The (European) market for (sawn) softwood

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1 The (European) market for (sawn) softwood Aspects of supply, production, trade, competitiveness and demand/use Thünen Institute of International Forestry and Forest Economics, Hamburg International Softwood Conference, Slide Hamburg, 1

2 The (European) market for (sawn) softwood Aspects of supply, production, trade, competitiveness and demand/use Wood supply Production Demand / Use Trade / Competitiveness Slide 2

3 Supply: Global development Production Global roundwood production % 35% 15% 2016 Total: 3.73 bn m³ Developed Countries: 3.14 bn m³ Least Developed Countr.: 0.59 bn m³ 1% Quelle: FAO (2017) Slide 3

Supply: Global development Forest Area Development of global forest area 2005-2010 (Average rate of deforestation per year) Net losses of forest area of ~7 million hectares per year Degradation of

4 Supply: Global development Forest Area Development of global forest area (Average rate of deforestation per year) Net losses of forest area of ~7 million hectares per year Degradation of additional areas, especially in the tropics and subtropics: (e.g.) Loss of biodiversity Carbon emissions Depletion of soil Programs for prevention (e.g.): REDD, REDD plus Lacey Act (USA) FLEGT (EU) EUTR (EU) Certification (total Σ11%, 19% of managed area, Tropics: 6%, DE: 70%) Slide 4

5 Supply: Global development Industrial roundwood Supply by continents % 28% 21% 12% 4% 3% Σ 2016: 1,87 billion m³ Source: FAO (2017) Slide 5

6 Supply: Global development Coniferous industrial roundwood Supply by continents share 2016 / share of conif. on continents total million 41% / 74% 38% / 78% 8% / 38% 7% / 19% 4% / 70% 1% / 16% Σ 2016: 1,05 billion m³ (Conif: 56%) Source: FAO (2017) Slide 6

7 Supply: Actual situation Global trade: Coniferous industrial roundwood Global trade by regions 2014 Slide 7

8 Supply: Actual situation Global trade: Coniferous industrial roundwood Main exporters and importers 2016 (in million m³, Top 15) New Zealand Russian Fed. USA Canada Czechia Australia Norway Germany Slovenia Ukraine Poland France Belarus Latvia Slovakia Exporter 82 mill m³ Importer 83 mill m³ - China as main importer of coniferous roundwood - Intense trade of European countries China Austria Germany Sweden Rep. of Korea Japan Canada Czechia Belgium India Romania Finland Poland Italy Latvia Slide Milli Milli 0 Source: FAO (2017)

9 Supply: Actual situation Global trade: Coniferous industrial roundwood Global trade by regions 2014 Slide 9

10 Production: Global development Semi-finished products: Global production ( consumption) million Production (%) by continents 2016 Sawnwood Wood-based panels 2,04 2,20 0,90 0, ,51 27,23 4,65 11, ,40 20,90 61, Sawnwood (m³) Wood-Based Panels (m³) Wood Pulp (tons) Paper & Paperboard (tons) New peaks for all products except pulp Wood pulp relatively constant Paper & paperboard slightly increasing Wood-based panels very dynamic Sawnwood strongly affected by crisis, but recovering 33,62 Paper & Paperboard 0,95 0,88 20,06 5,43 47,05 25,63 Wood Pulp 1,39 1,37 17,57 37,37 26,42 15,88 Source: FAO (2017) Slide 10

Production: Global development Sawnwood: Global production

2006 Sawn hardwood 2006 350 300 250 200 150 100 50 0 Sawnwood

2009 2010 2011 2012 2013 2014 2015 2016 Sawnwood strongly

by crisis Hardwood peaked in 2015 Softwood seems still to

11 Production: Global development Sawnwood: Global production million Production (%) by continents Sawn softwood 2006 Sawn hardwood Sawnwood (m³) Sawn Softwood (m³) Sawn Hardwood (m³) Sawnwood strongly affected by crisis, but recovering Softwood stronger affected by crisis Hardwood peaked in 2015 Softwood seems still to recover/increase Sawn softwood 2016 Sawn hardwood 2016 Source: FAO (2017) Slide 11

12 Production: Global development Sawn softwood production Production by continents million m³ North America Oceania Latin America Asia Africa Europe (incl. Russia) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Production shares by continents North America most affected by crisis (prod. + share) Europe lost production shares since crisis, but still higher than 2006 Asia constantly increased its production share 0% Source: FAO (2017) Slide 12

13 Production: Global development Sawn softwood production: Major countries million USA Canada Russian Fed. China Germany Sweden Finland Brazil Austria Japan Chile France Turkey USA and Canada increased since 2009, but still far below pre-crisis level China + Russia are constantly increasing their production Brazil quite stable ( 9m), Japan slightly declining trend ( 12m to 8m) Source: FAO (2017) Slide 13

