UN/ECE TIMBER COMMITTEE

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Preface
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Chapter 1

Highlights

• Total consumption of forest products in North American and European was at record levels in 1998.
• The mid-1998 economic crisis in Russia deepened the fall in consumption, production and trade.
• Central and eastern European countries exhibited strong signs of recovery of production and exports from early 1990s levels.
• The Asian economic crisis negatively affected ECE region exports in 1998, but some recovery was evident in mid 1999 as tropical timber markets restructured.
• Corporate restructuring and mergers are creating larger, multi-national corporations with greater market shares.
• Certified forest products are becoming more available through increasing forest certification activity, but consumer demand remains low.
• Oversupply of some forest products restrained prices in some commodities; simultaneously other product prices rose sharply with demand.

ECE region forest products consumption increased in 1997, in some cases to record levels.

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Chapter 1
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Chapter 2

ECONOMIC FACTORS AFFECTING FOREST PRODUCTS MARKETS

Highlights

• The year 1998 saw continued strength in the North American economy, but weak growth in Europe.
• The United States housing market was at high levels throughout 1998 and early 1999.
• In Europe residential construction was sluggish, but renovation and maintenance continued to expand steadily.
• The outlook in summer 1999 is for continued growth in the United States and for weak expansion in Europe.
• Japan has been in recession, but there are signs of recovery, including for the construction sector.
• In 1998 economic performance deteriorated in many transition economies: external shocks, including the Kosovo conflict, have highlighted the fragility of many of these economies.  Most countries expect poor or negative growth in 1999.

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Chapter 2
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Chapter 3

ESTONIA’S FOREST PRODUCTS MARKETS

Highlights

• The Estonian forestry sector has been characterized by rapid growth of foreign investments and export volumes since 1992.
• Production in the wood sector has doubled every two years since 1994 and is coming into equilibrium with the forest resource.
• Exports of wood and wood products grew rapidly in the early 1990s, but are stabilizing due to increased domestic consumption and value-added processing.
• Pulpwood exports will continue to be an important export commodity until pulping capacity is developed.
• In 1998 gross fellings were 78% of the maximum annual sustainable cut and sawlog imports are growing.
• Wood panel production and trade have grown steadily since 1994 and appear near current capacity.
• Domestic markets for certified forest products do not exist and exports are not limited by non-availability of certified timber. 
• Estonia’s forest and forest industries sector’s institutional framework has developed through interest group consensus and together with other national and international acts and agreements.
• Future developments, based on a number of positive attributes of the Estonian forest and forest industries sector, will depend on the resolution of sectoral problems and on continued foreign investment.

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Chapter 3
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Chapter 4

NEW ZEALAND’S FOREST PRODUCTS MARKETS

Highlights

• In 1998/1997, the roundwood equivalent of 10.7 million m3 was exported, in raw and processed form this 5.8% fall from the previous annual period was due to the economic crisis in many important Asian markets.
• Forests cover 8.1 million hectares, or 30% of New Zealand’s land area. Of this, 6.4 million hectares are indigenous and 1.7 million hectares are planted forests.
• Last year 15.9 million m3 of wood were harvested from these forests, but that could increase by 80% to 30 million m3 in 2010 with increasing available wood supply.
• In 1998/1997, 10.7 million m3 were processed on-shore by New Zealand’s industry mix of four pulp and paper companies, five panelboard companies, more than 400 sawmills and 80 remanufacturing plants.
• Forestry directly provided jobs for more than 25,500 people and contributed about 4.0% to the GDP and ranked third in terms of commodity exports.
• In global terms, New Zealand is a small player, accounting for 1% of the world’s total supply of industrial wood and 1.2% of the world’s total trade in forest products.
• Log exports recovered dramatically in early in early 1999 as Japan and Korea replenished depleated stocks.
• New Zealand is diversifying into value-added production, e.g. engineered wood products, partly to avoid future downturns in commodity markets.
• While Australia remains the major sawnwood market, New Zealand has increased market share in the United States through strategic alliances and joint ventures.

