for the abundant supply of sawdust in Finland include increased sawing volumes and subsidies for the use of woodchips in electricity production, which has caused power plants to prefer them over sawdust. The Finnish Sawmills Association warned in 2016 that treating sawdust and wood chips differently in the energy industry weakens the sawmill industry’s competitiveness so severely that they might need to cut down production volumes. The supply of sawdust is likely to increase as the growing demand for pulpwood increases overall annual harvesting and consequently also the supply of saw logs.

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New investments to production using sawdust as raw material alter the supply-demand balance in both countries. If all the planned investments would materialise, they would significantly increase the demand for sawdust in their regions. These investment plans include e.g., two bioethanol plants and a biorefinery investment in Finland, and a biorefinery in Sweden, briquet and pellet manufacturing and CHP plants.

Recently, Indufor has assessed the supply-demand balance of sawdust and its development in Finland and Sweden during the next five years, considering the new investments and increased harvesting. Both countries are divided into net supply and net demand regions, meaning that some areas have a surplus of sawdust, while some areas suffer from deficit. Regional differences are likely to increase in the future, leading to changes in prices.

Indufor can support you in planning the biomass procurement in different regions and develop an assessment of the raw material’s price development. We can support you in improving your supply chain’s productivity, efficiency and stability and in preparing for the future changes in the market.

Indufor's Experience and Offering

Biomass supply is one of Indufor’s key service offerings and we have supported several forest industry and biomass-using companies around the world. Over the years we have supported our clients in the following assignments:

  • Accessing sufficient and secure supplies of biomass raw materials
  • Assessing the sustainability risk of supply sources and improving biomass supply due diligence and legality controls
  • Assessing actual market prices and supply chain cost components, compare these prices to those of competitors and understand how to lower the costs, as well as mitigating price volatility and risk
  • Establishing mutually beneficial partnerships within the entire biomass value chain.

 

If you would like to hear more of our services, please contact Matias Pekkanen, Senior Consultant.

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Matias Pekkanen

Senior Consultant

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