European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
International Wood Market Developments
Ed PepkeForest Products Marketing SpecialistUNECE/FAO Timber Section, Geneva
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Subjects
I. Overview of developmentsII. Market driversIII. Policy driversIV. Specific sector developments
A. Wood raw materials (roundwood)B. Sawn softwoodC. Wood energy
V. ConclusionsVI. RecommendationsVII. Questions and discussion
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Main sources of informationW
W
W
W
W
W
W
W
W
W
W
W
• UNECE/FAO Forest Products Annual Market Review, 2007-2008
• UNECE/FAO Forest resources assessment
• UNECE/FAO Timber database
• FAO Statistics• State of Europe’s Forests
2007 by Ministerial Conference for the Protection of Forests in Europe, November 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
I. Overview of developments
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
“United States forest products market crashimpacts UNECE region”
• In 2007, US housing construction continued its sharp decline, severely impacting world markets.
• Green building systems are a market driver, but also a constraint.
• UNECE region consumption of wood and paper products fell in 2007 for the first time in 6 years (downturn in North American overcoming a rise in European and CIS).
• Oil prices soared, stimulating wood-based biofuels and policies to mobilize more wood from both forests and other sources.
• Certified forest area rose to over 300 million hectares worldwide.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
UN Economic Commission for Europe region
Europe 42North America 2Commonwealth of Independent States, 12
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
“US forest products market crashimpacts UNECE region”
• Some European market sectors exceeded their North American counterparts: production of sawn softwood and consumption of panels and paper and paperboard.
• China’s trade with countries in the UNECE region continues to increase.
• In Europe, wood products prices generally rose in 2007, then fell in 2008 as markets weakened
• In North America prices for some wood products, such as sawnwood dropped to their lowest levels since 1991.
• Russian export taxes on roundwood are disrupting supply and changing trade patterns.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
II. Market drivers
• US housing market• Energy prices• Russian export taxes• China’s trade
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
United States housing starts
00.20.40.60.8
11.21.41.61.8
2
2005
2006
2007
2008
Mill
ion
star
ts (
SAA
R)
Single family Multi-family
• US residential housing: 2.2 million homes in 2006
• 2008: under 1 million, -40%• Recovery beginning 2010 (NAHB)
Source: US Census Bureau, 2008.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Oil prices
0
20
40
60
80
100
120
140
2004
2005
2006
2007
2008
$/ba
rrel
• Rising fossil fuel costs driving wood energy• Spike at $145/barrel in July 2008• Pellet production in Europe, Canada, Russia• Competition with wood industry• Concern for sustainability certification• Biofuels vs. food wood
Source: US Department of Energy, 2008.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Russian exports & taxes
0102030405060708090
100
1998199920002001200220032004200520062007
Mill
ion
m3
Roundwood SawnwoodMarket pulp Paper and paperboard
• Roundwood export tax– 2008 €15/m3
– 2009 €50/m3
• Log exports to Europe down 44% in early 2008• With new Forest Code
– Autonomy to regions– Attracting foreign investment– Value-added processing
• Illegal harvesting and exports
Source: UNECE/FAO TIMBER database, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
China’s forest products output impacts
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
1997
1999
2001
2003
2005
2007M
illio
n $
• Impacting every market sector• Roundwood imports profit UNECE region
exporters• European roundwood exports affect sawmills• China’s exports benefit consumers• European, American manufactures impacted• Graph does not include furniture
Source: International Wood Markets Group, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Chinese furniture exports
0
5
10
15
20
25
19971998199920002001200220032004200520062007
Bill
ion
$
Total furniture Wooden furniture
• $22 billion 2007, total furniture exports• $11 billion, wooden furniture exports• $69 billion, total furniture production• 66% of production for domestic market• 2,322 manufacturing plants• Most plants have some foreign investment
Source: IBISWorld, 2008 and Tan,X. et al., 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Chinese forest products production
010203040
50607080
19971998199920002001200220032004200520062007
Mill
ion
m3 or
m.t.
