international wood supply: what are the …...global wood (fibre) megatrends strong china drive to...
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INTERNATIONAL WOOD SUPPLY: INTERNATIONAL WOOD SUPPLY: WHAT ARE THE TRENDS?WHAT ARE THE TRENDS?WHAT ARE THE TRENDS?WHAT ARE THE TRENDS?
PREPARED FORPREPARED FOR Queensland Forest & Timber Industry PlanIndustry Leaders Forum23 August, 2012
Topics
How will global wood supply and demand trends affect Australiank ?markets?
What role will (international) imports play in the Queensland market?
What export opportunities will emerge?
What are the implications for Queensland’s forest-growing andi t ?processing sectors?
1
GLOBAL WOOD (FIBRE) MEGATRENDS
Strong China drive to secure wood globally (and other fibre)
Russia – supply potential – but infrastructure limitations and rising costs
North America – crash in housing starts dropping lumber & panels demand,i b tl tti BC lpine beetle cutting BC volumes
Europe – Euro crisis depressing wood products demand but energy usesgrowing.g g
South America – rapid growth in pulpwood supply – but rising land costslimiting expansion
Oceania growing plantation supply to domestic and regional markets
Plantation development increasing in South-east Asian countries such asIndonesia Thailand and Indochina regionIndonesia, Thailand and Indochina region
Africa – politically-stable countries attracting plantation investors
India now starting to compete with China for imported fibre
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India – now starting to compete with China for imported fibre.
CHINA AS BLACK HOLE FOR WOODChina’s imports of wood raw materials and products have increased by120 million m³ in roundwood equivalents (RWE) since 2000.
160
180 Million m3 in RWE
Recovered paperPulp
Future 2030:2% CAGR = 253 million m3
120
140
PulpWood productsRoundwood
2% CAGR = 253 million m3
5% CAGR = 466 million m3
7% CAGR = 692 million m3
60
80
100
20
40
60
Source: Comtrade
01992 1994 1996 1998 2000 2002 2004 2006 2008 E2010
3
SUPPLY
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FOREST AREA BY REGION AND FOREST TYPEDuring the last 10 years, fast-growing plantations have been responsible formore than 60% of the wood supply for the incremental wood pulp capacity.These plantations are typically located in regions with favourable growingconditions for ood mainl in Latin America and So th east Asia
Nordic countries
Western Europe
conditions for wood, mainly in Latin America and South-east Asia.
Western Europe
Eastern Europe
Russia
USAUSA
Canada
Latin America
JapanPrimary forestModified natural forestSeminatural forestProductive plantation
Japan
China
Rest of Asia
Oceania
0 100 200 300 400 500 600 700 800 900 1000Million ha
pProtective plantation
Oceania
Africa
5
Million ha
WOOD SUPPLY/DEMAND – MAIN DRIVERS/DEVELOPMENTS
Increasing softwood plantations supplyd iand growing energy uses.
Stable/decreasing Russian wood exists but much is currently
Nordics increasing reliance on local supply, reduced capacity needs fewer imports.
Increasing energy demands.
Incremental harvest
long-term supply potential. Russian wood exists but much is currentlyeconomically inaccessible
China, growing demand and i t J d li i l lIncremental harvest
potential – softwood logsand biomass.
imports Japan declining slowly.
I i i t t i l t ti
Increasing supply based onRapidly-increasing plantation pulpwood supply and new demandf d l d l it
Increasing interest in plantationsfor wood products and energy.
existing and new plantations, exports to continue.
Limited expansion
from wood pulp and panels capacity.
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potential.
