european timber markets: developments and challenges in 2004

Diversity in the Single Market – Challenges for Tropical Timber in Europe

ITTO Market Discussions, 22 July 2004, Interlaken, SwitzerlandFA

OPhoto:

APA

European Timber Markets: Developments and Challenges in 2004

Ed Pepke, Ph.D.Forest Products Marketing SpecialistFood and Agricultural Organization &UN Economic Commission for Europe

Geneva, Switzerland



OPhoto:

APA

UNECE/FAO Timber Branch

FA

O

Timber Committee

European Forestry

Commission



OPhoto:

APA

Sources

• UNECE/FAO TIMBER database on forest products

• UNECE/FAO Temperate & Boreal Forest Resources Assessment 2000

• FAOSTAT Forestry Database website• UNECE/FAO Timber Bulletin “Forest

products annual market review, 2003-2004



OPhoto:

APA

FPAMR vs. ITTO’s market review

• Based on Joint UNECE/FAO/ITTO/Eurostat questionnaire

• Shared information, e.g. tropical timber chapter by ITTO

• Other FPAMR chapters– Policies influencing forest products

markets– Primary product sectors– Value-added wood products– Certified forest products



OPhoto:

APA

Subjects of presentation

• EU enlargement and its effects– Forest products markets– Tropical timber markets in Europe– Forest resources

• Findings from FPAMR 2004• Key issues in forest products

markets and government policies



OPhoto:

APA

EU Enlargement

EU15 + new EU10 = EU25

What effect on forest products markets?



OPhoto:

APA

EU 15



OPhoto:

APA

EU 25



OPhoto:

APA

Future EU 29



OPhoto:

APA

EU enlargement in general

• Population– 20% increase to 454 million

• Gross domestic product (GDP)– Almost 5% increase to €9,613 billion

• Intra EU25 trade accounts for two thirds of total trade of EU25



OPhoto:

APA

Currencies in the “single” market

70

80

90

100

110

120

130

140

150

160

2000 2001 2002 2003 2004

Index 1

/2000 =

100

EURO CHF PLZ SKR GBPSource: International Monetary Fund, 2004

14 currencies all together in EU !



OPhoto:

APA

EU 15 to EU 25:

Effects on forest products

markets



OPhoto:

APA

Annual per capita consumption

(m3 or m.t./person/year)

Product EU 15 EU 10

Sawnwood 0.23 0.15

Wood-based panels 0.12 0.11

Paper and paperboard 0.20 0.08



OPhoto:

APA

Changes to forest products trade

• Most changes made prior to 2004 in preparation for accession

• 80% of forest products exports already to EU (90% in Baltic countries)

• Higher speed of transport through customs = lower cost

• Reduced market barriers, including taxes, ending duties



OPhoto:

APA

Changes to forest products trade

• Increased market info• Consistent trade regulations• Consistent quality standards• Freer flow of labour• EU economic development funding

available



OPhoto:

APA

Roundwood (logs)



OPhoto:

APA

Total consumption of roundwood

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Consumption of tropical roundwood

0

500

1 000

1 500

2 000

2 500

3 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Consumption of hardwood roundwood (EU 25)

98 000

100 000

102 000

104 000

106 000

108 000

110 000

112 000

114 000

1999 2000 2001 2002 2003

1,0

00 m

3

Temperate Tropical



OPhoto:

APA

Imports of tropical roundwood

0

500

1 000

1 500

2 000

2 500

3 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Sawnwood (lumber)



OPhoto:

APA

Imports of tropical sawnwood (m3)

0

500

1 000

1 500

2 000

2 500

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Imports of tropical sawnwood ($)

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1999 2000 2001 2002 2003

1,0

00 U

S$

EU 15 EU 10



OPhoto:

APA

Imports of tropical sawnwood: volume vs. value (EU 25)

7800

8000

8200

8400

8600

8800

9000

1999 2000 2001 2002 2003

Volu

me, m

3

2 800 000

2 900 000

3 000 000

3 100 000

3 200 000

3 300 000

3 400 000

3 500 000

3 600 000

Valu

e, $

Volume Value



OPhoto:

APA

Imports of temperate vs. tropical sawn hardwood

0123456789

10

19891990

19911992

19931994

19951996

19971998

19992000

20012002

2003

Million m

3

Temperate Tropical



OPhoto:

APA

Consumption of sawn hardwood

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Consumption of tropical sawnwood

