Spread of Covid-19 pandemic across the globe left economists, credit rating agencies and banks without relevant historic benchmarks for their future forecasts. This was an unprecedented situation where previous events did not provide for guidance on how the markets will develop. Most companies even stopped giving future outlooks on their business. Forest product companies reduced production, either due to mandatory shutdowns or in preparation for weakening demand.
Travel restrictions led to a situation where people spend much more time at home. Do-it-yourself (DIY) segment has been particularly strong and demand for solid wood products has surprised many wood product manufacturers. Home renovations, garden projects and housing expansions have compensated for the slightly reduced housing construction activity. Mail in order of food and e-commerce of other products have supported the demand for cardboard and other packaging products. Only newspaper and graphic paper demand have softened as people are not reading their newspapers at cafes anymore and not printing documents in the offices.
Future outlooks are more positive again and institutions and companies are willing to give some future guidance. Demand for forest products is set to increase, trade is picking up and local wood markets are active. Price development for especially solid wood products has been strong and pulp prices are also expected to increase as demand in China is growing. Structural change in forest industries is an expected trend that benefits the whole market in medium term. New investment plans benefit from closures of old capacity and companies are building their long-term future.
Dasos portfolio companies provide wood and fibre for a variety of end use customers in the forest industries. Wide range of sustainably certified timber products, consisting of several wood species, assortments and ages, guarantees the demand in all market conditions. Portfolio companies are well managed and prepared for market fluctuations, and price fluctuations can be taken into account in maximising the forest value. Partnerships with forest industry companies provide for stable demand in all market situations.