european softwood markets

INFORESTA Séminaire International

sur les Pins à Croissance Rapide 19 avril 2004, Bordeaux, France

European Softwood Markets

by Ed Pepke

Forest Product Marketing Specialist

Timber Branch

Trade Development and Timber Division

United Nations Economic Commission for Europe

and Food and Agricultural Organization



Subjects of presentation

• Overall market situation in 2004

• Roundwood

• Sawnwood

• Panels

• Certified forest products

• Timber Committee recommendations

• Outlook for softwood sector through 2010



Sources of Information

• Forest Products Annual Market Analysis, 2002-2004

• Forest Products Markets: Perspectives for 2004

• UNECE/FAO TIMBER database

• FAO database

• European Forest Sector Outlook Studies



Highlights from Forest Products Annual Market Analysis, 2002-2004. 1/4

· Forest law enforcement, governance and trade policies are being developed as countries build partnerships to control illegal logging and the trade of forest products sourced from illegal harvesting.

• UNECE region forest products markets turned upwards in 2002, overcoming the dip in 2001, achieving some record levels.

• Certified forest area worldwide extended to over 160 million hectares by mid-2003, 95% of which are in the UNECE region, however, not all potentially labeled certified forest products reach final consumers.



Highlights from Annual Market Analysis. 2/4

• Total roundwood consumption for the UNECE region was 1.3 billion m3, well within sustainable harvest limits.

• Structural oversupply has arisen for some products and subregions, and with strong global competition, this has increased pressure on the economic viability of forest management in some countries.

• Forest products markets remained weak in western Europe, with the exception of sawn softwood, which bounced back from a drop in 2001 to reach record production and exports levels.




Strong housing construction in the United States drove demand for sawn softwood and structural panels, with an increasing amount being imported.

• Increased market share of imported forest products led the United States to continue quotas and tariffs on Canadian sawnwood imports in 2002 through mid-2003.

• Markets in central and eastern Europe exhibited strong, continuing recovery in 2002, and for some products, pre-transition levels were attained.




• Consumption of wood energy in the EU/EFTA rose to a record level in 2002, leading panel and pulp manufacturers to express concern about competition for their raw material.

• CIS exports of roundwood and sawnwood expanded to record levels, but domestic consumption remained soft.

• Sawn softwood consumption, production and trade rose to record levels in the UNECE region in 2002, but sawn hardwood demand peaked in 1999 and has since been falling.



EU/EFTA

CEECs

CIS



Production mondiale de bois de chauffage et de bois rond industriel

1,5001,5501,6001,6501,7001,7501,8001,850

1998 1999 2000 2001 2002

Mill

ion

m3

Wood Fuel Industrial Roundwood



S a w lo g s &ve ne e r lo gs

P u lpw o od

O th er in d us tria lro u nd w o od

In d us tria lro u nd w o od

F u e lw o od

R o un d w o od



World softwood production

0

200

400

600

800

1,000

1,200

1998 1999 2000 2001 2002

Mill

ion

m3

Industrial Roundwood PulpwoodSawlogs Other Industrial RoundwoodSawnwood



World Roundwood Trade

1,500

1,550

1,600

1,6501,700

1,750

1,800

1,850

1998 1999 2000 2001 2002

Milli

on m

3

Wood Fuel Industrial Roundwood



Industrial Roundwood Importers, 2002(million m3)

China 26 Canada 8

Japan 13 Austria 7

Finland 13 United States 7

Sweden 10 Italy 5

Korea, Rep. 8 France 2



Industrial Roundwood Exporters, 2002 (million m3)

Russia 37 Germany 4

United States 11 Latvia 4

New Zealand 8 France 4

Malaysia 5 Estonia 3

Canada 5 Gabon 3



Regional Industrial Roundwood Production

0

100

200

300

400

500

600

700

1998 1999 2000 2001 2002

Mill

ion

m3

Oceania AfricaS America AsiaN & C America Europe + Russia



Regional Industrial Roundwood Consumption

0

100

200

300

400

500

600

700

1998 1999 2000 2001 2002

Mill

ion

m3

Oceania AfricaS America AsiaEurope + Russia N & C America



Regional Industrial Roundwood Exports

0

20

40

60

80

100

120

140

1998 1999 2000 2001 2002

Mill

ion

m3

S America AfricaAsia OceaniaN & C America Europe + Russia



European Industrial Roundwood Production

0

20

40

60

80

100

120

140

1998 1999 2000 2001 2002

Mill

ion m

3

Baltics France Germany

Finland Sweden Russia



Regional Log Production

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1996 1997 1998 1999 2000

10

00

m3

Africa Asia Europe N America Oceania S America



European Softwood Log Production

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Finland France Germany Russia Sweden