0

500

1 000

1 500

2 000

2 500

1999 2000 2001 2002 2003

1000 m

3

EU 15 EU 10



OPhoto:

APA

Sawnwood consumption comparison

010 00020 00030 00040 00050 00060 00070 00080 00090 000

100 000

1999 2000 2001 2002 2003

1,0

00 m

3

Tropical Temperate Softwood



OPhoto:

APA

Imports of sawn hardwood

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Exports of sawn hardwood

0

500

1 000

1 500

2 000

2 500

3 000

3 500

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Production of sawn hardwood

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Beech sawnwood prices

85

90

95

100

105

110

115

120

125

1999 2000 2001 2002 2003 2004

Index 1

995 =

100

Germany France



OPhoto:

APA

Consumption of sawn softwood vs. sawn hardwood (EU 25)

010 00020 000

30 00040 00050 00060 00070 000

80 00090 000

100 000

1999 2000 2001 2002 2003

1,0

00 m

3

Softwood Hardwood



OPhoto:

APA

Imports of sawn softwood

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Exports of sawn softwood

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Plywood



OPhoto:

APA

Imports of plywood

0

1 000

2 000

3 000

4 000

5 000

6 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Imports of tropical plywood

0

200

400

600

800

1000

1200

1400

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Challenges for exporters to the EU

• CE marking for plywood, soon other products

• Labeling, including certification• Health and safety standards

– Phytosanitary standards• Quality/grade specifications• Packaging specifications• Species



OPhoto:

APA

Consumption of plywood

0

1 000

2 000

3 000

4 000

5 000

6 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

Production of plywood

0

1 000

2 000

3 000

4 000

5 000

6 000

1999 2000 2001 2002 2003

1,0

00 m

3

EU 15 EU 10



OPhoto:

APA

EU 15 to EU 25 - the effect on forest resources



OPhoto:

APA

Forest area

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

EU 15 EU 10

1,0

00 h

a

“Forest Available for Wood Supply”



OPhoto:

APA

Softwood vs. hardwood forests

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

EU 15 EU10

1,0

00 h

a

Softwood Hardwood



OPhoto:

APA

Forest resources in Europe

• Only 60% of wood grown is harvested

• Forest volume increases ~2 million m3 daily

• Forestland increases by 500,000 hectares

per year



OPhoto:

APA

State of Europe’s Forests

• Resources increasing• Forest health and vitality are critical• Productive functions maintained• Biodiversity is a focus• Plantations are only 3%• Protective forests are 12%• Socio-economic functions important



OPhoto:

APA

Forest resources in Russia

• Only 16% of wood grown is harvested• Forest volume increases ~3 million m3

daily • Forest area 1990 to 2000: no

significant change

Sources: State of the World’s Forests 2003; Global Forest Resources Assessment 2000; Temperate and Boreal Forest Resources Assessment 2000



OPhoto:

APA

Forest resources: growing stock

010,00020,00030,00040,00050,00060,00070,000

Million m3

Europe (41) NorthAmerica

CIS

Growing Stock Net Annual Increment Fellings

Source:Temperate and Boreal Forest Resources Assessment 2000.



OPhoto:

APA

Forest resources: NAI vs. fellings

0100200300400500600700800900

1,000

Europe (41) N. America CIS

Million m

3

Net Annual Increment Fellings




OPhoto:

APA

Forest resources: NAI vs. fellings

Fellings as% of NAI

Europe-41 60%

EU-15 64%

Nordic countries

72%

Baltic countries

50%

Central & eastern Europe

56%

Russia 16%

North America 80%




OPhoto:

APA

Forest resources summary

• Removals considerably below growth• Wide variance in utilization rates of NAI • Growing stock increasing in Europe• Oversupply compared to demand for

wood• Increasing alternative demands on

forests



OPhoto:

APA

Findings of FPAMR



OPhoto:

APA

Policies affecting UNECE region forest products markets

• Illegal logging– Dominates political discussions– EU regulation to control imports of

illegally-sourced timber in preparation• Wood energy

– Policies expanding biofuel trade– Competition for raw materials

• Tariffs, duties and regulations



OPhoto:

APA


• Promotion of wood– EU-wide promotion on enhanced use

of wood– Other regional campaigns successful

• Need to support research and development– Research has declined markedly – Development composite products



OPhoto:

APA


• Forest certification programs expanded worldwide – government purchasing programs– major wood buying groups and

retailers in the UNECE region• Global carbon trade market growing

rapidly



OPhoto:

