Global Timber and Solidwood Market Highlights - Focus on Asia 2012

Transcription

1 Global Timber and Solidwood Market Highlights - Focus on Asia th Annual Global Forest & Paper Industry Conference, PWC, Vancouver, British Columbia, May 12, 2012 Bob Flynn Director, International Timber

2 Highlights of Timber and Solidwood Markets: Key Points in 2012 North America very slow recovery in housing/lumber demand, growing importance of Asian markets China slow in the first half, but major driver of international trade in softwood logs, lumber, pulp China also rapidly becoming a major importer of hardwood chips for domestic pulp production Timberland investment primary focus of large investors is currently in Australia Most planted forest investment is with fast-growing hardwoods 2

3 Million Units RISI Forecast of US Housing Construction: Very slow recovery, and mostly in multi-family units 2.5 US Housing Starts, F 2 Multi-family Single Family Source: Lynn Michaelis, RISI 3

4 F 2013F 2014F 2015F 2016F Off-shore exports, especially to China, have become increasingly important for Canadian lumber producers 25% Share of Canadian Lumber Production Exported Overseas, F 20% 15% 10% 5% 0% Source: Bob Berg, RISI 4

5 The sharp divergence in timber pricing between the US West and South reflects demand-pull from China US Sawtimber Prices, F West Coast (Douglas-fir #2, Delivered) Southern Pine (Delivered)* * Assumes 7.5 MBF per Short Ton Source: Peter Barynin, RISI 5

6 Million Cubic Meters, RWE China s need for imported timber & primary forest products jumped 31% in 2011 but growth will be much slower in China's Growing Timber Deficit, Woodchips Pulp Wood Panels Lumber Logs

7 Million Cubic Meters A close look at China s domestic timber supply indicates major increases in fast-growing hardwood, but decline in softwood production China: Timber Harvest Quota by Province, 11th & 12th Five-Year Plans 11th Plan 12th Plan Guangxi Heilongjiang Fujian Jiangxi NE China SOE 7

8 Million cubic Meters The sources of China s softwood log imports have changed dramatically, but Russia is still the largest supplier 35 China: Softwood Log Imports by Source Other Canada USA Aust N Zealand Russia E 8

9 Thousand Cubic Meters Canada is the largest supplier of softwood lumber to China, with a 46% market share in 2011, followed by Russia at 36% and the USA at 8% 7,000 China: Softwood Lumber Imports by Source 6,000 5,000 Russia Canada other USA 4,000 3,000 2,000 1, E 9

10 F Million Cubic Meters, RWE Based on 2011 trade, our forecast of China s softwood log and lumber imports for 2015 looks too conservative 70 China: Softwood Log & Lumber Imports, F Logs Lumber Source: RISI s China s Timber Supply Outlook,

11 Million Cubic Meters, Lumber Scale On a lumber-equivalent basis, 60% of softwood logs and lumber from North America to China in 2011 were in the form of lumber 16 North American Softwood Log and Lumber Exports to China, US Logs Canada Logs US Lumber Canada Lumber

12 F 2013F 2014F Million BDMT By 2014, based on projects under development, China is likely to surpass Japan as the leading hardwood chip importer 14 Pacific Hardwood Chip Imports by Market, F China Japan Korea Taiwan Source: RISI s International Pulpwood Trade Review,

13 Thousand Cubic Meters India has been the fastest growing softwood log market (39% CAGR ), but volumes still below Japan or Korea 1800 India: Imports of Softwood Logs by Source, Other Australia New Zealand

14 Thousand Cubic Meters India s softwood lumber imports more than tripled in 2011, but were still only 2% of the imports in China 320 India: Softwood Lumber Imports, 2010 & Other Germany Russia N Zealand USA Canada

15 Major institutional timberland investors outside of North America have focused on Australia and New Zealand more than Latin America Oth L. America Institutional Ownership of Timberland in Latin America and Oceania, 2011 Colombia Argentina Chile Uruguay Brazil New Zealand Australia Thousand Hectares Source: RISI s Global Tree Farm Economics Review,

16 Our analysis of plantation forest investments reveals why few are focused on establishing new softwood plantations Global Tree Farm Case Study Results Species/Regime Average # of IRR case studies Rubberwood 14.4% 2 Teak 14.0% 12 Eucalyptus Sawlogs 10.7% 11 Eucalyptus Pulpwood Brazil 10.6% 4 Eucalyptus Pulpwood Australia 3.8% 4 Biomass Northern Europe 9.9% 6 Biomass (Euc) US South -1.0% 2 Softwood sawlogs 5.4% 26 Other Case Studies 8.6% 37 16

17 Key Points North America plenty of timber, and the slow recovery in demand for lumber means that China will continue to be very important for timberland owners, log exporters and lumber producers. China 2012 will be slow, but with demand for softwood log and lumber imports increasing in in line with economic growth projections China Expansion in woodchip imports will continue to focus primarily on hardwood, with only minor expansion in softwood chip imports Timberland Investment Lack of focus on expanding softwood plantations has long-term implications for fiber supply and trade 17

18 Questions? Bob Flynn Director, International Timber, RISI Phone: Mobile: Web site: Presentation based on China s Timber Supply Outlook, , International Pulpwood Trade Review, Global Tree Farm Economics Review