The forest industry has been successful and spoilt. The new situation has taken most with surprise although it has been going on for more than a decade.
Already in the late 1990ties you could see the deterioration of demand in the forest industry in certain areas. The Swedish company Modo realized that and sold their fine paper division to the Finns in the year 2000 for 6,5 billion SEK – a fantastic deal for the seller!
During all the years the forest industry has been very spoiled. Some of the prices have been volatile but volumes have always increased, so even the worst investment in capacity has been good after a couple of years.
Now – the last ten years plus – have been different. Uncoated fine paper, newsprint and magazine paper have been or started to be a dying breed. See the graph below. The downward trend is accelerating. Conventional wisdom has been that local papers and more exclusive magazines will survive longer. Today that does not seem to be the case.
The forest industry is becoming a more normal business. Some areas have a potential, other will disappear. Pulp, sawn timber, packaging in most forms, hygiene, tissue etc. will have a bright future. Some, like SCA, have understood this also over the years. The market has rewarded the company by having a market capitalization twice as high as their forest peers.