Roundwood m3 Sawnwood m3Woodpulp m.t. Paper products m.t.Plywood m3 Fibreboard m3Particle board m3
Source: International Wood Markets Group, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Chinese forest products imports
0
1000
2000
3000
4000
5000
6000
1997
1999
2001
2003
2005
2007M
illio
n $
Roundwood Sawnwood
Panels Woodpulp
Waste paper Paper productsSource: International Wood Markets Group, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Chinese forest products exports
0
500
1000
1500
2000
2500
3000
3500
4000
19971998199920002001200220032004200520062007
Mill
ion
$
Sawnwood PlywoodParticle board Fibreboard Paper products
Source: International Wood Markets Group, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Chinese forest products consumption
0
10
20
30
40
50
60
70
19971998199920002001200220032004200520062007
Mill
ion
m3 o
r m
.t.
Paper and paperboardSawnwoodWood-based panels
Sources: FAOStat, 2008 and Tan, X., et al, 2007.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
III. Policy drivers
• Climate change• Carbon markets• Wood energy, biofuels vs food• Green building • Deforestation• Corporate responsibility• Illegal logging and trade
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Policies can level or distort the playing field
• Laws, duties, tariffs, taxes, regulations
• Raw material costs
• Labour costs & benefits
• Manufacturing costs
• Goal: Raise standard of living and domestic consumption of wood products
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Climate change
• UN Intergovernmental Panel on Climate Change: “evidence of a warming trend is unequivocal”
• Policies mitigating climate change– National and sub-national governments– International organizations– Trade associations– Non-governmental organizations
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Climate change
• 17.4% of global greenhouse gas emissions caused by humans are from forestry, mainly deforestation
• Direct links between sustainable forest management and climate change
• EU targets for 2020– 20% renewable energy– 20% improved energy efficiency
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
020406080
100120140160180200
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990Volu
me
dam
aged
by
stor
ms
in E
urop
e (m
illio
n m
3)
1999
Greenhouse effect on growth?Species substitution?Storms and their damage?
Factor “X” for forests: Climate change
Source: UNECE/FAO Forest Products Annual Market Review
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Storm damage in Swiss forests, 1972-2005A
nn
ual
loss
es (
CH
F m
illio
ns)
Cu
mu
lati
ve (
CH
F m
illio
ns)
Source: Institute fédérale de Recherche Suisse, 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Carbon markets
• Active forest management reduces carbon emissions• Following Kyoto Protocol, carbon trading established• Pulp and paper industry included in the EU Emissions trading
Scheme• Future in marketing carbon sequestration in forests and
products of wood and paper?
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood energy policies
• Targets for wood energy– European and North American– Must be balanced with current and future availability
from forests– Must be balanced with wood processing industry needs
• 60% of annual growth in European forests harvested– 80% in North America– 34% in Russia
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Biofuels versus food
• Food security • Food shortages• Production of liquid biofuels from food crops• Wood-based biofuels do not compete with food
– Forests, including harvesting residues– Wood processing residues– Recycling of wood and paper products
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Green building systems
• New market• Market driver
Photo: APA.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Deforestation
• Issue which plagues the forest sector• Consumers confused between tropical deforestation and
state of forests in Europe• Strong policies in UNECE region for sustainable forest
management
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Change in annual forest area, 1990-2000
-5
-4
-3
-2
-1
0
1
2
3M
illio
n he
ctar
es
Natural Plantation Total
Europe
Asia &Pacific
AfricaS. America
MideastNorth
America
Central America
Source: FAO Global Forest Resources Assessment 2000
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Change in annual forest area, 1990-2000 (million hectares)
-9.4+5.2-14.6World
+2.9+3.3-0.4Temperate
-12.3+1.9-14.2Tropics
Net changeIncreaseDeforestation
Note: The change in annual forest area was recalculated at -7.3 million ha per year from 2000 to 2005 by the FAO Global Forest Resources Assessment in 2005.
