Finnish forest industry’s new product plans struggle to take off

Many ambitious projects by Finland’s largest forest industry companies have been abandoned, while new products still account for only a very small share of the sector’s revenue, Yle reports.

Companies have spent almost 20 years seeking new products that could revive Finland’s forest industry. Wood can be used to make a wide range of products, including alternatives to oil-based materials, but so far the results have been limited.

“The significance of new products for the sector’s revenue is almost negligible,” says Jakob Donner-Amnel, a forest industry researcher who has studied the sector for 30 years and works at the University of Eastern Finland in Joensuu.

Yle reviewed prominent projects by three major Finnish forest industry companies: Metsä Group, UPM and Stora Enso.

The review found that only one large factory producing new products is currently operating in Finland. Some projects have been abandoned, while one factory is being launched in Germany instead of Finland.

The industry’s current difficulties can also be seen in company valuations and share prices. Stock prices have fallen by between one-third and two-thirds over the past five years, while other industrial companies listed on the Helsinki stock exchange have seen strong rises.

Metsä Group abandons textile fibre factory in Kemi

In autumn 2025, Metsä Group said it was planning to build a 400 million euro textile fibre factory in Kemi. Chief executive Ilkka Hämälä described the project as likely to go ahead.

A pilot plant in Äänekoski, Central Finland, had already processed pulp into fibre for the clothing industry for several years. A Japanese partner had made yarn from the fibre, which could be used to produce items such as jackets.

In August, however, the plans changed. Niklas von Weymarn, who was responsible for the project, said that the new factory would not be built in Kemi. He heads Metsä Spring, Metsä Group’s innovation company.

“In the past few years, so much new capacity has been built in Asia that demand for wood-based fibre cannot keep up,” Weymarn said in a video interview.

Supply has therefore exceeded demand and the price of fibre has fallen. China, as well as India and Thailand, produces dissolving pulp from wood and uses it to make a fibre called Lyocell.

The Kemi factory would no longer be profitable because it could not compete with cheaper Asian fibre.

Stora Enso closes dissolving pulp production in Uimaharju

Serving the clothing industry has also disappointed another forest industry company.

For 10 years, Stora Enso’s factory in Uimaharju, Joensuu, produced dissolving pulp for Asia’s textile industry. The pulp was used in China and other Asian countries to make textile fibre for viscose fabrics.

Production of dissolving pulp ended in 2022.

“We always have to consider which products give us a competitive advantage,” said Juuso Konttinen, who is responsible for new product businesses at Stora Enso.

In practice, Asian producers can manufacture dissolving pulp more cheaply themselves.

The production also involved other problems. Toxic chemicals are used to make viscose. In addition, dissolving pulp was processed into viscose in China’s Xinjiang region, where there were strong suspicions that a factory belonging to a Stora Enso customer exploited members of an ethnic minority.

The Uimaharju factory now produces other pulp products, including unbleached pulp used to insulate electrical cables.

Battery materials remain at the trial stage

Wood can also be processed into raw materials for batteries.

Five years ago, Stora Enso built a pilot plant in Kotka to produce carbon material from wood. The material is suitable for use in batteries and cells that store electricity.

The plant was expected to expand, but it remains at the pilot stage.

“We are still satisfied with the pilot plant and expect to reach the next scale in the near future,” Konttinen said.

The next scale would mean a larger and more technically advanced factory.

The pilot plant produces hard carbon from lignin, a material released from wood during pulp production.