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Forest products markets in the UNECE region still experiencing uneven improvement after 2008 crisis

Published: 04 September 2015

The general condition of forest product markets in the UNECE region continued to improve in North America and Europe in 2014, driven by positive economic developments, upward trends in housing and construction, and increasing consumption of roundwood (raw materials) and wood products. However, the combined consumption of sawnwood, wood-based panels and paper products is still down by 21% in North America and 12% in Europe when compared with the pre-crisis level of 2007 (graph 1). Consumption in the Commonwealth of Independent States was up by 11% during the same period, although 2014 experienced a 2% drop in consumption vs. 2013.  Production and exports increased in 2014 in the Commonwealth of Independent States (CIS) for all major forest products, supported largely by the depreciation of the Russian rouble. These are some of the main findings of the UNECE/FAO Forest Products Annual Market Review 2014-2015 released today.

Graph 1: Consumption of major wood products by subregion, 2007-2014

UNECE member countries exported almost 93 million m3 of raw logs in total (approximately 70% of total global exports), of which about two-thirds of the volume was traded between countries within the UNECE region. The region is a major net exporter of raw logs, mainly to Asia. The net export volume of raw logs to destinations outside the UNECE region was almost 30 million m3, primarily to China. The export of logs has attracted the attention of policymakers in some countries, with Belarus, Bulgaria, Ukraine and Romania, all either planning on or already implementing some form of ban on the export of raw logs.

Latin America emerges as big player in pulp and paper

Structural changes in the pulp and paper sector are continuing to have wide-reaching ramifications. In the last four years, paper and paperboard consumption has fallen by about 10% in North America and by 5% in Europe. Consumption of newsprint paper in 2015 will be about half of what it was just ten years ago in North America. This situation has caused many consolidations, conversions to different paper products, cost cutting measures and mill closures within the UNECE region. Compounding the shrinking market for UNECE region pulp producers, the consumers of pulp (paper producers) are looking increasingly to South America for their pulp supply as a means of reducing costs via low cost hardwood (plantation eucalypt) kraft pulp.

South America has attracted a great deal of investment, including from pulp and paper companies based in the UNECE region. Investors are attracted by the low cost of production afforded by the combination of highly productive forest plantations, fully mechanized forest harvest, modern mills that take advantage of newer technology and economies of scale, and the proximity to shipping.

As a result, Brazil, Chile and Uruguay have experienced sharp increases in their pulp exports over the last 15 years (graph 2). Currently, Brazil exports 2/3rds of its production and Chile and Uruguay export an even larger share. The UNECE region receives about 50% of the pulp exports of these three countries, and this trend is not expected to abate anytime soon, with Brazil’s production capacity is forecasted to increase by 40% over current levels by the end of 2018. This is putting pressure on UNECE pulp producers, which will likely result in further consolidation and contraction within the UNECE pulp sector.

Graph 2: Exports of wood pulp from Brazil, Chile and Uruguay for the production of paper,
2000-2014

Wood is the most important source of renewable energy in the region

The use of wood for energy continues to grow at almost a 5% rate in the region (2011 through 2013) and currently accounts for about half of all UNECE region renewable energy. Overall, reported use of wood energy accounts for 2.3% of all energy in North America, 5.1% in Europe and 1.0% in the CIS.

Positive structural changes have occurred in the wood pellet manufacturing sector. Per capita wood pellet consumption increased significantly in the UNECE region between 2011 and 2013, from 26 kg to 39 kg.

Europe is the world’s largest market for wood pellets; it produced 13.3 million tonnes in 2014 (about 50% of the world’s production) and consumed about 22 million tonnes. The major supplier countries of wood pellets to Europe were: the US at 3.9 million tonnes (56% of their total 6.9 million tonnes of production in 2014); Canada at 1.3 million tonnes (66% of their total production of 1.9 million tonnes), and Russia at 814 thousand tonnes (91% of their total production of 892 thousand tonnes) (graph 3).

Graph 3: Imports of wood pellets into the European Union, 2009-2014

 

You can read more by downloading the advance electronic version of the publication at http://www.unece.org/forests/fpamr2015.

The Forest Products Annual Market Review 2014-2015, provides a first look at forest products information on production, consumption and trade; and market intelligence for the 56-country region of the UNECE, and from some of the key countries outside the region that are influencing UNECE region markets.

For further information, please contact:

Florian Steierer, Forest Marketing Officer
UNECE/FAO Forestry and Timber Section
Phone: +41 (0)22 917 1409
E-mail: info.ece-faoforests@unece.org
Website: http://www.unece.org/forests/welcome.html


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