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Forest products markets in Europe still suffer from housing slowdown while Canadian-based sawn softwood producers move south

Published: 05 November 2015

Markets show signs of rising consumption for some forest products, though the picture is far from consistent In Europe and North America, forest products consumption is strongly related to construction. The hoped-for recovery from the trough of the 2008 global financial crisis has not materialized. Housing starts in Europe and North America are still only about two-thirds of what they were in 2000. These were some of the market trends discussed at the Joint UNECE and FAO Committee meeting in Engelberg, Switzerland this week (Silva 2015).

One factor is what Sten Nilsson, CEO of Forest Sector Insights called “Hotel Mama”, a societal change whereby young adults (generation Y) are increasingly living at home with their parents. The number of 18-29 year-olds living with their parents in Europe has been increasing and is now approaching 50%. In North America this figure is lower but also increasing. According to Nikolay Ivanov, Vice President, Union of Timber Manufacturers and Exporters of Russia, this is in contrast to housing starts in the Russian Federation, where a record of more than one million new residences were constructed in 2014, with wooden construction taking a steadily growing share.

In North America, the Softwood Lumber Agreement between Canada and the US expired in October, 2015. Gordon Culbertson, Director, International Business at Forest2Market believes that both sides would like to reach an agreement but there are a number of factors that lead to complications:

·         British Columbia’s sawnwood output is forecasted to decline (a result of the mountain pine beetle infestation).

·         The US dollar has strengthened relative to the Canadian dollar.

·         China’s demand for Canadian sawnwood is falling, increasing the fears of US producers that Canadian wood could flood the market and soften prices.

In recent years, Canadian-based sawnwood producers have taken a large stake in the US south. Currently, about 30% of the sawn softwood production in the southeast of the US (the country’s most productive area) is owned by Canadian-based companies. All these factors make it difficult to predict whether there will be an agreement in the near term.

Wood construction was also high on the agenda and, in particular, the use of cross-laminated timber (CLT), a relatively new product that enables builders to construct tall buildings from wood due to its engineered strength characteristics.  The CLT industry is able to compete against concrete and steel as a construction material for large and tall buildings; and can outcompete steel and concrete where there is a desire for environmentally friendliness. The CLT industry has seen significant growth in production (more than 10% per year over the last 15 years) and architects continue to design and build ever-higher CLT structures (the current champion is 14 storeys and plans exist for other buildings with more than 20 storeys). A leading expert on CLT, Gerhard Schickhofer, Professor and head of the Institute of Timber Engineering and Wood Technology at Graz University of Technology, stated that the focus should be on buildings that are 3-5 storeys, rather than on moving too fast in producing the much taller structures that some architects seem to favour.

Overall, the production forecasts for forest products in 2015 show mixed results for Europe and North America, and a more positive view of the CIS.  2016 is forecast to be more positive for Europe, North America is predicted to remain mixed and the CIS region to decelerate.  Panel production in the CIS shows the most positive developments while paper and board in North America has the most negative forecasts.

Forecast annual change for production of major forest products by sub-region

    Europe

        CIS

North America

2015

2016

2015

2016

2015

2016

Industrial roundwood

-0.2%

1.1%

1.8%

3.0%

 0.2%

-0.2%

Sawn softwood

 0.6%

1.5%

1.9%

0.8%

 1.1%

 2.0%

Sawn hardwood

 1.4%

1.4%

3.1%

0.0%

-3.2%

-0.3%

Wood-based panels

-0.1%

0.8%

2.6%

4.2%

 2.0%

 2.9%

Paper and paperboard

-0.7%

0.7%

0.8%

0.0%

-1.5%

-0.3%

Silva2015 was a joint meeting of the UNECE Committee on Forests and the Forest Industry and the FAO European Forestry Commission), and was held in Engelberg Switzerland, 2-6 November.

For further information on Market Statements and forecasts, please follow: www.unece.org/forests/market-statements-2015.html

For more information on Silva2015 please follow: www.unece.org/forests/silva2015-engelberg.html#/

Otherwise contact:  florian.steierer@unece.org


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