European Pulpwood Production

010

2030

4050

60

1998 1999 2000 2001 2002

Milli

on m

3

Baltics France Germany

Finland Sweden Russia



European Roundwood Consumption

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Pulp Sawnwood Panels

100

0 m

3 é

qu

ival

ent



European Roundwood Utilization

33%

41%

26%




North American Roundwood Consumption

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002


100

0 m

3 é

qu

ival

ent



Russian Roundwood Consumption

0

50,000

100,000

150,000

200,000

250,000

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002


100

0 m

3 é

qu

ival

ent



Forecasts for Russia

• Increasing sawn softwood exports by 5% in 2004 to reach 10 million m3, exceeding former USSR levels

• Domestic consumption stabilizing at 8.5 million m3

• Continued legal framework problems• Increased foreign investments to add 1 million m3

in sawnwood capacity• Other products exports growing fast, e.g. pulp,

plywood



World Sawnwood Consumption

30,000

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

1996 1997 1998 1999 2000

1000

m3

America Europe Asia Other



Regional Sawnwood Consumption

0

50,000

100,000

150,000

200,000

250,000

300,000

1996 1997 1998 1999 2000

1000

m3

Africa Asia Europe N & C America Oceania S America



European Sawnwood (with hardwood)

70000

75000

80000

85000

90000

95000

100000

105000

110000

115000

120000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Consumption Production



European Sawn Softwood (no hardwood)

70000

75000

80000

85000

90000

95000

100000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Consumption Production



European Sawn Softwood Production

5,000

7,000

9,000

11,000

13,000

15,000

17,000

19,000

1996 1997 1998 1999 2000 2001 2002 2003 2004

10

00

m3

Finland France Germany Russia Sweden



European Sawn SoftwoodEU/EFTA versus CEECs

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Consumption EU/EFTA Consumption CEECs Production EU/EFTA Production CEECs



Russian Sawnwood

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Production Consumption



European Sawnwood Exports

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Softwood Hardwood



North American Sawnwood Exports

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Softwood Hardwood



Russian Sawnwood Exports

0

2,000

4,000

6,000

8,000

10,000

12,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Softwood Hardwood



European Sawnwood Imports

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

10

00

m3

Softwood Hardwood



North American Sawnwood Consumption

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

10

00

m3

Softwood Hardwood



North American Sawn Softwood Consumption

• 1.7 million houses per year in the United States• US increasing imports, decreasing exports• US reducing harvests• 34% of US consumption from Canada• ~ 95% of Canadian exports go to the US• Softwood Lumber Agreement resulted in 27%

duties on imported Canadian sawn softwood• Weaker US$ has not reduced imports



Sawn Softwood Exports, 2004

Million m3

Canada 36.2

Sweden 11.0

Finland 8.3

Russia 9.6

Austria 6.5

France 0.8



European Sawn Softwood Exports, 2004

Million m3

Sweden 11.0

Finland 8.3

Austria 6.5

Germany 4.0

Latvia 2.3

Million m3

Czech Rep. 1.4

Romania 1.6

Estonia 1.2

France 0.8

Norway 0.6



Sawn Softwood Imports, 2004

Million m3

United States 35.9

United Kingdom 7.6

Italy 6.3

Germany 4.1

Denmark 4.0

France 2.8



European Sawn Softwood Imports, 2004

Million m3

United Kingdom 7.6

Italy 6.3

Germany 4.1

Denmark 4.0

France 2.8

Million m3

Netherlands 2.3

Spain 1.8

Austria 1.2

Hungary 1.0

Belgium 1.4



European Wood-based Panel Markets

• Considerable use of softwood (25%)• Particleboard main product• Dynamic growth in MDF• Fast penetration of OSB, but low levels• Plywood maintaining market share



Regional Panel Consumption

01020304050607080

1998 1999 2000 2001 2002

Mill

ion m

3

Europe America Asia Other



European Panel Consumption

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1997 1998 1999 2000 2001 2002 2003 2004

