Summary
• UNECE forest products consumption fell 116.9 million m³ in roundwood equivalent in 2008.
• North American sawnwood output dropped 110 million m³.
• The European panel products market contracted 5.2% to 62.6 million m³.
• Growth continued in the former Soviet Union CIS countries, but their markets will worsen in 2009.
• The UNECE wood energy market is still expanding.
The ‘devastating’ impact of the international recession forms the central theme of the just published 2008/2009 UN Economic Commission for Europe and CE/FAO Forest Products Annual Market Review.
Covering North America, Europe and the dozen countries of the Confederation of Independent States (CIS) (formerly parts of the Soviet Union), the Review’s subtitle is “forest products markets in a global economic crisis”. Timber and forest products sectors in all three regions have been hard hit by the downturn, it says, with current problems tracking back to the sub-prime mortgage induced construction crash in the US.
The figures speak for themselves. As recently as 2005, the US construction industry was building 2.2 million houses a year. In 2009 the figure is expected to be just 470,000.
“With an unsustainable rate of building in the US [going into reverse], the world’s largest consumer of wood and paper entered an economic recession in late 2007 and its forest products markets sunk into a depression,” says the Review. “US imports dropped off sharply, causing a crisis in the Canadian forest products industry and European exporters were similarly affected.”
The European and CIS forest products sectors, it adds, then suffered the secondary blow of recession spreading to home markets.
The end result in North America was a fall in forest products consumption in terms of roundwood equivalent of 12.7%. That included a 17.7% drop in sawnwood to 110.5 million m³ and a 19% decline in wood-based panels to 49.9 million m³.
The total European forest products market shrank 6.2% to 553.4 million m³. Sawnwood was down 11.5% at 9.7 million m3 and wood-based panels 5.2% to 62.6 million m³.
CIS growth
CIS forest products sectors continued to grow through 2008, but at a much slower rate. Total consumption was up 3.2% at 79.4 million m³, with sawnwood 6% up at 16.3 million m3 and wood-based panels 5.1% at 14.2 million m³. And the Review predicted that CIS market conditions will deteriorate this year due to a worsening construction downturn, with the Russian timber sector further handicapped by last year’s hike in roundwood export tax.
Added up, 2008 UNECE forest products consumption was down 116.9 million m³ roundwood equivalent, with North America accounting for 80.9 million m³ of the decline.
Looking at individual market sectors, North American sawn softwood output fell by 19%, European by 11% and Russian by 11% last year, the result: record low prices and mills closing or mothballed.
UNECE region sawn hardwood production was down 8.2% to 42.8 million m³, with the downturn in domestic consumption exacerbated by a sharp reduction in sales to China. And in the first half of 2009 Chinese imports were down a further 46.4%.
Panel production
The fall in demand for panel products hit North America first and in 2008 its hardboard output fell by 13%, MDF by 9.3%, and chipboard by 14.5%. A total of 15 mills closed as a result.
European chipboard output fell 3.3%, OSB 9% and plywood 7.3%.
The Russian panel sector contracted too, with plywood output down for the first time since the Soviet Union broke up.
One part of the timber market that hasn’t contracted in the downturn is the wood energy sector. In fact, says the UNECE, it has been “immune to global economic recession”. The market has been driven by environmental concerns, and the desire to reduce dependence on imported fossil fuels.
Europe has seen fastest growth in consumption and production of wood fuel, but both the US and Canada are now looking to increase their use, Japan launched its first large-scale energy facilities co-fired by coal and wood biomass in 2008 and Russia “is increasingly interested in converting… to biomass”.
The growing concern worldwide now, however, is that increasing demand for the wood energy market will lead to panel products, and pulp and paper suppliers being priced out of the market for raw material.
Forest certification
Growing environmental concern in recent years has also seen rising demand for certified timber and the number of chain of custody certificates increased a further 41% last year. However, the UNECE report points out that 90% of certification to date has been concentrated in Europe and North America and that overall still only 8% of forests worldwide are certified.
The report concludes that government economic stimulus measures and new controls on the operation of the financial sector in North America and Europe should result in “direct and indirect benefits [for the forest products sector]”. They should, it says, help in the short term and “enable the sector to bounce back more fully in the long term”. But there are no definite predictions on the time scale for recovery and it says that overall market contraction, plus the rise in demand for wood fuel will, “form the basis” of UNECE timber committee market discussions in October.
