Demand for engineered wood products during the second quarter was broadly in line with seasonal averages, indicating that the residential housing market during this period was relatively flat. However, some housebuilders are increasing the level of discounting required to maintain their rate of sale, suggesting that underlying market conditions may be slightly weaker than the headline numbers indicate.

Many of the homes purchased during the second quarter will have been financed using mortgage products secured before the increase in borrowing costs resulting from the conflict in Iran. During the period, the average two-year fixed rate at 75% Loan-to-Value (LTV) rate increased from approximately 4% to 4.75%. These higher borrowing costs are likely to act as a brake on private residential construction activity during the second half of 2026.

Against these challenging market conditions, Metsä Wood continues to focus on creating value across the supply chain and helping customers improve efficiency through product innovation. We recently launched Finnjoist® FP+, a new factory pre-insulated I-joist designed to simplify timber frame production by removing the need for insulation to be measured, cut and fitted as a separate manufacturing stage. The solution also provides verified enhanced fire performance for applications designed to meet Product Paper 4 requirements, which comply with the fire testing and performance required for products in a timber frame assembly, while improving acoustic performance in intermediate floors.

The UK is predominantly a redwood (pine) market, and the imported redwood market has seen a period of relative stability throughout the second quarter. Demand and supply are roughly in balance at low levels, however. Sawmills have been supported by a softening of redwood log prices in 2026 but are still at high levels versus historical averages. Sawmills have looked to recover the inbound logistics costs associated with exporting.

Demand for Nordic whitewood (spruce) remains stronger than for pine and availability is less well balanced. Increased demand from Central Europe has placed pressure on the supply of some specifications, with UK buyers increasingly competing with other markets for available material.