Newspaper Affärsvärlden wrote citing flash comment from Deutche Bank that Dagmar-storm's effect on wood prices paid for forest owners may be up to a 15% percent fall. Swedish Forest Agency Skogstyrelsen says that damages from Dagmar are spread over a wide area and the total amount of forest damages is still unclear. Another winter storm has been causing trouble across Sweden and Finland today. Nordic pulp & paper sector companies have been overperforming in the last couple of days.
Most of the damages in Sweden are in Gävleborg, Jämtland and Västernorrland counties in the middle of Sweden. In Sourthern parts of the country, damages to forests are not as large as they were after Gudrun-storm in 2005 or after Per-storm in 2007. The fall in raw timber prices in Sweden after Gudrun and Per was between 10-20%. Risks for insect infestation are large and damaged woods should thus be logged off before summer.
Deutche Bank estimated that Stora Enso (OMX: STERV) might be the largest beneficiary, with a 3-5 Euro price fall per cubic meter resulting in over 100 million Euros in cost savings. After Asta-storm hit Finland in 2010, Stora-Enso said it will focus logging activities in storm damaged areas. Furthermore the company said it will take increased logging costs resulting from damaged woods and lower quality of the material into account in prices paid to forest owners. The company will undoubtedly do the same in Sweden. Strong US Dollar is also positive for Stora Enso. Furthermore newspaper Kauppalehti interviewed pulp manufacturer Botnia’s CEO Ilkka Härmälä today, and he felt that Nordic softwood pulp price may have bottomed out.
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