1000

m3

Particleboard & OSB Plywood Fibreboard



Regional Panel Imports

0

5

10

15

20

25

30

1998 1999 2000 2001 2002

Milli

on m

3

Africa Asia Europe

N & C America Oceania S America



Regional Panel Exports

0

5

10

15

20

25

30

1998 1999 2000 2001 2002

Milli

on m

3

Africa Asia EuropeN & C America Oceania S America



Russian Panel Market Forecasts

2003 2004

Consumption + 13% from 2002

5,252,000 m3

+ 8% from 2003

8,060,000 m3

Production + 13% from 2002

6,395,000 m3

+ 8% from 2003

6,980,000 m3

Exports + 11% from 2002

1,548,000 m3

+ 9% from 2003

1,950,000 m3

Imports + 13% from 2002

619,000 m3

+ 6% from 2003

665,000 m3



European Production Capacity

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

1000

m3

OSB MDF

Source: European Panel Federation



European OSB Market

0

1 000

2 000

3 000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

10

00

m3

Production Imports Exports



European OSB Production

0100200300400500600700800

2000 2001 2002 2003 2004

1000

m3

Ireland France Germany Poland



Europe and North American OSB Production

02000400060008000

100001200014000

2000 2001 2002 2003 2004

10

00

m3

Europe Canada United States



Particleboard Production with OSB

0

5000

10000

15000

20000

25000

2000 2001 2002 2003 2004

1000

m3

Canada France Germany

Poland United States



Particleboard Production withOUT OSB

0

2000

4000

6000

8000

10000

12000

2000 2001 2002 2003 2004

1000

m3

Canada FranceGermany PolandUnited States



MDF Production

0

500

1,000

1,500

2,000

2,500

1996 1997 1998 1999 2000

10

00

m3

Chine Allemagne France

Nouvelle-Zélande États-Unis d'Amérique



MDF Consumption

0

10002000

3000

4000

50006000

7000

1998 1999 2000 2001 2002

1000

m3

United States ChinaGermany PolandUnited Kingdom France



MDF Imports

0

500

1000

1500

2000

2500

3000

3500

1998 1999 2000 2001 2002

1000

m3

United States China Germany France



Regional Plywood Production

0

5,000

10,000

15,000

20,000

1996 1997 1998 1999 2000

10

00

m3

Europe Brazil Canada Chine United States Japan



Plywood Production

0

5

10

15

20

1998 1999 2000 2001 2002

Mill

ion

m3

Europe Brazil ChinaIndonesia Malaysia Russia

United States



Plywood Exports

0

12

3

4

56

7

8

1998 1999 2000 2001 2002

Mill

ion

m3

Europe Brazil China

Indonesia Malaysia Russia



Certified Forest Products Markets (1/2)

• Markets are primarily in western Europe

• 160 million hectares certified worldwide, 95% in the UNECE region

• 40% of Europe’s forests certified

• Weak demand from final consumers

• Retailer and business-to-business demand strongest



Certified Forest Products Markets (2/2)

• Chain of custody the major obstacle now

• Only a fraction of the wood supplied from certified forests is actually traded as (labelled) CFPs

• Concern for lack of premium for CFPs and lack of mutual recognition

• Important communications channel for the softwood industry!



UNECE Timber Committee*• Recovery of forest products markets in 2003

• Overall stability forecast for 2004

• Forest law enforcement, governance and trade is major issue confronting sector

• Wood-based energy policies affecting sector, offering new markets and competition for traditional raw material supply

• Harvests well below annual growth in UNECE region

• Promotion of wood necessary to grow market

* October 2003



Outlook to 2010 for the European Forest Sector

Source: Ongoing UNECE/FAO

European Forest Sector Outlook Studies, 2004.



European Forest Sector Outlook

• Fastest growth in eastern Europe• EU/EFTA remains the largest market• Harvests remain below annual growth• Standing volume of forests to increase

continuously• Wood energy increasing with ramifications on

traditional small diameter and residue uses• Emphasis on biodiversity and conservation



Consumption: change 2000-2020

EU/EFTA CEEC CIS

Sawnwood +18% +59% +159%

Panels +41% +110% +250%

Paper +56% +178% +225%




• Improved waste management and emission control• Forest sector’s role in mitigating climate change

recognized• CEECs and CIS compete on low labor and

material costs. Investment constraints




• Roundwood prices: Continued downward pressure• Low roundwood prices reduce economic viability

of forestry• Forest sector labor decline




• Need to expand markets to improve economic viability of sustainable forest management

• Western Europe remains competitive based on– Marketing skills

– Innovation

– Technological advances



Questions / discussion



Ed Pepke Forest Product Marketing Specialist

Timber Branch

Trade Development and Timber Division

United Nations Economic Commission for Europe

and Food and Agricultural Organization Palais des Nations

CH-1211 Geneva 10, SwitzerlandTél. +41 22 917 2872Fax +41 22 917 0041

E-mail: [email protected]/trade/timber

european softwood markets

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