Overview of global sawn softwood market International Softwood Conference Paris, October Rupert Oliver Forest Industries Intelligence

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1 Overview of global sawn softwood market International Softwood Conference Paris, October 2016 Rupert Oliver Forest Industries Intelligence

Global sawn softwood production Consistent increase from 280 million m 3 in 2011 to 319 million m 3 in 2015.

3 Global sawn softwood production Consistent increase from 280 million m 3 in 2011 to 319 million m 3 in Rebound from global financial crises Slight slowing in pace of increase in 2015 Source: Forest Industries Intelligence Ltd analysis of UNECE and FAOSTAT

4 Regional sawn softwood production Rising production driven mainly by N America N America: + 3.1% to 100.8m m 3 in 2015 Europe largest 102.7m m 3 but zero growth in 2015 Slow growth in CIS production, up 1.1% in 2015 to 37.1m m 3 Strong growth in China levelled off at 30.5m m 3 in 2014 and 2015 Source: Forest Industries Intelligence Ltd analysis of FAOSTAT

5 Global sawn softwood consumption Increase in annual consumption from 275m m 3 in 2010 to 320m m 3 in 2015 Pace of growth slowed to 0.9% in 2015 Source: Forest Industries Intelligence Ltd analysis of FAOSTAT & Global Trade Atlas

6 Regional sawn softwood consumption Europe largest consumer: +1.4% to 90.6m m 3 in 2015 Gap narrowed sharply with N America: +4.6% to 89.1m m 3 in 2015 Levelling of consumption growth in China +0.8% to 53.2m m 3 in 2015 CIS consumption falling 11% to 16m m 3 in 2015 Consumption flat elsewhere Source: Forest Industries Intelligence Ltd analysis of FAOSTAT & Global Trade Atlas

7 Per capita sawn softwood consumption in 2015 Very highly concentrated in northern countries 5.56b (77% of world s population) in countries with annual per capita consumption < 0.04m 3 Highest medium term growth potential in China Source: Forest Industries Intelligence Ltd analysis of FAOSTAT, Global Trade Atlas and World Bank data

8 Global sawn softwood trade Close to 2006 peak in 2015 Global exports: 126m m 3 in 2015 up 3.4% on 2014 up 41.4% on 2009 Global imports: 121m m 3 in 2015 up 2.8% on 2014 up 46.0% on 2009 Continuing increase in trade in 1 st half of 2016 Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas and Eurostat COMEXT data

of forest & killed 50% of BC commercial lodgepole pine volume Tightening AAC in Eastern Provinces due to public pressure to take greater

9 Canada sawn softwood exports One third of all world exports Rising since 2009, mainly to USA (& China until 2013) In 2015, exports up 9% to US but down 12% to China Long term supply constraints Mountain Pine Beetle affected 18m has. of forest & killed 50% of BC commercial lodgepole pine volume Tightening AAC in Eastern Provinces due to public pressure to take greater account of non timber values & higher costs SLA expired Oct 2015 uncertainty over re negotiation before Oct 2016 deadline Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas

Russia sawn softwood exports Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas Rising 2012 2015,

falling in 2016 Rouble depreciation since mid 2013 Russia s 25% log export tax from April 2008 reduced to 13 15% in 2012

10 Russia sawn softwood exports Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas Rising , mainly to China Exports to Europe up 11% in 2015 and rising in 2016 Exports to other CIS countries down 22% in 2015 and falling in 2016 Rouble depreciation since mid 2013 Russia s 25% log export tax from April 2008 reduced to 13 15% in 2012 (subject to quota) Priority Investment Projects Huge unrealised potential due to high logging costs, logistical challenges and investment risk

11 The next 10 largest exporters 5% rise in exports by Sweden and Finland in 2015 Exports also rising from Austria, Chile, Latvia, Ukraine and NZ in 2015 Fall in exports from Germany, USA & Romania in 2015 Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas & Eurostat COMEXT

USA sawn softwood imports 25% of all world imports Imports up 10% to 32.4m m 3 in 2015 & rising in 2016 Import share of consumption up from 34% in 2011 to 39% in 2015 Almost exclusively from Canada U.

12 USA sawn softwood imports 25% of all world imports Imports up 10% to 32.4m m 3 in 2015 & rising in 2016 Import share of consumption up from 34% in 2011 to 39% in 2015 Almost exclusively from Canada U.S. housing starts: precrises 1.80m > 0.55m in 2009 > 1.3m in 2015 US South potential for rising production SLA renegotiation? Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas & USDA GATS

13 China softwood log imports Imports fell 18% to 28.6m m 3 in 2015 Slight uptick in 2016 Russia leading supplier to 2012 but overtaken by NZ in 2013 Quantity units changed from m 3 to tonnes in 2014 => rough estimate 2014/15 Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas

14 China sawn softwood imports Sharp rise in imports in 2014 (exaggerated by unit change?) Only 1.6% growth to 22.8m m 3 in 2015 Import growth resumed in first half of 2016 Canada leading supplier but Russia now dominates Imports from Russia up from 6.4m m 3 in 2013 to 13m m 3 in 2015 & 8.6m m 3 in 1st half Imports from Canada decreased from 7.5m m 3 in 2014 to 6.1m m 3 in 2015 and slow in 1 st half of 2016 Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas

15 The next 10 largest importers Japan spiked in 2013 but fell in 2014 & 2015 rising again 2016 (mainly from Canada, Finland, Russia & Sweden) UK up 6.8% in 2015 but prospects uncertain post Brexit vote Uptick in Germany & Netherlands in 2015 Italy & France flat Egypt surged in 2014 and remained high in 2015 (mainly from EU & Russia) Algeria imports up in 2015 from Slovenia, Sweden, Finland & Germany, slower in 2016 Source: Forest Industries Intelligence Ltd analysis of Global Trade Atlas & Eurostat COMEXT

16 Global construction market Oxford Economics Global Construction 2030 Global construction to grow 3.9% pa, rising 85% by 2030 to reach $US17.5 trillion China to remain world s largest construction market US growth driven by strong cyclical rebound in near term & solid prospects to 2030 European construction slow recovery to pre crises levels by 2025 demographic weakness, residual economic uncertainty India needs to build 170m houses over next 15 years Japan s shrinking population Indonesia 4 th largest construction market by 2030

building on earthquake shake table at Miki in Japan.

17 Cross laminate timber new opportunities in construction >90% CLT production in Europe Earthquake test of 7 storey CLT building on earthquake shake table at Miki in Japan. Research collaboration between Ivalsa in Italy and Germany/Austria SOFIE Project

18 Wood modification Extending softwood applications Accoya acetylated timber bridge is expected to last 50 years >80% Thermowood sales in Europe Thermowood Association accounts for around 50% of total European production

19 Thank you! Rupert Oliver

Overview of European sawn softwood market in 2016 International Softwood Conference Paris, October Andreas von Möller

Overview of European sawn softwood market in 2016 International Softwood Conference Paris, October 2016 Andreas von Möller Eurostat construction production index for the EU Member States value of seasonally