Update on the Asian Wood Markets

Transcription

1 Update on the Asian Wood Markets RISI North American Conference Boston, USA October 16 18, 2017 Bob Flynn Director, International Timber, RISI Copyright 2017 RISI, Inc. Proprietary Information

2 Agenda Market focus: Softwood logs, softwood lumber, woodchips Asian markets: China, Japan, South Korea, India Competing supply sources: Russia, New Zealand, Australia, Canada, Other Copyright 2017 RISI, Inc. Proprietary Information 2

3 China is the dominant market for softwood logs, accounting for close to 80% of the Asian import trade in 2017 Million Cubic Meters Japan China Korea India Softwood Log Imports in Asia 4 0 Copyright 2017 RISI, Inc. Proprietary Information 3

4 YTD softwood log imports in China are down 2% from the 2014 peak, but softwood lumber imports up 44% since China: Softwood Log and Lumber Imports, Jan. Aug 25 Logs Lumber Million Cubic Meters Copyright 2017 RISI, Inc. Proprietary Information 4

5 But to understand the real picture on China s softwood demand, look at log and lumber imports together; lumber = 54% 80 China: Imports of Softwood Logs and Lumber (RWE) Million Cubic Meters Logs Lumber RWE 0 Copyright 2017 RISI, Inc. Proprietary Information 5

6 New Zealand is the largest source of logs for China, and the Russian volume is still more than double that from the USA Copyright 2017 RISI, Inc. Proprietary Information 6

7 Japanese imports of softwood logs have decreased 78% over the past 20 years Japan: Imports of Softwood Logs and Lumber RWE Logs Lumber RWE E Million Cubic Meters Copyright 2017 RISI, Inc. Proprietary Information 7

8 In contrast to China, the USA and Canada are still the primary suppliers of logs to Japan Copyright 2017 RISI, Inc. Proprietary Information 8

9 Lumber accounted for about half of South Korea s softwood imports in 2016/2017 Korea Imports of Softwood Logs and Lumber RWE 10,000 9,000 8,000 Logs Lumber RWE Thousand Cubic Meters 7,000 6,000 5,000 4,000 3,000 2,000 1, E Copyright 2017 RISI, Inc. Proprietary Information 9

10 New Zealand has long been the dominant supplier of logs to South Korea Korea Softwood Log Sources, Jan Aug 2017 Russia 2% USA 11% Japan 4% Australia 3% Canada 17% New Zealand 63% Copyright 2017 RISI, Inc. Proprietary Information 10

11 India s growth in softwood demand has been frustratingly slow, but will accelerate 3,000 India Softwood Log and Lumber RWE Imports Thousand Cubic Meters 2,500 2,000 1,500 1, Logs Lumber RWE 0 Copyright 2017 RISI, Inc. Proprietary Information 11

12 New Zealand is unchallenged as the primary supplier of softwood logs to India Copyright 2017 RISI, Inc. Proprietary Information 12

13 New Zealand log exports will likely hit a new alltime record this year, but politics may be a challenge for forest owners in this year s election New Zealand Softwood Log Exports 18,000 16,000 14,000 Other India Korea Japan China Thousand Cubic Meters 12,000 10,000 8,000 6,000 4,000 2,000 0 Copyright 2017 RISI, Inc. Proprietary Information 13

14 The surge in softwood log exports from Australia has caught many of us by surprise 4,000 Australia Softwood Log Exports Thousand Cubic Meters 3,500 3,000 2,500 2,000 1,500 1,000 China Korea Other Copyright 2017 RISI, Inc. Proprietary Information 14

15 Canada s log exports have been stable since 2013, but US shipments have dropped 25% 10 9 Softwood Log Exports to Asia Million Cubic Meters Canada USA Copyright 2017 RISI, Inc. Proprietary Information 15

16 Pine log exports to China have become a bigger deal in the US South, but are still a tiny fraction of total log consumption 120,000 US South Log Exports to Asia 100,000 China India Vietnam 80,000 60,000 40,000 20,000 0 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17 Jul 17 Cubic Meters Copyright 2017 RISI, Inc. Proprietary Information 16

17 But bulk shipments from Uruguay have been surprisingly strong, replacing Ukrainian logs China: Softwood Log Imports, Minor Sources Ukraine Japan Uruguay Other European Other 50 Aug 14 Oct 14 Dec 14 Feb 15 Apr 15 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Thousand Cubic Meters Copyright 2017 RISI, Inc. Proprietary Information 17