Source: FAO Global Forest Resources Assessment 2000
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Causes of deforestation• Forest conversion
– Agricultural, including• Pastures for animals• Bioenergy plantations: palm oil, sugar cane
– Urbanization
• Unsustainable forest management– Poor harvesting practices– Insufficient regeneration– Fire, insects, disease– Over harvest of fuelwood
• Poverty and over population
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Forest resources growing stock
0
10
20
30
40
50
60
70
Europe (41) North America CIS
Growing stock Net annual increment Fellings
s
Source: UNECE/FAO Forest Resources Assessment 2005
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Net annual growth vs. fellings
0
0 .1
0 .2
0 .3
0 .4
0 .5
0 .6
0 .7
0 .8
0 .9
1
E u ro p e (41 ) N . A m erica C IS
N et an n u a l in c rem en t F e llin g s
Source: UNECE/FAO Forest Resources Assessment 2005
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Forest resources in Europe*
• Only 60% of the annual growth is harvested
• Forest volume increases ~700,000 m3 daily
• Forest area growing: ~700,000 ha annually
* Europe = 42 countries for the UN Economic Commission for Europe
Source: UNECE/FAO Forest Resources Assessment
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Timber Committee: corporate social responsibility
• Trade associations issuing codes of conduct• Companies developing CSR policies to demonstrate their
positive social impact• CSR policies are a means to
– Shape consumer perceptions– Gain competitive edge– Improve international recognition and perception
• Mutual recognition of trade associations’ CSR policies could facilitate trade.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Illegal logging and trade• G8
– “support existing processes to combat illegal logging”– “one of the most difficult obstacles to further progress in
realizing sustainable forest management and thereof , in protecting forests worldwide”
• Legislation in US and EU• Trade associations establishing and updating codes of
conduct– UK TTF proactively made members establish “due
diligence risk assessment systems”– Timber Trade Action Plan coordinates associations
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
IV. Sector developments
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood products consumption
80
90
100
110
120
130
2003
2004
2005
2006
2007In
dex
(200
3=10
0)
North America EuropeCIS UNECE total
Source: UNECE/FAO TIMBER database, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
European consumption of forest products
3.2+18586m3 equiv.EU 27 total
3.5+22658m3 equiv.Total
2.3+2100m.t.Paper & p-board
5.0+371m3Panels
4.6+6128m3Sawnwood
%volume2007Million
Change from 2006
Source: UNECE/FAO TIMBER database, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Subregion consumption of forest products
-1.4-19.61,366m3 equiv.UNECE region total
8.7+6100m.t.CIS total
-7.0-48634m3N. America total
3.5+22658m3 equiv.Europe total
%volume2007Million
Change from 2006
Source: UNECE/FAO TIMBER database, 2008
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood raw materials• Total removals of industrial roundwood in the UNECE region
rose 4.3%, to a record 1.2 billion m3. • In Europe, roundwood (including fuelwood) production rose
by 8.7%, to a record 512.9 million m3. • European industrial roundwood gained 11.3%
– rising to 410.9 million m3, higher than 2000– below 2006 peak of 429.1 million m3.
• Winter storms were a factor influencing harvests in the past three years in Europe, including in 2008.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood raw materials
• Most European countries increased harvests in 2007 –Germany increased by 23.2% to 77 million m3
• 2008 forecast also below 2006 peak• Russian harvests increased 12% in 2007 to 162 million m3• Russian industrial roundwood exports fell 3.5% to 49 million
m3• US sawlog production down to 1986 level – exports up, from
Canada too, mainly to Asia• N. American prices fell in 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood raw materials• European sawlog prices rose faster than world average• Pulpwood reached record highs in 2008
– Rising demand for pulp– Raw material for panels– Energy sector demand – for residues
• Higher raw material, manufacturing and transportation costs undermining profitability
• Most wood fibre used for fuel (including from manufacturing & forest residues, pulping byproducts, recycling)
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Sawlog prices in Europe and N. America
0
20
40
60
80
100
120
140
160
19981999200020012002200320042005200620072008
$/m
3
North America Northern EuropeCentral Europe Eastern Europe
Source: Wood Resource Quarterly, Wood Resources International, 2008.
