Global Outlook: Supply

1
Global Outlook Supply Demand for Wood
Products

• Ed Pepke, Ph.D.
• Forest Products Marketing Specialist
• Food and Agricultural Organization
• UN Economic Commission for Europe
• Geneva, Switzerland

2
Outline

• Forest products markets
• Production, consumption trade
• Global
• Regional
• Sectoral
• Forest resources
• Growing the market

3
Sources

• UNECE/FAO TIMBER database on forest products
  statistics
• UNECE/FAO Temperate Boreal Forest Resources
  Assessment
• FAO Global Forest Products Outlook Study
• FAO Global Forest Resources Assessment
• FAOSTAT Forestry Database website
• UNECE/FAO Timber Bulletin Forest products annual
  market analysis, 2002-2005
• UNECE Timber Committee market forecasts

4
Forest products markets
5
World production of roundwood,1961-2003
Source FAOSTAT
6
Regional production of industrial roundwood,
1961-2010
Source FAOSTAT and FAO Global Forest Products
Outlook Study
7
Regional trade, all primary forest products, 2002
Source FAOSTAT
8
N. American trade, all primary forest products,
1993-2002
9
Sectoral analysis Lumber
10
N. American softwood lumber market, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
11
N. American softwood lumber trade, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
12
N. American hardwood lumber market, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
13
N. American hardwood lumber trade, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
14
American lumber consumption production,
1980-2010
Source FAO Global Forest Products Outlook Study
15
American lumber trade, 1980-2010
Source FAO Global Forest Products Outlook Study
16
Factors affecting models and markets

• Gross domestic product (GDP)
• Population
• Costs and prices (labor, raw material, etc.)
• Technological change
• Government policies
• Socio-economic trends

Global Forest Products Consumption, Production,
Trade and Prices Global Forest Products Model
Projections to 2010 By Zhu, S Tomberlin, D
Buongiorno, J. Published by FAO, 1998
17
European softwood lumber market, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
18
European softwood lumber trade, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
19
European hardwood lumber market, 1995-2004
Source UNECE Timber Committee forecasts, 10.2004
20
European hardwood lumber trade, 1995-2004
Source UNECE Timber Committee forecasts, 10.2004
21
Europe lumber consumption production outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
22
Europe lumber trade outlook, 1980-2010
Source FAO Global Forest Products Outlook Study
23
Russian softwood lumber market, 1992-2004
Source UNECE Timber Committee forecasts, 10.2003
24
Asia lumber production consumption outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
25
Asia lumber trade outlook,1980-2010
Source FAO Global Forest Products Outlook Study
26
An asideJapanese and Korean tariffs
27
Japanese and Korean tariffs

• In context of WTO trade negotiations, will not
  support elimination of wood tariffs
• Forest product tariffs protect the domestic
  industry interest
• Tariffs protect the environment, preserve limited
  natural forest resources and maintain minimum
  harvest levels for forest management
• Forestry Agencies of both governments will
  continue this bilateral forum to protect common
  trade interests in the forest products sector.

Source Global Agriculture Information Network,
January 2004.
28
Sectoral analysis Panels
29
North America structural production, 1995-2004
Source UNECE Timber Committee forecasts, 10.2003
30
European OSB market, 1995-2004
Source UNECE Timber Committee forecasts, 10.2004
31
America panel consumption production outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
32
America panel trade outlook,1980-2010
Source FAO Global Forest Products Outlook Study
33
Europe panel consumption production outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
34
Europe panel trade outlook,1980-2010
Source FAO Global Forest Products Outlook Study
35
Asia panel consumption production outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
36
Asia panel trade outlook, 1980-2010
Source FAO Global Forest Products Outlook Study
37
An aside on theChinese market
38
Chinas expanding trade

• Total export value 2003 390 billion, 36
• Total import value 2003 371 billion, 39
• Trade surplus 20 billion
• China Japan 2003 trade 120 billion, 31
• China US 2003 trade 114 billion, 29
• China Europe 2003 trade 112 billion, 43
• Sudden growth of primary product imports
  timber, steel, oil, soybeans

Source China Forest Products Market
Information, December 2003
39
Sino-US furniture trade US side

• Chinese share of US market increasing rapidly
• Chinese furniture exports to US
• 2000 1.7 billion
• 2002 2.9 billion
• Anti-dumping investigation requested by 28
  American furniture manufacturers in November 2003
• US furniture industry earnings down 70
• US furniture workforce down 34,000

Source China Forest Products Market
Information, December 2003
40
Sino-US furniture trade Chinese side

• 60 of Chinas furniture exports are American
  furniture
• Produced by US-owned companies
• US wood
• US technology and styles
• Advantage for US manufacturers is low
  manufacturing costs
• Labor
• Energy
• Taxes

Source China Forest Products Market
Information, December 2003
41
Chinas booming timber imports

• Housing construction
• Only minority wood-based
• Green and healthy communities
• Affordable
• Renovation market for houses and municipal
• Infrastructure development
• Interior woodwork and furnishings
• Olympic-related construction (2008 Beijing)

Source China Forest Products Market
Information, December 2003
42
Sectoral analysis Paper
43
N. America paper paperboard consumption
production outlook, 1980-2010
Source FAO Global Forest Products Outlook Study
44
N. America paper paperboard trade outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
45
European paper paperboard consumption
production outlook, 1980-2010
Source FAO Global Forest Products Outlook Study
46
Europe paper paperboard trade outlook,
1980-2010
Source FAO Global Forest Products Outlook Study
47
Asia paper paperboard consumption production
outlook, 1980-2010
Source FAO Global Forest Products Outlook Study
48
Asia paper paperboard trade outlook, 1980-2010
Source FAO Global Forest Products Outlook Study
49
Summary Key market issues (1 of 2)

