International Timber Outlook: Logs and Woodchips

Transcription

1 International Timber Outlook: Logs and Woodchips RISI 33 rd Annual North American Conference San Francisco, California October 1 12, 218 Bob Flynn Director, International Timber RISI

2 Agenda Chinese imports of softwood logs Heading to a new record volume of softwood log imports in 218 Tariff disputes AND other factors causing market adjustments Asian imports of hardwood chips Yet another new record volume in 218 But a massive hole is starting to develop on the supply side, and will have a ripple effect on Asian pulp imports over the next 4 5 years Climate change and forest investment 2

3 Two thirds of China s log and lumber imports are softwood, but hardwood imports increased faster in 218 Million Cubic Meters, RWE China Log and Lumber Imports, First Half Softwood Logs Softwood Lumber Hardwood Logs Hardwood Lumber 3

4 New Zealand s market share in China increased to 39% in first half 218, while most other major sources were lower Million Cubic Meters China Softwood Log Imports E 2 New Zealand Russia USA Australia Canada Japan Uruguay 4

5 China s total demand for softwood logs and lumber will end the year slightly higher than 217 levels; lumber imports are more likely to grow than logs in the future Million Cubic Meters China: Imports of Softwood Logs and Lumber (RWE) Logs Lumber RWE 5

6 New Zealand softwood log exports have tripled in volume over the last decade, primarily to China Thousand Cubic Meters 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, New Zealand Softwood Log Exports Other India Korea Japan China 6

7 Chinese imports of Russian softwood logs and lumber were 1% lumber in 27, but will be an estimated 75% in 218 Million Cubic Meters Logs Lumber (RWE) Chinese Imports of Softwood from Russia 7

8 Unprocessed logs were 61% of Russia s wood products export value in 21, but only 17% in first half 218 Russia Wood Products Export Value 8, 7, 6, Raw Logs Other Wood Products Million USD 5, 4, 3, 2, 1, E 8

9 Russia s softwood lumber exports have doubled over the past decade, but nearly 6% now going to China 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Russian Softwood Lumber Export Share E Others BALTICS Other East Asians MENA EU CIS China 9

10 Softwood log exports to China from the US South were growing rapidly, but have recently hit a bump in the road 25 US Southeast & US Gulf Coast: Log Exports to Asia China India Vietnam 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 Sep 17 Nov 17 Jan 18 Mar 18 May 18 Jul 18 Thousand Cubic Meters 1

11 Incredibly, over 4% of US softwood log exports to China in 218 have been from the South, in containers 45% 4% 35% 3% 25% 2% 15% 1% 5% % * * Based on first 8 months data. Share of US Softwood Log Exports to China from US South 11

12 Yes, China does have import duties on US logs but that s only part of the story Current import duties include: 5% on Douglas fir and hemlock 1% on spruce and true fir (could go to 2% in January) 25% on SYP 25% on oak and 2% on other hardwood logs But if the Chinese really want to play hardball, it doesn t matter what the duty is; China National Forest Products (SOE controlled by the State Council) is the largest player, and finances many of the others by providing letters of credit. 12

13 For the ninth year in a row, Asian imports of hardwood chips have set a new record volume; but trouble is ahead 25 China Japan Asian Hardwood Chip Imports 2 South Korea Taiwan Million BDMT 15 1 India P 13

14 Despite government efforts to restrict chip exports, Vietnam has increased its share of the market Asian Hardwood Chip Imports by Source Thailand 6% South Africa 7% Brazil 5% Indonesia 1% Other 2% Vietnam 39% Chile 13% Australia 27% 14

15 All signs point to a major drop in hardwood chip supply; but will companies return to chips from natural forests? Million BDMT Asian Woodchip Market Balance, 222/223 Demand Supply Balance 5 Hardwood Softwood 15

16 Climate Change: Having a Major Impact and Raising Costs of Wood Worldwide Mountain pine beetle in British Colombia Year round fire season in California and increased fire damage throughout the West Fires also causing severe disruptions in wood supply in Indonesia, Europe, Chile, etc. New pests and diseases attacking fast growing plantations at an increasing rate Plantation forestry companies finding their clones no longer suitable as climate conditions changes, e.g., Brazil, South Africa The risks/costs of climate change and opportunities for forest investors will be one of many topics of discussion at the Sixth Forest Investment Conference in London next May 16

17 London, May 219 Sixth RISI Forest Investment Conference RISI and DANA have combined forces to bring together the most compelling conference for the financial community, those engaged in tracking companies and assets, or those who own and manage timberlands. The two day conference will take an in depth look at timberland investments around the globe and how these opportunities will unfold in the near future. 17