Europe`s sawmilling sector is entering another phase of capacity adjustment as Holmen and Stora Enso reduce or reconsider production at key Nordic sawmills, highlighting the continuing pressure created by high log prices, cautious lumber demand and compressed processing margins.

The latest announcements from Sweden and Finland reinforce a broader trend across the European wood and sawn timber industry: producers are increasingly adjusting output to match weaker demand and increasingly expensive raw material.

For sawmills, timber traders and wood processors, the key issue remains the relationship between log prices and achievable sawn timber prices.

Holmen cuts Linghem sawmill production by 64%

Swedish forest industry group Holmen is reducing production at its Linghem sawmill from approximately 72,000 m3 per year to around 26,000 m3.

The reduction represents a decline of roughly 64%, or approximately 46,000 m3 of annual sawmill production capacity.

Around 18 of the approximately 30 employees at the facility are also expected to be affected by staff reductions.

Holmen cited extremely difficult market conditions for wood products, stronger competition for raw material and elevated costs as key reasons for the decision.

The company has described the current market for sawn timber and wood products as the weakest in around three decades.

Holmen`s Wood Products business reported a loss of SEK 55 million in the second quarter of 2026. The company noted that demand improved seasonally and prices increased slightly, but the decline in previously very high log prices was not sufficient to restore profitability.

Stora Enso considers closing Veitsiluoto sawmill

In Finland, Stora Enso is planning to centralise pine sawing from its Veitsiluoto sawmill in Kemi to other production facilities in Northern Finland, particularly Oulu and Kalajoki.

If the proposal is implemented, the Veitsiluoto sawmill would close permanently.

The facility has an annual production capacity of approximately 200,000 m3 of pine sawn timber and employs around 60 people.

The sawmill is currently under a temporary production curtailment and, according to Stora Enso`s August announcement, would not restart production in October 2026 if the closure plan proceeds.

Stora Enso said the proposed restructuring is intended to improve efficiency, profitability and competitiveness by concentrating production at larger or more competitive facilities.

Raw material prices remain the central problem

The announcements from Holmen and Stora Enso reflect one of the most important challenges facing European sawmills in 2026.

Softwood log prices remain relatively high in several European markets, while buyers of sawn timber remain cautious and highly price-sensitive.

For sawmills, profitability depends not simply on the price of logs or lumber individually, but on the margin between the two.

When timber raw-material prices rise faster than lumber prices, producers face increasing difficulty transferring costs to customers.

Energy, labour, transportation, maintenance and financing costs add further pressure.

This explains why some producers are reducing shifts, curtailing output or closing less competitive sawmills even when wood demand has not collapsed completely.

European softwood production remains below earlier peaks

The capacity reductions also fit within the broader European market trend.

According to data cited by the European Organisation of the Sawmill Industry, softwood sawn timber production among member countries declined by approximately 1.5% in 2025, and another slight contraction is expected in 2026.

Production remains significantly below the levels reached around the 2021 market peak.

The situation differs between countries. Germany has experienced a substantial decline in sawmill output, while Finnish production performed comparatively better during 2025.

However, the latest Nordic capacity reductions demonstrate that even highly developed sawmilling markets are not insulated from the effects of high timber prices, changing demand and weak processing margins.

Less sawmill capacity could eventually tighten lumber supply

In the short term, capacity reductions can help producers limit losses by preventing excess production from entering an already cautious market.

If enough European sawmills reduce output, however, the market balance could eventually shift.

Lower production may reduce inventories and potentially create tighter availability of certain spruce and pine sawn timber products, particularly if construction or export demand begins to recover.

For lumber buyers, distributors and downstream processors, monitoring capacity changes may therefore become increasingly important.

A combination of lower sawmill production and persistent high log prices could eventually support higher sawn timber prices, although this will depend heavily on demand from construction, packaging, furniture and international export markets.

A move toward larger and more efficient sawmills

The current restructuring also points toward a longer-term transformation of the European sawmill industry.

Large producers are increasingly concentrating output at facilities with higher productivity, greater automation, better access to timber resources and lower processing costs.

Smaller or less efficient plants face greater difficulty competing when:

- log prices remain high
- timber availability becomes restricted
- labour costs increase
- energy costs remain volatile
- lumber customers resist price increases
- capital investment requirements rise

This could gradually lead to greater consolidation within the European timber processing and sawmilling industry.

What should wood industry companies monitor?

For timber buyers, traders, sawmills and downstream manufacturers, the latest capacity reductions highlight several indicators worth following closely:

- European softwood log prices
- spruce and pine lumber prices
- sawmill capacity utilisation
- production curtailments and closures
- construction demand
- inventory levels
- wood imports and exports
- international lumber demand

These factors will determine whether the current adjustment remains primarily a profitability correction or develops into a broader tightening of European sawn timber supply.

Follow European wood prices and sawmill trends on WoodBusinessPortal.com

The changing balance between timber costs, sawmill production and lumber demand is becoming increasingly important for companies throughout the wood value chain.

📊 Read our analysis of high European log prices and pressure on sawmill margins to understand how expensive raw material is affecting wood processors and lumber producers.

🌍 Explore the European wood market in 2026 – prices, demand and industry trends for a broader overview of timber supply, lumber production, imports and exports.

🏭 Read our report on pressure across Europe`s wood industry and the risk of further restructuring, covering sawmills, wood processors, furniture manufacturers and other businesses across the sector.

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Sources

Holmen - Interim Report / CEO comments, 20 August 2026
Holmen reported a SEK 55 million loss for its Wood Products business in Q2 2026 and said that, despite seasonally stronger demand and slightly higher prices, lower log prices were not sufficient to restore profitability. The company is continuing to balance production with market conditions.
https://www.holmen.com/en/investors/Financial-information/ceo-comments-interim-report/

Woodnet - “Holmen reduces Linghem by 64 percent - 18 employees notified”
Industry report confirming that Linghem sawmill production will fall from approximately 72,000 m3 to around 26,000 m3, a reduction of roughly 64%, with approximately 18 jobs affected.
https://www.woodnet.se/article/view/1243297/holmen_drar_ner_linghem_med_64_procent_18_varslas

Stora Enso - “Stora Enso plans to centralise sawmill production in Northern Finland and permanently close Veitsiluoto sawmill”
Official company announcement confirming the planned centralisation of pine sawing to Oulu and Kalajoki and the proposed permanent closure of the Veitsiluoto sawmill in Kemi.
https://www.storaenso.com/en/newsroom/press-releases/2026/8/stora-enso-plans-to-centralise-sawmill-production-in-northern-finland-and-permanently-close-veitsiluoto-sawmill

Fastmarkets - European Sawn Timber Market, 2026
Market overview identifying Veitsiluoto as a roughly 200,000 m3/year pine sawmill and analysing recent restructuring, investments and capacity developments in the Finnish sawn timber industry.
https://www.fastmarkets.com/insights/european-sawn-timber-market-trends-and-outlook-july-2026/

WoodBusinessPortal.com - Log Prices Remain High Across Parts of Europe
Analysis of the imbalance between relatively expensive logs, cautious lumber demand and pressure on European sawmill margins.
https://woodbusinessportal.com/newsdetail-en-2604

WoodBusinessPortal.com - The Wood Market in 2026: Romania and Europe
Market overview covering European softwood lumber production, timber prices, sawmill margins, imports, exports and the outlook for the European wood industry.
https://woodbusinessportal.com/newsdetail-en-2598