• Illegal logging and trade of illegally-sourced
  wood
• Certification of sustainable forest management,
  markets for certified forest products
• Policies for sound use of wood, wood promo
• Industrial development policies and structural
  oversupply

Source Forest Products Annual Market Analysis,
2002-2004
50
Summary Key market issues (2 of 2)

• Climate change policy
• Wood energy promotion policies
• Trade policy, tariff and non-tariff barriers

Source Forest Products Annual Market Analysis,
2002-2004
51
Forest resources
52
Annual change in forest area, 1990-2000,
(million hectares)
Deforestation Increase in forest area Net change in forest area
Tropics -14.2 1.9 -12.3
Non-tropics -0.4 3.3 2.9
World -14.6 5.2 -9.4
Source FAO Global Forest Resources Assessment
2000
53
Annual change in forest area, 1990-2000
Africa
N C America
Europe
Oceania
Asia
South America
Source FAO Global Forest Resources Assessment
2000
54
Reasons behind deforestation

• Conversion to other land uses (0.4 of worlds
  forests annually in the 90s)
• Agricultural, including grazing
• Urbanization
• Unsustainable silvicultural practices
• Unmanaged harvesting
• Poor regeneration
• Overharvesting fuelwood

55
Forest resources in N. America

• 80 of net annual increment harvested
• Forest volume increases 3 million m3 daily
• Forest area 1990 to 2000
• USA 0.2
• Canada, no significant change

Sources State of the Worlds Forests 2001
Global Forest Resources Assessment 2000
Temperate and Boreal Forest Resources Assessment
2000
56
Forest resources in Europe

• Only 60 of wood grown is harvested
• Forest volume increases 2 million m3 daily
• Forestland increases by 500,000 hectares per year

Sources State of the Worlds Forests 2003
Global Forest Resources Assessment 2000
Temperate and Boreal Forest Resources Assessment
2000
57
State of Europes Forests

• Resources increasing
• Forest health and vitality are critical
• Productive functions maintained
• Biodiversity is a focus
• Plantations are only 3
• Protective forests are 12
• Socio-economic functions important

Source Ministerial Conference on the Protection
of Forests in Europe, 2003.
58
Forest resources in Russian Federation

• Only 16 of wood grown is harvested
• Forest volume increases 3 million m3 daily
• Forest area 1990 to 2000 no significant change

Sources State of the Worlds Forests 2003
Global Forest Resources Assessment 2000
Temperate and Boreal Forest Resources Assessment
2000
59
Forest resources growing stock
Million m3
SourceTemperate and Boreal Forest Resources
Assessment 2000.
60
Forest resources NAI vs. fellings
Million m3
SourceTemperate and Boreal Forest Resources
Assessment 2000.
61
Forest resources NAI vs. fellings
Fellings as of NAI
Europe-41 60
EU-15 64
Nordic countries 72
Baltic countries 50
Central eastern Europe 56
Russia 16
North America 80
SourceTemperate and Boreal Forest Resources
Assessment 2000.
62
Regional forest resource utilization
Wood in forest (billion m3) Roundwood harvest 2002 (million m3) Roundwood harvest 2002 ()
S C America 117 439 0.4
Russia 89 192 0.2
N. America 60 678 1.1
Africa 46 613 1.3
Asia 35 1,005 2.9
Europe 28 395 1.4
Oceania 11 63 0.6
Note Not all forest available for wood
supply Roundwood does not include chips.
Therefore, ages are gross. Sources State of the
Worlds Forests 2003, FAO Stat.
63
Forest resources summary

• Removals considerably below growth
• Wide variance in utilization rates of NAI
• Growing stock increasing in Europe
• Southern hemisphere plantations expanding
• Oversupply compared to demand for wood
• Increasing alternative demands on forests

64
Growing the market
65
Growing too much wood? Not enough wood products
demand?What are the solutions?
66
Grow the wood markets

• Guarantee that todays wood products meet
  consumers needs
• Develop new products to meet evolving needs
• Develop new markets for wood products substitute
  for non-renewable materials

67
How can we grow the wood markets?

• Engage the industry build coordinated,
  international promotion programs
• Create favorable policy environments
• Promote public awareness of key issues and
  messages

68
Examples

• FAO/UNECE Forest Communicators Network
• creates a positive image of the forest and forest
  industries sector
• networking among members
• identifying key common messages and concepts
• building PR capacity
• Wood Promotion Network

69
Market effects of wood promotion

• Multi-country wood promotion essential to enlarge
  woods market share
• Promotion must be cost justified
• Identify and know target markets cultural and
  technical dimensions
• Fund raising a problem in fragmented industry
• Key elements competence, neutrality,
  credibility, resources

Source UNECE/FAO Forest Products Annual Market
Review, 2001-2002
70
UNECE Timber Committee recommendations

• Develop new products to expand existing markets
• Establish new markets to meet consumers needs
• Build international cooperation in promoting
  environmental advantages of sustainable wood
  production
• Promote wood culture

71
Questions and Discussion Ed Pepke Forest
Products Marketing Specialist UNECE/FAO Timber
Branch 439 Palais des Nations CH-1211 Geneva 10,
Switzerland Telephone [phone] Fax 41 22
917 0041 Ed.Pepke_at_unece.org www.unece.org/trade/ti
mber