UNECE Region Forest Products Markets Forecast to turn up in 2010 – Is this the start of a recovery?
At its annual market discussions conducted in Geneva on 13-14 October 2009, the UNECE Timber Committee forecast an upturn in most wood products market sectors in 2010. However, experts concluded that it is far too early to speak about a recovery. The Committee adopted an official market statement with forecasts for each market sector.
After suffering the greatest decline in consumption since the oil crisis of the 1970s, with a fall of 8.5% in 2008, forest products markets were forecast to fall again in 2009, with one major exception: wood energy which was buoyed by Governments’ policies for renewable energy sources for a green economy.
Using sawn softwood as a market indicator, the UNECE Timber Committee forecast that the sector will rebound in 2010, with consumption increases in the UNECE subregions of the CIS, Europe and North America by 27.9%, 2.5% and 5.5% respectively. Overall in the UNECE region, sawn softwood consumption is forecast to increase by 4.3% in 2010.
Summary of key developments
Certified forest products
- Certified forest area is increasing slowly and is concentrated mostly in North America and Europe, which represents 97% of the certified roundwood supply.
- Chain-of-custody certificates increased sharply, by 41% in 2008, indicating strong market activity for certified forest products.
- Obstacles to market development for certified wood products are the fragmentation in trade and consuming sectors, as well as consumers’ lack of awareness and willingness to pay premiums.
- The future progress of certification schemes depends on their ensuring compliance with the new US and EU policies combating illegal logging, as well as accounting for carbon storage and sustainable production of biofuels.
- Green building continues to be an important market driver, especially considering that 40-50% of the world’s energy usage is for space and water heating and cooling.
- There are tremendous opportunities for renovation of existing buildings to improve their energy efficiency.
- Governments are supporting energy-efficient construction and renovation through their subsidies and other programmes to promote a green economy.
- To promote green building the forest sector needs to build strategic alliances with stakeholders to understand and acknowledge the contribution of wood products in buildings to fight climate change.
- The Committee promotes a scientific basis for green building rating systems, i.e. life cycle assessment for all construction materials, and the continuous updating and sharing knowledge on construction materials and energy consumption.
Corporate social responsibility
- Forest products companies and their trade associations are initiating and developing their corporate social responsibility (CSR) programmes to show to customers and consumers that they act responsibly.
- This is a structural change in the way the forest sector is doing business.
- Even in an economic crisis, CSR programmes help maintain market share, as well as build better relations with local communities and employees.
China’s importance in the UNECE region forest products markets
- China is the UNECE region’s major trading partner, especially for wood and paper products.
- The exponential development of China’s wood and paper products manufacturing suffered its first downturn in 2008, and indicators in the first half of 2009 show an 11.7% wood and paper products export decrease from 2008.
- China is the world’s largest importer of roundwood, but imports decreased in the first half of 2009 by 18%, especially from Russia.
- The immense scale of construction, combined with rising consumer spending, means increasing domestic consumption of wood and paper products. To produce paper, China dominates world waste paper imports.
- China forecasts its economy will recover quickly to double-digit growth, which is in part dependent on recovery of its trade partners’ economies to resume exports.
Wood raw materials
- The Committee forecasts further decline of roundwood production (and consumption) in 2009, however in 2010, a slight upturn is expected in Europe and CIS, but not in North America.
- The weak markets pose difficulties for utilising dead wood from forests infested by the mountain pine beetle. In Canada it is estimated that 14.5 million hectares of forest, with 620 million m3 have been affected by the outbreak. Further losses are predicted, as it spreads geographically further within Canada and the United States and to new species.
- The production and traded volumes of wood pellets are expected to double by 2012. Europe remains the biggest producer, importer and consumer of wood pellets.
- Several huge pellet plants are under construction in the Russian Federation and the Russian Parliament adopted a decree on renewable energy sources which aims to increase the role of woody biomass in the domestic energy consumption.
Forest carbon markets
- Forests play an essential role in the global carbon cycle, yet thus far forestry projects have played but a disproportionately minor role in GHG emissions trading, compared to their full potential.
- The EU Emissions Trading System excludes forest carbon, but a US cap-and-trade scheme could accept a relatively large amount of forestry offsets from tropical developing countries, with potentially significant impacts on carbon markets.
- The forest sector could undergo a structural shift after 2012, depending on the scope of the successor to the Kyoto Protocol.
Paper, paperboard and wood pulp
- Pulp and paper production and consumption in both Europe and North America is forecast to decline in 2009 (by 6.8% and 1% respectively) as the global economic crisis took hold – 2010 forecasts are weak.
- In mid 2009 pulp prices started to stabilize which is seen as a first hint of a positive market development.
Additional information is available on the Timber Committee website:
Complete tables of country market forecasts for 2009 and 2010 at: http://timber.unece.org/index.php?id=42
Country market statements at: http://timber.unece.org/index.php?id=235
UNECE/FAO Forest Products Annual Market Review, 2008-2009 at: http://timber.unece.org/index.php?id=208
For additional information please contact:
Forest Products Marketing Specialist
UNECE/FAO Timber Section
Trade and Timber Division
United Nations Economic Commission for Europe
Palais des Nations
CH - 1211 Geneva 10, Switzerland
Phone: +41 (0)22 917 2872
Fax: +41 (0)22 917 0041
Site Web: www.unece.org/timber/
Workshop website: http://timber.unece.org/index.php?id=195