N. America
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Sawn softwood – consumption
80
90
100
110
120
130
140
150
160
2003
2004
2005
2006
2007In
dex
(200
3=10
0)
Europe CIS North AmericaNote: CIS apparent consumption is secretariat estimate.Source: UNECE/FAO TIMBER database, 2008.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Sawn softwood market developments
• US housing market collapse caused 1/4 of the North American industry capacity to curtail or close
• Green building has quickly emerged to become a new business and expanding market in North America.
• After a profitable 2006, most European sawmill revenues declined in mid-2007 and the industry drifted into a more difficult financial situation in mid-2008.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Sawn softwood market developments• Russian sawn softwood situation
– Production and exports (9%) increased – New sawmill investments announced– Effects of escalating sawlog export taxes
• 2008 oversupply in most markets as sawnwood intended for Japan and the US were redirected to Europe or the Middle East.
• German sawn softwood situation– Europe’s largest producer in 2004– Production escalated 12% in 2006– Production up 3.4% in 2007– Roundwood harvests up 9% in 2006– Harvests up 23% in 2007, also for pulp, panels, energy.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Sawn softwood market developments
• Catastrophic market situation in North America, downturn in Europe– Present challenges – Require new business models – To maintain production, marketing channels, trained
employees, customer loyalty• Sawmills operating at sizeable losses on every sale• Mergers and acquisitions
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
New sawnwood business models
• North American mills operating when prices below break even
• Greater consequences if mills close to reduce immediate losses.
• Sawmills owned by pulp companies need to keep operating to supply minimum volumes of wood chips, especially when these high-capital pulp-mill investments are operating at near-record prices. Integrated mills must operate regardless of the current sawnwood market price.
• Price trends…
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
New business models
• Corporate and independent mills have contracts or obligations to consider with regard to log supply, from their own logging crews to log supply agreements
• Many mills have longer-term market commitments with large contractual customers
• In considering mill downtime in weak markets, mills need to be concerned about keeping their skilled workers
• Fixed costs that need to be absorbed during a mill shutdown or curtailment can be very high (even prohibitive for shutting down), especially if bank loans need to be serviced through cash flow
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Sawn softwood price trends
150
200
250
300
350
2005
2006
2007
2008
$/m
3
Japan Europe US
Source: Wood Markets Monthly Newsletter, 2008.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
German sawnwood exporters maintain US market share
• Winter storm damage in 2006, 2007 and 2008– Windthrow salvage– Beetle salvage– Lower cost sawlogs flexibility in pricing
• Exporters committed to long-term contracts• Protecting client relationships
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
North American mountain pine beetle epidemic
Source: Natural Resources Canada, 2008
• Forecast nearly 1 billion m3 of lodgepole pine killed by 2017 (= 1/3 of British Columbia)
• If converted to sawnwood, equivalent to 15 million wood-frame houses
• Beetle is not respecting borders (Alberta & US) or species (jack pine)
• Climate change link: beetles killed by -30C• Huge fire risk• Industrial development: sawnwood, panels, pellets to Europe
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood energy(the oldest and newest market)
Nice discovery Og,but what aboutglobal warming?
