RECOVERY OF FOREST PRODUCTS MARKETS IN THE UNECE REGION IN 2003 AMID CONCERNS FOR OVERCAPACITY IN SHORT TERM
Traditional forest products markets are increasingly influenced
by new wood energy policies in the UNECE region
The UNECE Timber Committee analyzed the current forest products market situation in 2003 and forecast markets for 2004. The full text of the Committee’s approved market statement is attached, along with summary tables of forecasts. Key points from the statement are summarized below. (See also companion press release on illegal logging and wood energy (ECE/TIM/03/P02)).
Forest products markets in the UNECE region were forecast to remain at high volumes in 2003, although oversupply appeared in several sectors. However the outlook for 2004 is for little change, interpreted as uncertainty about economic conditions with the exception of Russia and the central and eastern European countries (CEECs).
In contrast to western Europe, North American wood products demand is at a high level due to the strong US housing construction.
Certain subregions, for example CEECs and the CIS, principally Russia, are benefiting from high GDP growth, availability of wood raw materials, low labour costs and favourable government policies creating a climate for international investment.
The Timber Committee discussed forest law enforcement, governance and trade (FLEGT), at present the main issue in the forest sector. Illegal logging denies revenues to governments, industries and forest owners, puts downward pressure on forest products prices, negatively affects workers and compromises sustainable forest management.
The Committee felt wood energy should continue to be promoted by governments, noting an excess of growth over removals in the region’s forests, to improve forest viability, provide rural employment, promote renewable resources and mitigate climate change. It acknowledged the concern of some industry sectors for raw material competition.
Certified forest products
The area of certified forestland has grown to approximately 160 million hectares worldwide, of which most is in the UNECE region.
In environmentally-conscious markets, certified forest products are gaining recognition, but mainly at the business-to-business level.
Public procurement policies, in favour of wood products originating from sustainably managed forests, may become important drivers.
The lack of a price premium for certified forest products and of comprehensive mutual recognition of certification schemes remain outstanding concerns.
Globalization is transforming the sawnwood trade: trade is expanding in further-processed sawnwood products, both from within the UNECE region, but also from outside, such as plantation-grown softwood from the southern hemisphere.
Trade disturbances such as the U.S. anti-dumping and countervailing duties on Canadian sawn softwood have impacts such as the transfer of trade to other countries and increases in manufacturing efficiency.
Sawnwood prices have been weak in the North American oversupply situation, but some strengthening in prices is evident in Europe. Russian sawnwood prices remain below western prices.
Russian sawn softwood exports are forecast to grow, notably to China, by 5% in 2003 and again by 6% in 2004, confirming recovery of the sector’s exports to levels greater than the former USSR.
In Europe, a furniture crisis occurred in 2002: growth in furniture demand stopped, leading to a drop in sawn hardwood demand. Throughout the UNECE region, increasing imports of furniture from outside the region are displacing domestic production, negatively affecting both sawnwood and panels demand.
Romanian production and exports of sawn hardwood were forecast to accelerate, with exports expanding by 23% in 2004, confirming Romania as Europe’s largest sawn hardwood exporter.
Although production is at record levels, the wood-based panel industry faces short-term overcapacity and low prices. Rationalisation of less competitive plants is occurring.
Paper, paperboard and woodpulp
Russian consumption will grow faster than in Europe, as per caput consumption levels converge on those of Europe and North America.
North American consumption of paper and paperboard is forecast to decline reflecting structural changes in the economy and weakness of advertising in paper-based media, as well as overcapacity in the sector.
In Europe, woodpulp now accounts for less than half of the raw material used for paper production as the use of recovered paper expands rapidly.
Wood raw materials, including wood fuel
The hot, dry summer of 2003 negatively influenced roundwood markets due to fires and insect infestations.
While the majority of roundwood exports are legal, some come partly from illegal logging and the Timber Committee is seeking much better information on the extent of illegal logging.
Additional information is available on the UNECE Timber Committee web site on: complete tables of country forecasts (www.unece.org/timber/mis/forecasts.htm), country market statements (www.unece.org/timber/mis/market/market-61/market-61.htm), draft Forest Products Annual Market Analysis, 2002-2004 (www.unece.org/timber/docs/fpama/2003/fpama2003a.htm)
For further information, please contact:
Mr. Christopher Prins
Chief, UNECE/FAO Timber Section
Trade Development and Timber Division
United Nations Economic Commission for Europe
Palais des Nations
CH - 1211 Geneva 10, Switzerland
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1. Europe: Summary table of market forecasts for 2003 and 2004
2. North America: Summary table of market forecasts for 2003 and 2004
3. Russian Federation: Summary table of market forecasts for 2003 and 2004