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Entire UNECE region forest sector being reshaped by wood energy policies and markets in 2006 and 2007

Published: 31 July 2007

Geneva

The United Nations Economic Commission for Europe (UNECE) and the Food and Agricultural Organization (FAO) just released the UNECE/FAO Forest Products Annual Market Review, 2006-2007. It covers forest products market and policy developments in the UNECE member States. The comprehensive report will be presented at the first joint UNECE Timber Committee and International Softwood Conference Market Discussions on 8-9 October 2007 in Geneva. The study’s main findings are:

  • In 2006 and early 2007, United States house construction fell sharply (see graph, dragging down North American forest products markets, notably for sawnwood; however, stronger European and CIS markets pushed UNECE region consumption of wood and paper products to record volumes of 1.4 billion m3.

  • Responding to climate change and energy security concerns, government policies in Europe and North America are accelerating woodfuel demand to meet targets for renewable energy.

  • Rising demand for wood energy, in addition to the wood and paper industry’s increasing demand for wood raw materials, necessitates mobilizing more wood, which is reshaping the entire forest sector, with long-term opportunities and short-term consequences.

  • Approximately half of the 472 million m3 harvested in Europe, and the 679 million m3 harvested in North America, is sooner or later used for energy.

  • Certified forest area reached 292 million hectares worldwide by mid-2007, with most in the UNECE region, where in addition to wood, other products are being certified, including woodfuel and non-wood forest products.

  • China now leads the world in both roundwood imports and furniture exports, which has stimulated imports of roundwood and sawnwood from the UNECE region, and is an existential threat for some of the region’s furniture manufacturers (see graphs).

  • China’s forest products output was $140 billion in 2006, increasing by over 25% from 2005; primary products imports increased by 14% to $17 billion, and exports increasing by 26% to $7 billion in the same period.

  • Half of China’s furniture exports are wooden, rising rapidly over the last decade, including by 39% from 2005 to 2006, to reach $8.8 billion.

  • In Europe, strong growth in both production (by 4.7% to 110.5 million m3) and consumption (by 4.0% to 102.1 million m3) (i.e. strengthening net exporter) of sawn softwood occurred in 2006, rising with increased prices for sawlogs and sawnwood; conversely, North American prices and markets fell (production by 3.9% to 122.6 million m3 and consumption by 5.0% to 122.2 million m3) (see graph).

  • Investments in European wood processing capacity, at times with EU assistance and at times by multi-national companies, have created greater demand for industrial roundwood and more production of wood products for both domestic and export markets.

  • Russia implemented a far-reaching Forest Code to improve the whole sector, and then initiated rising export taxes on roundwood in mid-2007; however, there were numerous start-up complications. A longstanding US-Canada Softwood Lumber Agreement was resolved with a new seven-year trade agreement in 2006, but it remains controversial.

  • Germany became Europe’s largest sawnwood producer in 2004, and its production of sawn softwood escalated again in 2006, by 12%, reaching 23.2 million m 3; together with higher demand for wood for energy and other wood products, Germany’s roundwood removals continued their rapid climb in 2006, by over 9.4%, reaching 62.3 million m3 (see graph).

Market summary

Forest products markets in the UNECE region moved up slightly in 2006 to remain at a record level of consumption. However, trends were far from consistent between the three subregions. Consumption in North America, the largest consuming subregion, fell by 1.8% in 2006, primarily due to a severe downturn in US housing construction, by 13% in 2006; another 18% drop is forecast for 2007. In turn, Canada’s wood products production, most of which is destined for US markets, also fell, compounded by reduced harvests in some provinces, the strengthening currency and insect outbreaks. In North America, these problems together have resulted in panel, paper and sawmill closures and reduced output and profitability for those that have stayed in production. In certain localities and product sectors, market analysts have termed the situation catastrophic.

In contrast to North America, wood and paper markets in Europe have risen again for the fifth straight year as measured by consumption volumes. Economies have strengthened over the last year, and in mid-2007, market indicators suggest continued growth. Sawnwood consumption moved up by 3.4%, with all of the increase for softwood, as hardwood remained steady. Panel and paper manufacturers had higher production and exports in 2006 over 2005 and received higher prices for their products. Strongest overall growth in consumption in the UNECE region, by well over 5.4%, occurred in the Commonwealth of Independent States (CIS) in 2006.

The Forest Products Annual Market Review begins with an overview of forest products markets and policies, followed by a chapter on government and industry policy issues impacting forest products markets. These are followed by analyses of the economic factors affecting the forest and forest industries sector. Statistics-based chapters are included for markets of sawn softwood, sawn hardwood, wood-based panels, paper, paperboard and woodpulp, wood raw materials and tropical timber. Additional chapters highlight the key developments in wood energy, forest products certification, as well as value-added wood products, e.g. furniture. Electronic annexes provide supplementary statistical information and the Review’s database is available on the website below.

In conjunction with the first joint UNECE Timber Committee and International Softwood Conference Market Discussions to be held on 8-9 October 2007 at the Palais des Nations, there will be a one-day policy forum on wood energy and mobilization of wood on 10 October, also at the Palais des Nations. The market discussions will be based on this report, plus country market reports and market forecasts for 2007 and 2008. Journalists are encouraged to register and attend both. See website below.

Copies of the Review may be obtained from the website homepage of the UNECE Timber Committee and the FAO European Forestry Commission, at the website below. The Review is also a UN sales document which can be ordered through the distributors of United Nations publications in various countries or from the United Nations Office at Geneva (e-mail: unogbookshop@unog.ch).

For further information please contact:

Mr. Ed Pepke

Forest Products Marketing Specialist

UNECE/FAO Timber Section

Trade and Timber Division

United Nations Economic Commission for Europe

448 Palais des Nations

CH - 1211 Geneva 10, Switzerland

Phone: +41 (0) 22 917 2872

Fax: +41 (0) 22 917 0041

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United States housing starts, 2004-2007

 

Note: SAAR = Seasonally adjusted annual rate.
Source: US Bureau of the Census, 2007.

Chinese forest products imports, 1997-2006

Source: Tan, X. et al., 2007.
 

Chinese forest products exports, 1997-2006

Source: Tan, X. et al., 2007.

 

Sawn softwood price trends in US, Europe and Japan, 2004-2007

Note: Exporters prices are for structural sawnwood (net sizes) in key markets: 2x4, J-Grade, FOB Japan; 47x100, carcassing, FOB Europe; and 2x4, #2, & Better, delivered to Chicago.
Source: Wood Markets Monthly Newsletter, 2007.

Industrial roundwood, fuelwood and sawnwood production in Germany, 1996-2006

Notes: The authors believe that the official fuelwood statistics underestimate the actual production.
The abnormally high production in 2000, which has now been surpassed, resulted from the windstorms in December 1999.

Source: UNECE/FAO Timber database, 2007.

Ref: ECE/TIM/07/P04


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