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Chapter 4
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Chapter 5

TRADE RESTRICTIONS AND THEIR FUTURE

Highlights

• Access to forest products markets is influenced by a wide range of institutional measures which restrict trade, either overtly or in many cases covertly.
• Tariff levels have been declining steadily but still remain high for some ECE region markets and for some trading partners.
• Non-tariff barriers restrict trade in many ways, particularly through health and technical standards; unlike tariffs, some non-tariff barriers are increasing.
• The question of whether certification of sustainable forest management is, or will be, a barrier to trade is widely debated.
• The exact effect and direction of impediments to trade are difficult to predict, but they merit vigilance.
• Moves are underway to begin another round of multilateral trade negotiations for forest products.
• The implications of further trade liberalization for individual Timber Committee member countries will vary depending on whether they are exporters or importers.
• There is considerable opposition by many environmental groups to further forest products trade liberalization.

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Chapter 5
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Chapter 6

FOREST PRODUCTS IN THE ELECTRONIC MARKET PLACE

Highlights

• The Internet, as a new market channel, has the potential to change the traditional way forest products are traded.
• Electronic marketplaces allow customers to search for suppliers and vice versa.
• Companies use the Internet to enhance corporate image, improve customer and supplier relations, and to improve competitive advantage.
• Many forest products companies now have individual homepages on the Internet, however few forest products are currently traded electronically.
• Concern for security is the primary reason for reluctance to adopt electronic commerce.
• Extranets offer additional advantages of improved, secure, communication with a company’s customers, suppliers, vendors, shippers and other partners.

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Chapter 6
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Chapter 7

ROUNDWOOD SUPPLY, TRADE AND CONSUMPTION

Highlights

• European removals in 1998 and 1997 were equal in total, but had important fluctuations between assortments.
• Roundwood trade in Europe, especially imports and exports of hardwoods accelerated in 1998.
• Hardwood and softwood log prices fluctuated in 1998 and 1999 and rose generally.
• Pulpwood prices were depressed in the United States due to an oversupply.
• North American roundwood consumption increased with the high demand for sawn hardwood and softwood.
• North American roundwood removals are shifting eastward due to changing supply availability and other factors.
• Russian roundwood removals fell heavily in 1998 due to the mid-year economic crisis.
• Japan remains by far the largest roundwood importer despite structural change in imports of further value-added products.
• The Asian economic crisis in 1998 had negative consequences for ECE region roundwood exporters.

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Chapter 7
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Chapter 8

SAWN SOFTWOOD CONSUMPTION, SUPPLY AND TRADE

Highlights

• In 1998 North American sawn softwood consumption rose to a record level for the third consecutive year.
• European production and exports moved up to new records, although this development was not universal in 1998.
• CIS countries’ sawnwood production and trade were negatively affected by the Russian economic crisis in mid 1998.
• Sawnwood exporters were severely hurt in 1998 by the downturn in Asian demand.
• Asian sawnwood markets were recovering in early 1999.
• In North America sawn softwood prices neared record levels in mid 1999.

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Chapter 8
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Chapter 9

SAWN HARDWOOD CONSUMPTION, PRODUCTION AND TRADE

Highlights

• European sawn hardwood consumption rose in 1998 for the second consecutive year signalling the end of the long decline.
• European trade, both imports and exports, was at record volumes.
• North American consumption, production and imports climbed to record levels in 1998.
• Russian sawn hardwood consumption continued to decline.
• Both North American and European exports, which had been constricted by the downturn in Asian demand in 1998, were recovering in mid 1999 with renewed demand from Asia.
• Sawn hardwood export volumes were roughly equal after European exports rose and North American exports fell.
• Flooring markets were strong in both North America and Europe and European production of wine barrels was consuming increasing quantities of white oak.
• Exports of beech sawnwood and logs to Asia drove up prices in Europe.
• North American hardwood prices rose in 1998 and early 1999 as demand outstripped capacity.