14 Production: Global development Sawn softwood production: Major European countries million Russian Fed. Germany Sweden Finland Austria France Turkey Poland Romania Czechia United Kingdom Not very much of a development (except Russia) A lot of countries are still below pre-crisis level Mainly eastern European countries are increasing production Source: FAO (2017) Slide 14

15 Trade: Actual situation Global trade of sawn softwood Main exporters and importers 2016 (in million m³, Top 15) Canada Russian Fed. Sweden Finland Germany Austria Chile Latvia USA Ukraine New Zealand Czechia Brazil Belarus Romania Exporter 121 mill m³ Importer 120 mill m³ - Rougly one third of global production is traded - Canada, USA, Russia and China are main trader USA China UK Japan Egypt Germany Italy Netherlands France Algeria Saudi Arabia Uzbekistan Rep. of Korea Austria Denmark Source: FAO (2017) Slide 15

16 Trade: Actual situation Global trade of sawn softwood Global trade by regions 2014 Slide 16

17 Production & Consumption: Global development Change in prod. & cons. of 20 main consumers of sawnwood Comparison: and Only few growing markets. China is main exception, strongly depended from imports. Consumption in the US sharply declined. EU countries with decreasing markets: IT, UK, FR, SE Slide 17 Source: FAO, Dieter/Janzen

18 Trade: Competitiveness Development of market shares (Sawn softwood) Development of export shares (exports and pre-crisis and now ) 4% 40% 3% NZL CHL 35% 30% World exports: : 22.9 bn USD : 25.2 bn USD CAN Export Share % 1% UKR POL SVK BLR SVN EST BEL CZE ROU BRA LVA IRL FRA LTU NLD NOR 0% 0% 1% 2% 3% 4% Export Share Export Share % 20% 15% 10% RUS SWE FIN DEU 5% USA NZL CHL AUT LVA ROU SVN IRL NLD POL NOR SVK BLR LTU UKR CZE FRA BEL EST BRA 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% Export Share Source: FAO (2017) Slide 18

19 Demand, use, consumption Example: Use of wood in the German construction sector Use of wood in the construction industry = 100 % New Constructions ( 36% ) ( 29% ) ( 7% ) Residential construction Non- residential construction [> 50% of wood products are used in construction Modernization ( 64% ) ( 51% ) Residential construction ( 13% ) Non- residential construction Source: Jochem et al. (2016) Slide 19

20 Demand, use, consumption Example: Use of wood in the German construction sector What we know: Several studies examined the influencing factors on the choice of the construction material in Germany by using surveys. Depending on the type of building, the choice of the construction materials is influenced by various factors. Non-residential: Price and the construction material that is traditionally used. Residential: Also price and tradition, but also other factors like technological factors, or other subjective evaluated factors, such as quality, durability and security. Source: Jochem et al. (2016) Slide 20

own and cross-price elasticities (of wood-base

given conditions and the availability of explanatory

detectable for residential construction in Germany.

primarily determined by other, nonquantifiable

Nonresidential: Significant results -> Stronger

21 Demand, use, consumption Example: Use of wood in the German construction sector Analysis: Estimation of own and cross-price elasticities (of wood-base products and substitutes) Residential: Under the given conditions and the availability of explanatory variables: significant price influences are not detectable for residential construction in Germany. -> The use of wood in residential construction is primarily determined by other, nonquantifiable factors. Nonresidential: Significant results -> Stronger economic behaviour and subject to trends (consumption of previous year has significant effect) Source: Jochem et al. (2016) Slide 21

22 Supply II: Potentials Development Forest stock in Europe Stock 2015: Share (without Russia), Quantity in billion m³ UK: 2%, 0,7 ES: 4%, 1,2 Slide 22 FR: 9%, 2,9 NO: 4%, 1,2 DE: 11%, 3,7 IT: 4%, 1,4 SE: 9%, 3,0 PL: 8%, 2,5 CZ: 2%, 0,8 SK: 2%, AT: 4%, 0,5 1,2 HU: 1%, 0,5 RS: 1%, 0,4 FI: 7%, 2,3 LV: 2%, 0,7 LT: 2%, 0,5 RO: 6%, 1,9 BY: 5%, 1,7 UA: 7%, 2,2 BG: 2%, 0,7 Forest stock in Europe increases continuously Highest forest stock in Russia, but only little changes RU: (71%), 81 Source: FRA in billion m³ (o.b.) Russland Russia Europe Europa (excl. o. Russland Russia) Mittelosteuropa Middle Eastern Europe Middle Mittelwesteuropa Western Europe Nordeuropa Northern Europe South Südwesteuropa Western Europe Südosteuropa South Eastern Europe

Supply II: Potentials Example: Perspectives in Germany Wood use by timber species groups versus WEHAM potentials (Base scenario) 100 90 Use*: 80 70 60 98 % mill.