EUROPEANS HAVE PLENTY OF FORESTS
Percentage of total forest areaPercentage of total forest area
Country Total forest areailli h
Productive forest illi h
Growing stock, illi 3
Growing stock per ha, 3/hCountry million ha area million ha million m3 m3/ha
NV Russia 81.0 57.0 10 215 117Sweden 27.5 22.5 3 155 115Finland 22 8 20 1 2 158 96Finland 22.8 20.1 2 158 96Germany 11.1 10.5 3 380 305Norway 9.4 7.6 863 92Poland 9.1 8.6 1 864 203Baltic countries 7.3 6.7 1 446 197
Source: EFI & FAO
…AND THE POTENTIAL TO INCREASE HARVESTS – BUT NOTEASILY ACCESSIBLE
Industrial roundwood in 2009, million m3
Harvest potential
Local production
Harvest increase potential40
60
80
16%60
8062%
FinlandSweden 100
Harvest increase potential
Over-harvesting
40
60
800
20
0
20
40
80
Norway0
2049%
0
20
40
60
e162%
40
60
80
44%
Baltics
NW Russia0
0
20 e
60
80
60
80
e = estimate
P l d0
20
40
60-1%
0
20
40
60
75%
Source: FAOstat, PöyryGermany Poland
0
DEMAND
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INDUSTRIAL VS. ENERGY WOOD “WAR FRONTIERS”Due to subsidies, biofuel companies can pay more for wood raw material andplantation land. This will drive up both land and wood prices.
1000
1200Million m³
Potential conflict between fuel and industry use
800
Bioenergy
Bioenergy emerging, but behind Europe
Competition over
Energy use not competing with industry
400
600
gydisturbing wood markets
Abundant
plantation wood and land
industry
200
400 bu da tpotential supply
0Europe Russia North America Latin America Oceania Africa Asia
Sawlogs / plylogs Pulpwood Other industrial roundwood Fuelwood / energy wood
10
Sawlogs / plylogs Pulpwood Other industrial roundwood Fuelwood / energy woodNote: Figures refer to the year 2004
2020 PELLET DEMAND PEAKFrom 15 million t/a 45 million t/a by 2020.
WesternEurope
Russia
Japan &Korea
China
Million tonnes
2010
2015
2020Source: Pöyry Multiclient Study,
Wood Pellets Becoming A Global Commodity2020 Wood Pellets – Becoming A Global CommodityReleased on April 20, 2011Source: Pöyry Management Consulting
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…The European demand will have consequences for the whole f d d dforest and wood products sector
Ambitious targets and National Renewable Energy Action Plans may createmajor wood deficit in the European Union.major wood deficit in the European Union.
ent)
Deficit ~100 million m3Surplus ~100 million
b eq
uiva
le Deficit 100 million mSurplus 100 million
on m
3(s
ubM
illio
Supply Demand Supply Demand
Forest biomass supply (IPCC Scenario A1)
Forest biomass demand – Energy Use
Theoretical surplus 2010
Supply gap 2020
Forest biomass demand – Material Use2010 2010 2020 2020
Theoretical surplus 2010
PANELS – GLOBALLY LIMITED TRADE MOVEMENTSTotal 2010 volumes: 261 million m3
Europe
Rest ofAsia
NorthAmerica
China
LatinAmerica
Rest ofthe WorldProduction
Consumption
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*Europe includes Turkey and RussiaSource: Pöyry Management Consulting
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SOFTWOOD – GLOBALTotal 2010 volumes: 260 million m³
Europe
Rest of
NorthAmerica
Rest ofAsia China
LatinAmericaAmerica
Rest ofthe World
Production
Consumption
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*Europe includes Turkey and Russiap
Source: Pöyry Management Consulting
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GFC DRAMATIC FALL IN SOFTWOOD LUMBER DEMAND INWESTERN MARKETSWESTERN MARKETS
Consumption of sawn coniferous wood products in
230
250 million m3
DOT COM BUBBLE
FINANCIAL CIRISIS38%
Consumption of sawn coniferous wood products in North America and Europe 1965-2011
190
210
230
ENERGY GLOBAL
RECESSION
BUBBLE-3%
=6Mm3
-38%=78Mm3
150
170OIL CRISIS
-21%=28Mm3
CRISIS/ GULF WAR-24%
=34Mm3
-11%=18Mm3
90
110
130
50
70
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
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1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
…SO EUROPEANS AND NORTH AMERICANS LOOK TO OTHERMARKETSMARKETS
The Europeans have focused on Australia. Pacific Rim focused on China.