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Chapter 9
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Chapter 10

WOOD-BASED PANELS SUPPLY, TRADE AND CONSUMPTION

Highlights

• European consumption of wood-based panels, mainly particle board, increased slightly in 1998 to record levels.
• In North America, consumption of wood-based panels expanded in 1998 at a much more rapid pace than in 1997.
• In the Russian Federation wood-based panels consumption declined in 1998, but remained above 1996 levels.
• Particle board consumption in Europe expanded by almost 2% in 1998 in a difficult market situation.
• Production of OSB continued to increase in 1998 in North America by more than 15%, however, demand outstripped capacity increases and prices turned around and surged to record levels.
• In the United States structural panel sector OSB continued to gain market share over softwood plywood and in 1999 the production volume may exceed plywood.
• In 1998 the tropical hardwood plywood sector has been characterised by cheaper exports as a result of currency devaluations due to the Asian economic crisis.
• Apparent consumption of MDF in Europe in 1998 further increased by 20% to 6.1 million m3 and during the same period capacity expanded by 15% to 8 million m3.
• In 1998 engineered wood products in the United States continued to gain market share from dimension lumber (sawnwood); production of laminated veneer lumber (LVL) and  wooden  I-beams increased by 21% and 25% respectively.

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Chapter 10
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Chapter 11

WOODPULP, PULPWOOD AND PAPER AND PAPERBOARD SUPPLY, TRADE AND CONSUMPTION

Highlights

• In 1998 as a whole, production of paper and paperboard was slightly higher in Europe than in 1997, but lower in North America, despite higher consumption (imports rose and exports fell).
• North American pulp production fell, but in Europe, the level remained roughly unchanged;  recovered paper and eucalyptus pulp continued to increase their share of total paper-making furnish.
• In 1998 world pulp markets were characterized by oversupply and weak prices, but production cutbacks restored market balance and prices were rising in mid-1999.
• Volumes of European pulpwood removals rose, but market conditions were generally stable or weak.
• European pulpwood imports from Russia and the Baltic countries, mostly to Finland and Sweden, continued to rise.
• In North America the pulpwood oversupply and high stock levels resulted in steeply falling prices.

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Chapter 11
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Chapter 12

CERTIFIED FOREST PRODUCTS

Highlights

• Demand for certified forest products (CFPs) in 1999 remains small and mainly from retailers.
• The majority of the world-wide demand for CFPs comes from within the ECE region, mainly from Europe and principally from net importing countries.
• Potential supply of CFPs has increased dramatically due to new forests being certified.
• Producers of CFPs seek advantages other than profit.
• The Pan European Forest Certification system was established in mid 1999.

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Chapter 12
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Chapter 13

TROPICAL TIMBER DEVELOPMENTS

Highlights

• Tropical timber markets continued to fall sharply during the first half of 1998, but appeared to reach the bottom in the later half of the year.
• Recovery in some tropical timber markets was occuring in early and mid 1999.
• ECE exporters were severely impacted by the downturn in Asian markets in 1998; however, demand was increasing in Japan and Korea in early and mid 1999.
• Production and trade of secondary tropical forest products withstood the economic crisis better than primary products and in some cases were positively influenced by producers’ currency devaluations.
• Tropical timber prices fell sharply in 1998, but partly recovered in early 1999.
• Currency devaluations of many Asian currencies had direct effects on ECE region forest products trade.

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Chapter 13
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Annex tables

APPARENT CONSUMPTION OF FOREST PRODUCTS BY COUNTRY

1. Sawn softwood
2. Sawn hardwood
3. Particle board
4. Plywood
5. Fibreboard
6. Newsprint
7. Other printing and writing paper
8. Chemical woodpulp

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Annex tables
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Reader Survey

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Reader Survey
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