UN/ECE Timber Committee - Geneva, September 2002

1. UN/ECE Timber Committee -Geneva, September 2002 Sawn hardwood markets - temperate hardwood developments David Venables Bsc AIWSc European Director – American Hardwood Export Council www.ahec-europe.org

2. Sawn hardwood markets – 2001highlights • Sawn hardwood production in UN/ECE declined, led by sharp drop in United States • Sawmill production in central & eastern Europe increased significantly • Western European production fell back after 1999 storms oversupply Production

3. Sawn hardwood markets – 2001highlights Imports/exports • Export trade flows for UN/ECE region down by 5% • compared to 2000 - (U.S. -9%, EU -13%) • UN/ECE import trade flows for sawn hardwood • down by 6%

4. Sawn hardwood markets – 2001highlights • Apparent consumption in the UN/ECE fell from its peak in 2000 – weakened U.S. market • Central and eastern European consumption is increasing – Furniture manufacturing and re-export to the EU Consumption

5. Sawn hardwood markets – 2001highlights • The tragic events of 11th September accelerated reducing demand in already fragile markets • Rapid development of Asian furniture industries - far reaching effect on US hardwood trade • European sawmillers lost ground in established Asian markets • Markets continued to be affected by rates of currency exchange. • Environmental issues, focused on certification, received increased media attention Influencing factors

6. Current market developments in the UN/ECE region • The USA & most European economies continue to slow • Euro has strengthened to parity with US$ • Geo-political stability – crisis in the Middle East • Beech demand reducing – over production may affect price stability • Oak demand stronger – increasing promotion • Production in western Europe falling further • Eastern European production also affected by slower EU demand • Production in North America stabilising • Consumption of temperate hardwood continuing to fall • Asian furniture imports continue to impact – especially in USA • Flooring demand still firm - concerns regarding overcapacity

7. Future trends for UN/ECE region • Political & economic instability will continue to impact on market confidence • Any economic recovery in the region likely to be modest • Sawn hardwood exporters will increasingly target Asian markets - further growth in china • A stronger Euro will improve opportunities for US exports to Europe • Pressure on illegally logged tropical hardwoods – create further shift to temperate hardwoods • Further relocation of established wood processing units to Asia • Central & eastern Europe will continue to grow in importance both in terms of sawn hardwood and manufacturing capacity