GFC1.2900
CurrencyThousand m3
1700
800 Other
Lithuania
Estonia
0.6
0.8
400
500
600 Czech Republic
Austria
Sweden
Germany
0.4
200
300
400Chile
United States
Canada
New Zealand
0
0.2
0
100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
New Zealand
AUD/USD
AUD/EUR
Source: WTA, Oanda
16
FURNITURE IMPORTS – AUSTRALIA Indirectly, the panel industry is exposed to competition from imported furniturefrom Asia. Although the demand for furniture is growing, it is imports that havecaptured that growth rather than domestic production.
35%
Australian Furniture Imports over Demand -real 2010-
45%
Australian Furniture Imports over Production-real 2010-
25%
30%
30%
35%
40%
10%
15%
20%
10%
15%
20%
25%
0%
5%
1997 1999 2001 2003 2005 2007 20090%
5%
10%
1997 1999 2001 2003 2005 2007 2009
Strategic question for further analysis• What are the panel furniture segments that are most exposed to this trend?
• Which panel players supply to furniture exposed to substitution by imports?
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IMPORTS OF WOODEN FURNITURE
AUD/USDWooden Furniture,Million Units
1.00
1.20
14
16AUD/USDMillion Units
Wooden Furniture, Other
0.8010
12 Wooden Furniture, Office
0.40
0.60
6
8 Wooden Furniture, Kitchen
0.202
4 Wooden Furniture, Bedroom
0.0002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Calendar Year
AUD/USD
18
WHAT ROLE WILL IMPORTS PLAY?
European suppliers have established distribution centres in eastern Australia
Will continue to service this market, especially while core markets remaindepressed
Panels and hardwood lumber producers will be affected by growing furniture Panels and hardwood lumber producers will be affected by growing furnitureimports - Australian manufacturers are losing market share.
Australian producers are facing strong value chainsg g
19
EXPORT OPPORTUNITIES
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GLOBAL TRADE OF INDUSTRIAL WOOD IS LARGE AND GROWINGGROWINGMain wood importers are Japan and China and the Nordic countries.Main exporters are Russia, eastern Europe and Oceania.
2121
HARDWOOD FIBRE- AUSTRALIA SUPPLY• Significant oversupply of fibre, which will have implications:‒ Intense competition for export market share resulting in lower prices‒ Limited existing markets for alternative usesLimited existing markets for alternative uses‒ Fragmented resource, estimated 40-50% unlikely to be replanted.
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Million m3
(RWE)
12
14
Native Forest Total
NT Plantation Pulpwood
8
10
p
NSW & QLD Plantation Pulpwood
4
6 WA Plantation Pulpwood
Tas Plantation Pulpwood
‐
2
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Pulpwood
Vic & SA Plantation Pulpwood
22
Source: Pöyry Management ConsultingYear Data from 2012 onwards is a Pöyry estimate
AUSTRALIA SOFTWOOD LOG EXPORT BY DESTINATIONSoftwood supplies in Australia are constrained.Logs uneconomic to process locally are exported – now mainly to China
1 400
1 600
000’ m3
Other
1 000
1 200
1 400
Malaysia
Japan
600
800Indonesia
Taiwan
UAE
200
400
UAE
Sth Korea
China
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011e
Source: WTA, Pöyry
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EXPORT OPPORTUNITIES
Chinese fibre demand creates some potential for exports, but mainlylog/woodchiplog/woodchip
Constrained softwood log supply outlook nationally - some log export potential
Very large hardwood pulplog supply overhang challenge to get this into the Very large hardwood pulplog supply overhang – challenge to get this into themarket at acceptable prices - makes marginal supply regions even moremarginal
Specialty products – hardwood lumber, poles and piles emphasise the strengthand special qualities of the Australian species
Pellets the likely (but as yet unproven) growth in Japanese and Korean pellet Pellets – the likely (but as yet unproven) growth in Japanese and Korean pelletmarkets creates opportunities
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WHAT ARE THE IMPLICATIONS FOR QUEENSLAND’S FORESTINDUSTRY SECTOR?
Competitive value chains:– Efficient sustainable fibre supply– Scale plants– Full paying use of residues.p y g
Innovation to capture highest-paying uses of product - CLT is one example
Support for investments to maintain the above.
25