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood energy markets
0
10
20
30
40
50
Austria
Belgium
Bulgaria
Cyprus
Czech
Republic
Denm
arkEstoniaFinlandFranceG
ermany
Greece
Hungary
IrelandItaly
LatviaLithuan
iaLuxem
bourgM
altaN
etherlandsPolandPortugalR
omania
SlovakiaSloveniaSpainSw
edenU
nited Kingdom
Perc
enta
ge
2005 share 2011 target 2020 target
• Driven by high fossil fuel costs• Driven by policies to promote renewable energies
– 20% by 2020 in EU– 10% of transport fuels by 2020 in EU
• Driven by policies for energy security
Renewable energy in European Union, 2005, 2011, 2020
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood energy markets• Similar targets in North and South America, Asia, Oceania
and Africa– US target of 15% biofuels for transport by 2022– 30% by 2030
• Most energy demand for space and water heating• Wood pellet industry growing
– Warm winters of 2006/2007, 2007/2008 oversupply– Transportation costs, especially Canada to Europe
• Future: cellulosic ethanol
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Pellet consumption et production
0
1000
2000
3000
4000
5000
6000
7000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
N. American productionEuropean productionOther productionTotal productionN. American consumptionEuropean consumptionOther consumptionTotal consumption
Pel
let p
rodu
ctio
n (1
000
tons
)
Source: Canadian Wood Pellet Association, 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood fuel production
0
20
40
60
80
100
120M
illio
n m
3
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Europe Russia N. America
Sources: UNECE/FAO TIMBER database, UNECE Timber Committee forecasts, October 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
French fuelwood production
0
5
10
15
20
25
30
35
40
Mill
ion
m3
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
2006. New French studyon consumption andproduction. Old statisticsnot yet corrected.
Sources: UNECE/FAO TIMBER database, and UNECE Timber Committee forecasts, October 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Situation today
• Record high petroleum prices• Energy sources security problems• Climate change policies• Wood industries’ raw material needs increasing• Wood energy production increasing• Roundwood and residue prices increasing
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
0
10
20
30
40
50
60
70
80
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Mto
e
Wood & wood waste in households & services
Other wood & wood waste
BiogasMuniciple waste
Liquid biofuels
Utilization of biomass in the EU
Wood 80%
Source: EurObserv'ER, 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Wood for the wood-based industries
• Increasing demand forecast • Wood raw material prices climbing• Competition for roundwood and residues
– Local and regional– Short-term intense!– Medium term?
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Demand for wood and fibre in western Europe, without energy, 1960-2020
0
100
200
300
400
500
600
700
800
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Year
Am
ount
(in
mill
ion
cubi
c m
etre
s WR
ME
)
Recovered paperNet pulp importsIndustrial roundwoodTotal wood and fibre requirement
Source: UNECE/FAO European Forest Sector Outlook Study, 2005WRME = Wood raw material equivalent
Growth in demand without energy
Gap = residues
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Results of a UNECE/FAO study on“Wood resources availability and demands:Implications of renewable energy policies”
• Wood is the major renewable energy source in Europe• Woodfuel consumption much greater than previously
measured• Lack precise statistics• Increasing wood energy changes long-term forecasts for the
sector’s wood needs
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Dilemma or opportunity?(million m3)
-44812748252020
-1859767912010
-478217752005
“Gap”DemandSupplyYear
Source: UNECE/FAO “Wood resources availability and demands: Implications of renewable energy policies”, 2007.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
How to fill the “gap”• Increase harvests from European forests
– More of annual growth– More standing timber
• Remove more biomass from forests– Tree tops– Branches, needles, leaves
• Harvest wood outside forests (urban, hedgerows)• Increase wood recycling and residue reuse• Import biomass, wood fuels• Improve energy use efficiency
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Possible consequences of a future gap
• Renewable energy targets not achieved• Goals achieved, but not only with wood
– Other sources of biomass– Other renewable energy sources
• Wood industry growth slowed– Raw material unavailable– Price of raw material too expensive
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
0
10
20
30
40
50
60
70
80
90
Bill
ion
m3
1990 2000 2005
Europe-Annual growth
Europe-Annual harvest
Europe-Growing stock
Russia-Annual growth
Russia-Annual harvest
Russia-Growing stock
Source: UNECE/FAO Forest Resources Assessment
Import more fibre? From Russia??
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Bill
ion
m3
1990 2000 2005
Europe-Annual growthEurope-Annual harvestRussia-Annual growthRussia-Annual harvest
Source: UNECE/FAO Forest Resources Assessment
Import more fibre? From Russia??Annual growth vs. annual harvests
34%
59% ATTENTION!
