Outlook for Australia’s forestry and forest products industry

1. Outlook for Australia’s forestry and forest products industry Mark Kelly URS Forestry

2. Outline of issues • International context • Resource trends and log markets • Sawn timber • Pulp and paper • Export woodchips • Composite boards • Emerging products • Conclusions

3. International overview • China’s demand and production driving international wood product markets • Declining native tropical forests • Increasing supplies from plantations • Supplies from Russian forests • South American pulp and paper expansion

4. China’s demand and log prices Softwood log imports Hardwood log imports

5. The rise of plantations Proportion of roundwood sourced from tropical plantations and tropical native forest

6. Large expansion in market pulp capacity in South America will help meet China’s demand Expansion of market pulp capacity in South America China’s imports of pulp

7. Australian plantation resources New softwood plantation establishment in Australia New hardwood plantation establishment in Australia • Softwood changed from one of increasing supplies to constrained opportunity for expansion • Plantation hardwood pulpwood will expand rapidly over the next decade - another 8 million m3 pa

8. Australian native forest resources

9. Sawn timber consumption Apparent consumption of sawn timber in Australia Per capita consumption of sawn timber in Australia

10. Hardwood sawn timber continue to move to high value appearance uses • Rapid growth in LVL consumption in Australia • LVL creating competition in hardwood structural markets • Also potential competition from LSL Apparent consumption of LVL in Australia

11. Pulp and paper Apparent consumption of printing and writing paper in Australia Apparent consumption of pulp in Australia

12. Woodchip exports Real Australian hardwood woodchip export prices Forecast supplies of hardwood chips in Australia

13. Composite boards Apparent consumption of particleboard in Australia Per capita consumption of boards in Australia Apparent consumption of MDF in Australia

14. Emerging environmental markets • Development of carbon trading provides opportunities for plantations • Bioenergy and biofuel also provide opportunities • Water issues can have both positive and negative implications

15. Key issues for the future • Need to attract investment in sawlog plantations • Focus on higher value production • Develop markets for environmental services • Private native forests • Scope for sustainable management • Pulp mills are very important to hardwood pulpwood sector • Hardwood sawn timber to face continued competition • Building understanding of sustainability • Certification