Södra lowers pulpwood and fuelwood prices during surging supply and mild winter

 Monday, October 27, 2025

In a move reflecting the current economic climate and raw material availability, Södra, the prominent forest industry group owned by 52,000 forest owners in Southern Sweden, announced a price reduction for several key ranges of forest raw materials, primarily impacting pulpwood and fuelwood assortments. This adjustment is effective from October 21st and underscores the prevailing market situation characterized by excess supply and dampened demand.

The core reason for Södra’s October price correction is a substantial and persistent surplus of firewood (fuelwood) and pulpwood on the market. This oversupply is not a result of a sudden spike in felling but rather a confluence of factors, highlighting a temporary dislocation between supply capacity and industrial consumption.

The demand side of the equation has been notably weak, particularly for paper pulp and certain bio-products, which are the primary end-uses for pulpwood. The broader global economic uncertainties, coupled with shifts in consumer behaviour, have contributed to a protracted period of low consumption. While the long-term outlook for forest products, especially in sustainable construction (like Cross-Laminated Timber, or CLT), remains positive, the short-term market for pulp-based products continues to face headwinds. This reduced industrial consumption means mills are not drawing down raw material stocks at the expected rate, allowing the existing supply to accumulate.

The ‘Mild Winter’ effect

A contributing factor, specifically to the fuelwood and bioenergy segment, was the mild winter of 2025. Milder-than-anticipated weather across Scandinavia lessened the demand for wood-based solid fuels used in domestic heating and district energy production. Fuelwood and certain lower-grade pulpwood assortments often feed into the bioenergy sector. When energy demand is reduced, particularly during the critical winter consumption months, the standing stocks of these raw materials quickly swell, exerting downward pressure on prices.

Specific price adjustments

Södra’s adjustments reflect the relative saturation of each segment. The changes apply to both coniferous (softwood) and deciduous (hardwood) assortments of pulpwood, as well as fuelwood and gravel/tree parts (often referred to as GROT, an energy assortment). All prices are expressed in Swedish Krona per cubic metre solid wood under bark SEK/m^3fub, a standard unit in the Nordic timber trade.

Notably, the largest proportional reduction targets hardwood pulpwood, suggesting this particular segment may be experiencing the most acute supply-demand disparity, possibly linked to specific market weaknesses in certain pulp or specialty products.

In contrast to the price cuts for raw materials like pulpwood and fuelwood, Södra emphasised that prices for sawn products (timber, or sawlogs) remain competitive and at a historically high level. The company confirmed that there is currently no price adjustment planned for sawn products.

This differentiation is crucial. Sawlogs, which produce valuable sawn timber for construction and furniture, occupy the highest value tier of forest raw materials. The ongoing stability in sawlog prices suggests that despite the broader economic uncertainty, the demand for high-quality construction material remains robust, or at least that the industry has successfully maintained a balance between supply and end-product pricing for these premium assortments.

The imbalance between the high-value sawlog segment (stable prices) and the lower-value pulpwood/fuelwood segment (decreasing prices) reflects a complex, segmented market reality. Forest owners continue to benefit from strong prices for timber, which is positive for overall forest farm profitability. However, the drop in pulpwood and energy wood prices will inevitably affect the total revenue generated from thinning and final felling operations, where these lower-grade assortments constitute a significant volume.

Strategic implications

For Södra’s member forest owners, this price adjustment reinforces the need for adaptive harvesting strategies. In a market characterised by high pulpwood stocks, owners may be encouraged to:

1. Prioritise high-value timber: Focus harvesting efforts on stands where the yield of sawlogs is maximized, thus mitigating the impact of the lower pulpwood price.
2. Delay lower-grade harvests: Where possible, postpone the thinning or final felling of stands that would yield a large proportion of pulpwood or fuelwood, allowing the wood to grow and potentially be sold into a more favourable market later.
3. Optimise logistics: With the tight margins on lower-grade assortments, minimizing harvesting and transport costs becomes even more critical to maintaining profitability.

Södra’s ongoing commitment is to develop its operations to keep forest raw material prices competitive for its members. However, the current price cuts for energy and pulp assortments are a clear signal that the market requires a period of re-balancing to digest the surplus raw material supply. As the forest industry watches global economic recovery, the return to normal seasonal demand for bioenergy, and the consumption patterns of the pulp sector, the prices for these core raw materials will likely continue to reflect this dynamic and challenging market environment.

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