23 Supply II: Potentials Example: Perspectives in Germany Wood use by timber species groups versus WEHAM potentials (Base scenario) Use*: % mill. m³/a % 53 % - Domestic supply of spruce will in future also (possibly) be below (a suggested) demand - Potentials are mainly to be seen in: Oak, and other hardwoods % NFI3 WEHAM-Periods Buche Beech Eiche Oak Fichte Spruce Kiefer Pine *) Relation of average use to average potential wood supply Source: Slide 23

24 Supply: Potentials Perspectives EFSOS II: Outlook Study for Europe 2010 to 2030 European Forest Sector Outlook Study Results of scenario analysis show great range of possible wood supply in Europe Slide 24 Source: UN: EFSOS II

25 Supply: Potentials Perspectives Changes in forest area of planted forests until 2030 Years Source: Carle & Holmgren (2008) Planted forests only have a minor share on total global forest area. Area of planted forests will increase, also in pessimistic scenario. The area is nearly equally distributed between softwood and hardwood. Slide 25

disproportionately more wood supply; mainly for material use.

26 Supply: Potentials Perspectives Change in wood production in planted forest until in 2030 Total roundwood removal Planted forests provide disproportionately more wood supply; mainly for material use. Main increases are expected in Asia and South America. Slide 26 Years Source: Carle & Holmgren (2008)

Conclusions Forest stock is still increasing in Europe. However, potentials are intensely used, regional wood supply might show specific shortages (softwood!).

27 Conclusions Forest stock is still increasing in Europe. However, potentials are intensely used, regional wood supply might show specific shortages (softwood!). Global potentials will preferably increase in (faster growing) plantations. Understanding and further developing of demand/usemechanisms (here mainly for domestic markets): Understand and overcome technical or subjective barriers for wood use (in construction sector) Measures to improve image of wood Provide solutions in combination with new/modified products and communicate them! Slide 27

The (European) market for (sawn) softwood: Aspects of supply, trade, demand, competitiveness and use Many Thanks! Thünen Institute of International Forestry and Forest Economics Leuschnerstr.

28 The (European) market for (sawn) softwood: Aspects of supply, trade, demand, competitiveness and use Many Thanks! Thünen Institute of International Forestry and Forest Economics Leuschnerstr Hamburg fon: +49 (0) fax: +49 (0) mail: web: The Johann Heinrich von Thünen Institute, Federal Research Institute for Rural Areas, Forestry and Fisheries Thünen Institute in brief consists of 14 specialized institutes that carry out research and provide policy advice in the fields of economy, ecology and technology. Slide Hamburg, 28

29 Annex Quellen Carle J, Holmgren P (2008): Wood from Planted Forests: A Global Outlook Forest Products Journal 58 (12): Dieter M, Janzen N (2015): Das deutsche Cluster Forst und Holz im Wettbewerb. Tagung Sicherung der Nadelrohholzversorgung. Göttingen, FAO, Food and Agriculture Organization of the United Nations (2017): ForesSTAT ( FRA 2015: Global Forest Resources Assessment Desk reference. FAO, Food and Agriculture Organization of the United Nations: Rome. Jochem D, Janzen N, Weimar H (2016): Estimation of own and cross price elasticities of demand for wood-based products and associated substitutes in the German construction sector. Journal of Cleaner Production 137(2016): Thünen-Institut, Dritte Bundeswaldinventur - Ergebnisdatenbank, Aufruf am: , Auftragskürzel: 77Z1PA_L417mf_0212_bi, Archivierungsdatum: :30:40.527, Überschrift: Vorrat (Erntefestmaß o.r.) des genutzten Bestandes [1000 m³/a] nach Land und Baumartengruppe, Filter: Periode= Thünen-Institut, Dritte Bundeswaldinventur - Ergebnisdatenbank, Aufruf am: , Auftragskürzel: 43Z1PA_P573of_1252_L40rSF, Archivierungsdatum: :52:59.127, Überschrift: projizierter Vorrat (Erntefestmaß o.r.) des Rohholzpotenzials [1000 m³/a] nach Baumartengruppe und Projektionsperiode, Filter: Basisszenario. United Nations, UN (2011): European Forest Sector Outlook Study II: (EFSOS II). Geneva Timber and Forest Study Paper 28, United Nations Economic Commission for Europe/Food and Agriculture Organization of the United Nations. United Nations Commodity Trade Statistics Database: UNComtrade ( Slide 29

Overview of the European sawn softwood market in 2017

Overview of the European sawn softwood market in 2017 International Softwood Conference Hamburg, October 2017 Andreas von Möller, President ETTF Eurostat construction production index for the EU Member