Overview of global and European forest products markets

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1 Elias Hurmekoski Overview of global and European forest products markets Sant Pau, Barcelona, 29 November 2016 Engineered wood products and wood construction in the bioeconomy: Opportunities & challenges for Southern Europe

2 Economic relevance of forest industries WORLD (FAO) Pulp, Paper and Paperboard Sawnwood & Wood-Based Panels Total Employment (2011) Production value (2014) 4.3 million 5.4 million 9.7 million 498 billion $ 307 billion $ 805 billion $ EU-28 (Eurostat) Pulp, Paper and Paperboard Wood products industries Total Employment (2013) Production value (2013) 0.64 million 0.97 million 1.61 million 165 billion 112 billion 277 billion 5 % of European manufacturing industries production value & employment Easily doubled, if considering the downstream industries & forestry

3 What is happening in the global and European forest products markets?

4 Shares of global forest products production Shares of global paper and paperboard production Shares of global wood-based panel production

6 Sawnwood has been substituted by wood-based panels

7 Bioenergy may refer to 1000 different things Assortments (energywood, industry residue, post consumer wood, etc.) Products (chips, pellets, ethanol, etc.) Conversion technologies (burning, fermentation, pyrolysis, etc.) Market segments (heating, power, biofuels, biochar, etc.)

8 Bioenergy market outlook expert views 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% The EU bioenergy markets will keep growing roughly in line with the trends of the past decade. The EU climate and energy policies will need to re-evaluate the balance of the energy and material uses of wood, leading to reduced policy incentives for bioenergy and a subsequent downturn of the bioenergy markets. Disagree Neither agree, nor disagree Agree The competition with other renewable energy technologies will become fiercer bioenergy will lose ground compared with alternative renewable energy sources. Hurmekoski et al. (2016) manuscript

Creative destruction (Joseph Schumpeter, 1950s) Destructive trends Creative trends Mature pulp & paper and sawnwood markets in Europe Record long economic downturn (8 years) Investments shifting to

9 Creative destruction (Joseph Schumpeter, 1950s) Destructive trends Creative trends Mature pulp & paper and sawnwood markets in Europe Record long economic downturn (8 years) Investments shifting to fast-growing markets in Asia, or low-cost production regions like South America Diversification sawnwood to engineered wood products Pulp & paper to biorefineries Bioeconomy policies & strategies particularly climate & energy policies

10 Mature markets both cyclical and structural reasons Index 2000 = 100 Consumption per capita in Europe (excl. Russia) Wood-based panels GDP per capita (real) Packaging paper & board Wood pulp Sawnwood Graphic paper

11 Diversification Cross Laminated Timber (CLT) > 15 % average annual growth rate since 2007, despite the economic downturn! Dissolving pulp > Pöyry (2015) expects the global demand to double by 2030 Hetemäki & Hurmekoski (2016)

12 Structural implications Due to the continued financial downturn, consolidation continues A new concept in Äänekoski, Finland: A bioproduct mill that creates an industrial ecosystem, with one large pulp mill and several small firms that refine the by-products into high value products Mergers & acquisitions: Will the forest industries acquire firms from other sectors, or will firms from other industries increase their forest ownership? Statistics are giving an increasingly misleading picture of the forest products markets!

13 Thanks!

14 References & other key literature 1. Hansen, E., Panwar, R. & Vlosky, R. & (eds.) The Global Forest Sector: Changes, Practices, and Prospects. CRC Press, Taylor and Francis Group, USA. 462 p. 2. Hetemäki, L. & Hurmekoski, E Forest products markets under change: review and research implications. Current Forestry Reports, published online. 3. Hetemäki, L., Kuuluvainen, J. & Toppinen, A Future of forest-based sector state of the art and research needs. Festschrift, in honor of Ole Hofstadt and Birger Solber, Norwegian University of Life Sciences (NMBU). 4. Hetemäki, L. (ed.), Future of the European Forest-Based Sector. Structural Changes Towards Bioeconomy, What Science Can Tell Us 6, European Forest Institute. 5. Hurmekoski, E Long-term outlook for wood construction in Europe. Dissertationes Forestales Hurmekoski et al. (2016), Frontiers of the European forest sector. Manuscript. 7. Jonsson et al. (2016), Forest Products Outlook. In: Winkel (ed.), Towards a sustainable European forest based bioeconomy: assessment and the way forward, What Science Can Tell Us 7. Manuscript. 8. UNECE/FAO European Forest Sector Outlook Study (EFSOS II). UNECE Timber Committee FAO European Forestry Commission

Outlook for forest bioeconomy markets

Outlook for forest bioeconomy markets Lauri Hetemäki Assistant Director European Forest Institute @FORBIOproject Opportunities and challenges of sustainable forest bioeconomy seminar, Wanha Satama, Helsinki,