New Russian export taxes
April 2008: € 15/m3 conifers
Jan. 2009: € 50/m3 conifers
Jan. 2011: € 50/m3 birch
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Mobilize more wood• Remember ~40% of annual growth remains
in Europe’s forests each year• Confederation of European Forest Owners
estimates on private forest lands– 150 million m3 more harvest possible
(~half of surplus 40%)– 25% more production through better
silviculture• How many billion cubic metres of standing
timber are enough?
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
UNECE Timber Committee on “Energy”• Entire forest sector being transformed by increased wood
energy in the UNECE region– Forest owners and managers– Wood industry and markets– Bioenergy industry
• Growing wood energy is both a challenge and an opportunity• Government policies must consider
– Needs of the forest sector, especially the wood industry– Needs for bioenergy
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
• Interaction of policies and markets is complex• Policies promoting bioenergy
– Strongly increase wood energy consumption– Open important markets– Create new trade
UNECE Timber Committee on “Energy”
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Source: UNECE/FAO Forest Products Annual Market Review
Swedish imports of wood fuels
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
• Pellet demand at record level• Pellet prices peaked in 2007, except Sweden• Increasing pellet trade
– Especially strong in Germany, Sweden, Austria– 80% of N. American production exported to Europe
• Consumption of wood energy much greater than previously known
UNECE Timber Committee on “Energy”
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
V. Conclusions
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
• N. American markets forecast to continue declining• European markets slowing in 2008• Russian export taxes will halve exports in 2008
UNECE Timber Committee on “markets”
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
• New processes overcome some traditional weaknesses of wood– Sensitivity to moisture– Dimensional instability– Lack of resistance to fungi
• New materials are opening up new marketing possibilities • Wood should take market share from competing building
materials
UNECE Timber Committee on “new markets”
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Timber Committee on procurement
• Public agencies, trade associations and private companies establishing procurement policies to ensure sustainable and legal sources
• Purchasers aim to minimize the environmental impact of whole systems, through “green building” requirements –directly influencing markets for forest products
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Timber Committee on wood promotion
• Several European countries target parliamentarians • 2010 Vancouver Olympics and the 2012 London Olympics:
major opportunities to showcase wood • Consistent approach needed on wood specifications to aid
choices for construction • Certification of sustainable forest management is an
important communication tool.
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Forest sector mitigates climate change• Replacement of non-renewables
– Energy: wood for fossil fuels– Materials: wood for concrete, steel, plastics
• Storage of carbon– Forest ecosystem– Wood and paper products
• Burning wood is carbon neutral• Wood-based insulation for energy efficiency
Source: State of Europe’s Forests 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Conclusions from State of Europe’s Forests, 2007• European forests in comparatively good state• Sustainable forest management progressing• Political commitment to SFM• Threats to forests being addressed• New challenges require effective policies and action
– Increasing risks to forests– Increasing demands
• More diverse, including from other sectors• More stakeholders
Source: UNECE/FAO & MCPFE, 2007
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Future of the forest sector
• Integrated production of wood & paper products with energy production
• Greater value of energy production by integrated plants than by “primary wood & paper” products?!
• Profitability of the sector linked to wood energy– Challenge for certain industries, e.g. panels– Opportunity for forest owners, sawmills, energy suppliers
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
VI. Recommendations• Know the provenance of your wood
– Be sure it’s sustainable and legal,
– Not only for your company today, and for your company tomorrow
– But for the sake of the entire sector's reputation
• Work together to increase wood demand through effective promotion
• Use wood efficiently, with highest values first, and eventually recycle for new products and energy
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
VII. Discussion &
questions
European Institute for Wood Preservation Congress4-6 September 2008, Lausanne, Switzerland
Ed PepkeForest Products Marketing Specialist
UNECE/FAO Timber Section448 Palais des Nations
CH-1211 Geneva 10, SwitzerlandTel. +41 22 917 2872Fax +41 22 917 0041www.unece.org/[email protected]