APA

European construction sector development

Source: Euroconstruct, 2004

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

2002 2003 2004f 2005f

% c

hange

New residentialResidential renovation and modernizationNew non-residentialNon-residential renovation and modernization



OPhoto:

APA

Central and eastern European construction sector

developments

Source: Euroconstruct, 2004

-12-9-6

-3036

912

2002 2003 2004f 2005f

% c

hange

New residentialResidential renovation and modernizationNew non-residentialNon-residential renovation and modernization



OPhoto:

APA

Wood raw materials (logs & chips)

• Record roundwood production in UNECE region

• Fastest trade development: exports from central and eastern Europe

• Russian exports = 30% harvest• Log prices decreasing with higher

supply• Wood energy promotion by

governments creating new markets



OPhoto:

APA

Sawn softwood

• Globalization of markets continues• High demand in USA. Increasing imports

from Europe and elsewhere• Record European exports to Japan• Eastern Europe and Russia redefining

global marketplace• China’s demand increasingly affecting

UNECE region



OPhoto:

APA

Sawn hardwood

• Increasing central and eastern European (CEEC) demand for further processing

• Consumption increasing in UNECE region: up 9% in western Europe in 2003

• Imports increasing, primarily within region

• Record hardwood flooring demand



OPhoto:

APA

Sawn hardwood

• Growing CEEC production, trade and consumption

• CIS countries (Ukraine, Russia) exporting hardwood to Asian and European value-added manufacturers

• Interest in darker, tropical species for flooring



OPhoto:

APA

Hardwood sawlog prices

60

70

80

90

100

110

120

130

1999 2000 2001 2002 2003

Index 1

/1999 =

100

US South oak Germany oak Germany beech



OPhoto:

APA

Panels

• European particleboard, MDF and OSB industries back on track

• European plywood industry records positive results, but affected by foreign competition

• CEEC and CIS region enjoy clearly higher growth rates and increased investments

• Record prices in USA stimulate exports



OPhoto:

APA

Certification and certified forest products

• 170 million hectares worldwide• 90% in UNECE region• Public procurement policies are newest

driving force for certification• Problems

– Lack of mutual recognition– Lack of demand from final consumers



OPhoto:

APA

Certified forest area distribution

47%

40%

6% 3% 2% 2%

North America EU/ EFTA Oceania Latin AmericaOther Europe and CIS Africa



OPhoto:

APA

Value-added wood products

• 10% growth in trade in 2002• Continued growth in 2003 and 2004• China’s export power

– The US duties on wooden bedroom furniture imported from China

• Furniture most dynamic sector• Outdoor garden furniture from tropical

woods• Engineered wood products: bright future



OPhoto:

APA

World imports of wooden furniture

0

2000

4000

6000

8000

10000

12000

14000

1998 1999 2000 2001 2002

Billion $

Furniture parts Other wooden furniture

Bedroom & kitchen furniture Seats



OPhoto:

APA

Conclusions



OPhoto:

APA

Wood supply and demand:

Are we growing too much wood?

No.



OPhoto:

APA

We are not growing sustainable forest products markets as fast

as forests.



OPhoto:

APA

We must grow wood markets through long-term, international

cooperation (organizations, industry trade associations, Governments and NGOs).

Solution:



OPhoto:

APA

International wood promotion programs

• UNECE/FAO Forest Communicators Network

• Wood Promotion Council in North America

• Roadmap 2010 in Europe• National and regional programs, e.g.

Nordic Timber Council (NTC)



OPhoto:

APA

Summary

• The single EU market is diverse• New EU10 will not increase markets

dramatically in the near future• Tropical timber shares some challenges with

temperate timber– Increasing wood’s market share– Educating consumers about SFM,

renewablility, recyclability– Gaining confidence in wood

• Let’s work together to “grow” the markets!



OPhoto:

APA

Questions and discussion



OPhoto:

APA

Contact informationEd Pepke

Forest Products Marketing SpecialistUNECE/FAO Timber Branch

448 Palais des NationsCH-1211 Geneva 10, Switzerland

Telephone +41 22 917 2872Fax +41 22 917 [email protected]

www.unece.org/trade/timber



OPhoto:

APA

Presentation prepared with

Ulla Kyttälä and Eliisa RantaForest Products Marketing Assistants

UNECE/FAO Timber BranchPalais des Nations

CH-1211 Geneva 10, [email protected]@unece.org

www.unece.org/trade/timber

european timber markets: developments and challenges in 2004

Documents