The International Softwood Conference on November 4-6 reflected an increasingly globalised softwood sector dealing with accelerating structural and technical change and ever more demanding customers. Hence the range of topics; from global market shifts to sustainability, biomass energy, to timber building.
The Amsterdam conference consensus was that the softwood sector was still working through the aftermath of economic crisis and it was not always straightforward. Speakers identified new market stresses, as producers increased output to capitalise on economic improvement. Moreover, the industry was having to adapt to global shifts in trade influence, most significantly the further rise of China as a prime market mover.
But ISC speakers identified opportunities too in emerging markets, changing international industry structures and trading patterns. The global move towards sustainability, low carbon ‘bio economics’ and particularly ‘green’ building also favoured timber, they said.
Another plus was evidence of growing desire for industry-wide co-operation and mutual support, underlined by presentations from the paper, pulp and pallet sectors, plus the conference once more being co-organised by the European Timber Trade Federation (ETTF) and European Organisation of Sawmill Industries (EOS).
Hosted by the Netherlands Timber Trade Association (NTTA) and moderated by former UK Timber Trade Federation chief executive John White, the ISC was also itself judged a success and positive market indicator by delegates and organisers. It attracted over 140 people and there was a high degree of audience participation, culminating in lively workshops on big market-shaping topics, including marketing, biomass energy, logistics and online commerce.
The opening global market presentation from analyst Rupert Oliver of Forest Industries Intelligence showed an industry in overall upturn.
"Total softwood trade increased from 275 million m3 in 2010 to 315 million m3 in 2014, with consumption in line, up from 272 million m3 to 313 million m3," he said. "That’s a significant rebound."
Within these figures China’s growth was the key factor. Europe remained the leading softwood producer with an output of 101 million m3, followed by North America and Russia, on 95.7 million m3 and 36 million m3 respectively, but Chinese production rose fastest, up from 15.2 million m3 in 2010 to 28.8 million m3 in 2014. Consumption also nearly doubled to 47.3 million m3.
China doubled its plantation area too, but the bulk of its demand rise was met by imports; logs mainly from New Zealand, Russia and the US and lumber from Russia, Canada and Europe.
Economic slowdown this year depressed Chinese consumption. But Mr Oliver predicted renewed import growth, with new curbs on natural forest logging and government directives to boost timber building.
OVER-PRODUCTION CONCERNS EOS president Sampsa Auvinen acknowledged the worst of the EU’s recession was over, but recovery remained a "roller coaster of market ups and downs".
"The concern is production out-running consumption," he said. "We’re seeing good consumption recovery in some countries, but overall growth is slow, with EU construction expected to rise just 1-2% this year. There’s talk of an EOS country softwood production decrease to 79.6 million m3 this year, but so far it doesn’t feel like it."
Long-term prospects were good, he maintained, with China regaining momentum and strong new markets set to emerge, including Poland and Iran. But short-term Europe would remain sluggish.
He added that if mills wanted to offset this by selling more to volatile emerging markets, "production must react to demand fluctuations quicker’.
ETTF President Andreas von Möller agreed that European recovery was uneven and big end user industry output remained below prerecession levels. The key for producers was to treat markets individually and be sensitive to the risk of over-production.
NORTH AMERICAN OBSTACLES AND OPPORTUNITY Marc Brinkmeyer, chief executive of Idaho Forest Group, said US and Canadian softwood sectors also faced ‘headwinds’.
"Despite continued low interest rates, US mortgage debt is flat, slowing construction progress," he said.
The expiry of the US/Canadian Softwood Lumber Agreement also created uncertainty, although it was hoped this would be renewed or replaced shortly.
However, said Mr Brinkmeyer, underlying trends were upward, with US annual housing starts topping 1 million, lumber demand forecast at 53 billion board feet in 2017, against 42 billion last year and mill output 37 billion board feet compared to 31 billion.
Other plus factors were ongoing commitment to pan-North American timber promotion via the Softwood Lumber Board, which has spent US$100m since its 2006 launch, and growing interest in mass- or engineered wood building. The latter was highlighted by response to the US government’s recent US$3m Tall Timber Building contest.
