European Wood-Based Panels Market Prospects

UNECE Timber Committee Market Discussions 24-25th September 2002

Geneva, Switzerland

ByMr. Olli Koskiranta

Vice-President, Business DevelopmentFinnforest Corporation

2

Contents European Woodworking Industry & Companies

WBP* Consumption Structure in Europe

WBP Production, Prices & Consumption in Europe** Plywood OSB Particle board MDF

Market Observations in Europe vs. North America

Future Trends

* WBP is wood-based panels ** Including Russia

3

European woodworking industry excluding furniture

Production:

60 billion EUR/year

Workforce:

540 000 workers

Over 100 000 companies

Typical SME-sector, with many sub-sectors

4

Major Wood Working Industry Companies in Europe

0 200 400 600 800 1000 1200 1400 1600 1800

AssiDomän

Södra

Nexfor

Finsa (est.)

Frati (est.)

Kunz (est.)

Kronospan (est.)

Swiss Krono (est.)

Stora Enso Timber

Pfleiderer

UPM-Kymmene Wood Products

Sonae Industria

Egger

Finnforest - Moelven

Million €

Solid Wood Panels EWP Building systems Other

Source: FF

5

Wood-based panels Consumption Structure in Europe 1990 - 2002

Plywood

Particle board

OSB

MDF

Other fiberboard

0

10

20

30

40

50

601

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

Mil

lio

n m

3

Source: FF, FAO,UNECE, WPI

6

European Plywood Production & Consumption 1998-2003

Sources: FF, FAO,UNECE, WPI,

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

1997 1998 1999 2000 2001 2002 2003

SW Ply Prod. HW Ply Prod. SW Ply Cons. HW Ply Cons.

*HW plywood includes tropical,birch and other temperate plywood

7

Finnish Softwood & Birch Plywood Price Development 1990-2002

200

300

400

500

600

700

800

900

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

'1-5

200

2

€/m

3

FIN Birch Ply FIN SW Ply

Source: Finnish Customs

8

European OSB Production, Price & Consumption 1998-2003

0

500

1 000

1 500

2 000

2 500

1998 1999 2000 2001 2002 2003

1000

m3

0

50

100

150

200

250

300

EU

R/m

3

Production Consumption Est. Price av.*

Sources: FF, FAO,UNECE, WPI

9

European Particleboard Production, Price & Consumption 1998 - 2003

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

1998 1999 2000 2001 2002 2003

1000

m3

0

20

40

60

80

100

120

EU

R/m

3

Production Consumption GER Price av.*

Sources: FF, EPF, FAO, UNECE, WBI, *EUWID

10

European MDF Production, Price & Consumption 1998-2003

0

2 000

4 000

6 000

8 000

10 000

12 000

1998 1999 2000 2001 2002 2003

1000

m3

165

170

175

180

185

190

195

200

205

210

215

220

EU

R/m

3

Production Consumption UK Price av.*

Sources: FF, EPF, FAO, UNECE, WBI

11

Engineered wood products and wood-based panels:North America vs. Western Europe

North America (US+CDN)Population 300 million1)

GDP 12 189 Billion EUR2)

Wood-based panels:Plywood 16,6 Mil. m3OSB 19,3 Mil. m3Particleboard 11,1 Mil. m3MDF 4,4 Mil.m3Total 51,4 Mil. M3

Engineered Wood Products:LVL 1,5 Mil. m3Glulam 0,8 Mil. m3I-beams 270 Mil. linear m

Western Europe (EU-15+CH&N)Population 390 million1)

GDP 8 815 Billion EUR3)

Wood-based panels:Plywood 5 Mil. m3OSB 1,6 Mil. m3Particleboard 29 Mil. m3MDF 7,5 Mil. m3Total 43,1 Mil. M3

Engineered Wood Products:LVL 0,2 Mil. m3Glulam 1,2 Mil. m3I-beams 8 Mil. linear m

Sources: FAO, RISI, APA, Jaakko Poyry 2)=EUROSTAT forecast 3)=EU-15 only (EUROSTAT forecast)1)=Census, US&CAN; EU-15 + SUI&NO

12

European Plywood vs. MDF and OSB Consumption 1989-2001

Plywood Consumption

4,0 3,5

1,8 2,2

0123456789

10

1989 2001

Mil

lio

n m

3

HW Plywood SW Plywood

MDF & OSB Consumption

1,6

8,4

0,2

1,7

0123456789

10

1989 2001M

illio

n m

3

MDF OSB

Sources: FF, EPF, FAO, UNECE, WBI,

13

Plywood and OSB End Use Changes by Segments in USA 1989 - 2001

Plywood Consumption

3,5 5,30

5

10

15

20

1989 2001

Mill

ion

m3

Industry Renovation

New Building

OSB Consumption

5,1

13,0

0

5

10

15

20

1989 2001M

illio

n m

3

Industry Renovation

New Building

+ 7.9

+ 2.0

Source: RISI

19.6

14.4

5.5

18.6

14

Biggest European wood-based panels producers by capacity in 2001

Sources: FF, EPF, WBI,

0 1000 2000 3000 4000 5000 6000

Finnforest

Constantia

Wyerhaeuser

Fantoni

Kunz

Schauman

Spano

Unilin

NexforFinsa

Frati

Hornitex

Pfleiderer

Swiss Krono

Egger

Sonae

M&P Kaindl/Kronospan

Plywood

Particleboard

MDF

Fibreboard

OSB

Total Europeanmarket 50 Mm3

15

Future Trends

The role of Russia & former East-Europe as panel producer is increasing – as is consumption in that area.

Manufacturing plants are growing in size and simultaniously becoming multi-product manufacturing centers

North American plywood will not be back to Europe, Asian plywood decreases its volume and Central - and South European plywood production will become niche business.

Wood chip raw materials will increase in price (regionally) due to the growing popularity of bio-energy (subsidies).

16

Future Trends

Price competition in bulk products Competition by substitutes Construction increasingly R&R Demand shifts to DIY chains Industry, distribution & customer consolidation Building systems: Engineered Wood Green values & recycling

Note! Demand and supply forecasting becomes more and more relevant for investment and business – Where to get reliable information and statistics?