European Softwood Markets

1. 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

2. Subjects of presentation • Overall market situation in 2004 • Roundwood • Sawnwood • Panels • Certified forest products • Timber Committee recommendations • Outlook for softwood sector through 2010

3. 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

4. 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.

5. 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.

6. Highlights from Annual Market Analysis. 3/4 ·   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.

7. Highlights from Annual Market Analysis. 4/4 • 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.

8. CIS EU/EFTA CEECs

9. Production mondiale de bois de chauffage et de bois rond industriel

11. World softwood production

12. World Roundwood Trade

13. Industrial Roundwood Importers, 2002(million m3)

14. Industrial Roundwood Exporters, 2002(million m3)

15. Regional Industrial Roundwood Production

16. Regional Industrial Roundwood Consumption

17. Regional Industrial Roundwood Exports

18. European Industrial Roundwood Production

19. Regional Log Production

20. European Softwood Log Production

21. European Pulpwood Production

22. European Roundwood Consumption 1000 m3 équivalent

23. European Roundwood Utilization

24. North American Roundwood Consumption 1000 m3 équivalent

25. Russian Roundwood Consumption 1000 m3 équivalent

26. 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

27. World Sawnwood Consumption

28. Regional Sawnwood Consumption

29. European Sawnwood (with hardwood)

30. European Sawn Softwood (no hardwood)

31. European Sawn Softwood Production

32. European Sawn SoftwoodEU/EFTA versus CEECs

33. Russian Sawnwood

34. European Sawnwood Exports

35. North American Sawnwood Exports

36. Russian Sawnwood Exports

37. European Sawnwood Imports

38. North American Sawnwood Consumption

39. 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

40. Sawn Softwood Exports, 2004 Million m3 Canada 36.2 Sweden 11.0 Finland 8.3 Russia 9.6 Austria 6.5 France 0.8

41. 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

42. 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

43. 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

44. 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

45. Regional Panel Consumption

46. European Panel Consumption

47. Regional Panel Imports

48. Regional Panel Exports

49. Russian Panel Market Forecasts

50. European Production Capacity Source: European Panel Federation