MENA MOMENTUM In respective presentations on Morocco, Algeria, Libya and Tunisia (MALT) and the wider Middle East and North African region (MENA), Guillaume Hotelin, of Comarbois in Morocco and Jan Gustaf Roempke of ARA Timber acknowledged obstacles.
Besides political unrest and conflict, these included depressed oil prices, credit shortages, and logistical issues, including ships taking weeks to discharge at Alexandria due to backlogs.
But MENA markets were also billed as having potential. They currently import 10 million m3 of softwood, half going to Egypt and most from Europe and Russia, although with US sales rising 26% last year to US$27.4m. Economic growth rates average over 3% and combined population is over 400 million and growing fast.
Mr Roempke said conflicts in key areas were also abating and highlighted that Egypt had been rerated positive by Standard & Poor’s.
According to Sviatoslav Bychkov, of Ilim Timber, the Russian softwood sector too has been through turbulent times, facing log export restrictions, the rouble’s volatility and trade sanctions.
But the industry overall has coped said Mr Bychkov and has some major growth possibilities, with the annual timber cut of 202 million m3 some 500 million m3 below availability.
He predicted a Russian sawn wood exports rise of 5.4% this year to 22 million m3, and was optimistic about the longer term, with demand in China, which consumes 39% of Russian sawn and 92% of log exports, expected to revive.
"The government’s new industry monitoring e-system should also boost efficiency and help curb illegal trade," he said.
Naohiro "Bob" Iwami of Interfor Japan, also saw solid prospects for the Japanese softwood sector. Japan is, he said, a "relatively small market", but with a big appetite for lumber, consuming 28 million m3 a year.
The main market engine was the timber oriented construction sector, which is willing to pay a premium for consistent quality and is now using more KD and engineered wood, hence Europe’s rising import share from 7% to 39% in 20 years. Moreover, he said, housing starts were expected to rise by 40,000 this year to 931,000.
The government aims to increase Japan’s timber self-sufficiency to 50%, he acknowledged.
"But overall timber use incentives should generate import opportunities too," he said.
CROSS-INDUSTRY CO-OPERATION One of the conference’s ‘guest industry’ presenters, Marco Mensink, director general of the Confederation of European Paper Industries, described how Europe’s pulp and paper sector had also adapted to recent structural upheavals, critically decline in newsprint and graphic paper demand. However it had coped by raising packaging and tissue production and was now planning €5bn of investment.
The outstanding challenge, where paper sees prospects to join lobbying forces with timber, is to safeguard raw material supplies by curbing wood ‘waste’ going to landfill and incineration for heat and power.
"We need a ‘circular’ economy, with landfill disposal banned and an end to distorting subsidy for burning wood," he said.
Marc Michielsen, executive director of Europe pallet industry federation FEFPEB saw scope for wider pan-forest products collaboration. Challenges faced by his sector, which consumes 25% of European softwood, include competition from plastic products, restrictive ISPM15 plant health controls, and raw materials competition from the bio-energy sector.
"We should make an even stronger joint effort and develop a common language to promote wood as the sustainable raw material," he said.
Meanwhile, the possibilities of latest wood construction case studies for generating market excitement were underlined in a presentation on the Treet building by Ole Herbrand Kleppe, Chief Project Manager of Bob Real Estate Development. This 14-storey apartment block in Bergen, Norway is the world’s new tallest timber building.
Previous tallest wood towers were based on cross laminated timber, where height is limited by weight and compression, said Mr Kleppe.
But Treet comprises four-storey stacks of timber-based, pre-fabricated apartment modules, ‘contained’ in a structural glulam frame, with a glulam-reinforced ‘platform’ floor every five storeys.
The result, said Mr Kleppe was a quick build system that could pose "significant commercial competition for multi-storey steel and concrete", with the added benefit of storing CO2 in its fabric – 2,000 tonnes in Treet’s case.
He closed with a shot of four conventional Bergen apartment blocks. "We can now build that skyline in wood," he said.