18 China is also the dominant market for softwood lumber, accounting for over 75% share in 2017 Million Cubic Meters Japan China South Korea India Asian Softwood Lumber Imports E Copyright 2017 RISI, Inc. Proprietary Information 18

19 Russia has become the dominant supplier of softwood lumber over past two years Copyright 2017 RISI, Inc. Proprietary Information 19

20 In contrast, Japan continues to depend on quality lumber suppliers from Europe and Canada Copyright 2017 RISI, Inc. Proprietary Information 20

21 While Chinese imports of Russian logs have dropped 57% since 2007, total imports of softwood logs and lumber have increased 38% Million Cubic Meters Logs Chinese Imports of Softwood from Russia Lumber (RWE) Copyright 2017 RISI, Inc. Proprietary Information 21

22 China s timber imports are nearly 13% of global industrial roundwood production Logs Lumber Wood Panels Pulp Woodchips China's Timber Deficit E Copyright 2017 RISI, Inc. Proprietary Information 22 Million Cubic Meters, RWE

23 Woodchip imports in Asia in 2016 set a record volume for the seventh year in a row Million BDMT Japan South Korea India Asian Woodchip Imports China Taiwan Copyright 2017 RISI, Inc. Proprietary Information 23

24 And 2017 will register another record volume, for the eighth year in a row Asian Woodchip Imports, January August Volume in Thousand BDMT /2016 Hardwood Japan 7,012 6,989 7, % China 6,427 7,242 7, % South Korea % Taiwan* % India** % Total Hardwood 14,404 15,042 15, % Softwood China % Japan 1,166 1,042 1, % South Korea nm Total Softwood 1,239 1,352 1, % Total All 15,643 16,393 16, % * Lags other markets by one month ** Estimated from industry sources Copyright 2017 RISI, Inc. Proprietary Information 24

25 Nearly 80% of the softwood chip supply for the Asian markets is from just two countries Asian Softwood Chip Import Sources, January August 2017 Fiji 5% Canada 3% Russia 3% Chile 0% New Zealand 11% USA 44% Australia 34% Copyright 2017 RISI, Inc. Proprietary Information 25

26 The USA and Australia have been swapping positions as key softwood chip supplier. Guess which supplier cut prices in 2017? Softwood Chip Exports to Asia 2,500 2,000 USA Australia 1,500 1, E Thousand BDMT Copyright 2017 RISI, Inc. Proprietary Information 26

27 It is unusual for Douglas fir chips to be priced lower than radiata chips, but over time prices generally remain close USD per BDU, FOB Port of Loading Softwood Chip Prices for Japan 1Q10 2Q10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 Douglas fir Radiata Copyright 2017 RISI, Inc. Proprietary Information 27

28 Some of the primary sources of hardwood chip supply are expected to reduce shipments sharply over the next five years Sources of Hardwood Chips for Asia, Jan Aug, 2017 South Africa 7% Thailand 8% Brazil 4% Indonesia 3% Malaysia 1% Other 1% Vietnam 35% Chile 14% Australia 27% Copyright 2017 RISI, Inc. Proprietary Information 28

29 From , the US South was the largest supplier of hardwood chips to Asia: is a come back in the cards? US South: Hardwood Chip Exports 3,000 2,500 2,000 1,500 1, E Thousand BDMT Copyright 2017 RISI, Inc. Proprietary Information 29

30 Special Market Analysis Study LATEST EDITION! International Pulpwood Trade Review 23 rd annual edition Comprehensive annual report on global woodchip and biomass trade Monthly updates on volumes and prices in the Asia Pacific market Directory of suppliers and buyers 10 th International Woodfiber Conference: Durban, South Africa, September 2018 Copyright 2017 RISI, Inc. Proprietary Information 30

31 RISI Woodfiber Resource & Trade Conference September 17 19, 2018 Durban, South Africa 10 th Conference Representing all segments of the international chip and biomass supply chains Delegates from more than 30 countries Two day conference and optional field trip

32 No time to discuss timberland investment but see September 18 th, 2017 webinar: recordedwebinar.html And for more information see also Copyright 2017 RISI, Inc. Proprietary Information 32

33 RISI Forest Investment Conference May 1 2, 2018 New York City, USA