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Forest Products Markets in the UNECE region still recovering from the 2008 crisis

Published: 18 November 2014

Despite improving conditions in the five years since the economic crisis hit bottom in 2009, production output for the major forest products in the UNECE Region (Europe, the Commonwealth of Independent States (CIS) and North America) are still 10-15% below the average annual output for the four years preceding the crisis (2004-2007). This is one of the main findings of the UNECE/FAO Forest Products Annual Market Review 2013-2014(See figure 1)

The region holds 80% of temperate forests and supplies a majority of global wood and wood products. What can be said is that the industry has made many adjustments (cost cutting, consolidations and finding overseas outlets for products) which have contributed to a more stable and predictable market (a key element in attracting investment into the sector). Consumption of forest products in 2013 within the UNECE region has been uneven, with Europe stagnating, the CIS and North America showing a modest growth. (See figure 2)

Demand for many forest products has been deeply affected by developments in the key housing and construction sector. Recession, sovereign debt problems, low rates of household formation and lethargic economies continue to constrain Europe’s housing construction market; with no improvement expected before 2015 or 2016. Housing completions in the Russian Federation achieved record levels in 2013, with a total of 912,100 new dwellings built, an increase of 10.3% over 2012 and the largest number of new dwellings built in a single year for more than 20 years. In North America, the US housing market remains in the early stages of recovery, although housing starts and new house sales are still at the lowest levels recorded since 1963.

Although recent developments for most forest products markets still do not warrant being labelled as a “recovery”, the industry is looking forward to the promise of increased global demand, pent up domestic demand and the fact that wood products hold many solutions to improving the sustainability of the region’s economy and the global environment. The Review analyzes innovations in wood energy, tall buildings built with engineered wood products such as cross-laminated timber and new-generation wood-based fabrics which can fill society’s need for sustainable clothing.

Some of the other key highlights from the Review

Asia, and particularly China, continues to transform the global supply chain, taking in wood and primary wood products from the UNECE region to transform them into finished products that are subsequently reexported back to the region.

Negotiations between the EU and the US on a trade agreement called the Transatlantic Trade and Investment Partnership began in July 2013. The proposed agreement could significantly benefit the forest sector by reducing tariffs on chemical processing agents and machines as well as non-tariff barriers such as rules and regulations on forest products.

Viscose, a wood-derived fibre for producing textiles, comprises 6% of the global textile fibre market. It occupies third place in that market, after synthetics and cotton and ahead of wool. While traditional viscose has many environmental flaws, modern wood-based fibres can be considered as the most sustainable of the world’s four most commonly produced fibres.

The consumption of industrial roundwood in the UNECE region was 984 million m3 in 2013, 1% higher than in 2012 and 17% more than in 2009. Prices for wood raw materials are reached $89.45/m3 in the first quarter 2014, the third-highest price since the inception of the Index in 1995.

Apparent sawn softwood consumption rose by 5.2% in North America in 2013 and by 8.8% in the CIS. In Europe, however, demand dropped for the third consecutive year, by 1.7%. China has become a key alternative market for sawnwood producers in Canada, Europe and the US.

North American and CIS sawn hardwood consumption both increased by 12% in 2013, to 17 million m3 in North America and to 2.1 million m3 in the CIS. European sawn hardwood consumption fell by 4.8%, to 12.3 million m3.

Panel demand in the region is up and significant investment is occurring in the Russian Federation and, to a lesser degree, in North America.  Eastern Europe is increasingly supplying the market in that subregion.

Paper and paperboard production rose in North America (mainly as a result of increased demand for packaging) but decreased in Europe and the CIS. North American newsprint capacity has fallen by more than half since 2000, from 15 million tonnes to just 6.7 million tonnes in 2014, part of an increasingly severe decline transforming the paper industry.

Recent data show an increase in wood energy consumption in the UNECE region, with solid biofuels, of which the vast majority is wood, accounting for 10.5% of primary energy production in the EU27. North America exports of wood pellets to the EU reached a new high of 4.6 million tonnes in 2013 with strong continuing investments, and Russian pellet production remained at 1.5 million tonnes in 2013.

The Review is available at: http://www.unece.org/forests/fpamr2014.html

For further information, please contact:
Florian Steierer
UNECE/FAO Forestry and Timber Section
Phone: +41 (0)22 917 1409
E-mail: ece-faoforests@unece.org
Website: www.unece.org/forests.html


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