Global Wood Markets: Consumption, Production and Trade

1. Global Wood Markets:Consumption, Production and Trade By Ed Pepke Senior Timber Trade Analyst EU FLEGT Facility European Forest Institute

2. Contents Introduction Global forests and forest products (supply) Consumption and production (demand) Trade Trade conclusisons Discussion

3. I. Introduction • Why’s this important? • What forest products? • Wood vs non-wood • Traditional and new products • Topical issues • Traditional, e.g. trade disputes • New, e.g. subsidies for wood energy

4. Wood products consumption & trade questions • Has continuous increase in wood demand and the growing global timber trade had positive or negative effects on the world’s forests? • Socio-economic effects? Will the forest sector continue to play an important role in providing livelihoods for rural communities? • Deforestation exists globally – where is it and is it going up or down? • If we grow more wood than we cut, could we cut more than we grow and still be sustainable? • Wood fuel consumption peaked in the US in 1970s; how can the world use most harvested wood for fuel? • Will laws against illegal logging and against trade of illegal wood reduce wood demand?

5. II. Global forests and forest products

6. Forests and deforestation Net forest loss: 1990s 8.3 million ha/year 2000-2010 5.2 million ha/year Asia & Pacific Annual net loss of forest area between 2000-2005 was 7.3 million ha/year Europe North America Mideast Africa S. America Central America Sources:FAO Global Forest Resources Assessments 2000, 2005, 2010

7. Why deforestation? • Conversion to other uses: agriculture, palm oil, pasture, urbanization • Fire, insects, disease • Root causes: poverty, firewood, illegal logging • Offset by plantations and natural expansion • Positive trend of a negative issue

8. What does global deforestation mean? • Consumer confusion • Lack of confidence in specifying, buying • Increasing regulations • Logging bans • Log export bans • Trade regulations, e.g. FLEGT, EU Timber Regulation • Need for better governance, legislation, programs, certification, legality assurances

9. Global roundwood harvests

10. Global roundwood consumption Of 3.5 billion m3 total, more than half is used as wood fuel. Source: FAO Stat, 2011.

11. Woodfuel use Increasing in developed world, but efficient, environmentally sound combustion. Inefficient domestic heating and cooking

12. Modern wood energy • Efficient, clean combustion • Carbon neutral • Renewable energy • Market outlet for low-grade fiber

13. Modern wood energy • Processed fuels • Not bulky firewood • Conveyable chips (high moisture) • Dry, high calorie pellets and briquettes • Next… • Biorefineries: pulp, energy, chemicals • Liquid and gaseous fuels

14. Production and consumption of wood pellets

15. Roundwood harvest trends Europe

16. Growing stock vs. AnnuaI growth vs. Fellings Million m3 Source: UNECE/FAO, 2010.

17. NAI vs. Fellings 79% Million m3 64% 36% Source: UNECE/FAO, 2010.

18. Increasing forests & increasing demands • Increasing demand for paper and paper products, e.g. packaging • Increasing demand for wood products • Increasing demand for wood energy • = competition! • Where will wood come from?

19. III. Consumption and production

20. World shaped by political boundaries Source: Worldmapper

21. World shaped by population Source: Worldmapper, 2009

22. World shaped by forest products production Sources: Worldmapper & FAOStat, 2009

23. World shaped by wood and paper consumption Sources: Worldmapper & FAOStat, 2009

24. As shaped by forest products exports Sources: Worldmapper & FAOStat, 2009

25. As shaped by forest products imports

26. Western European wood and fiber requirements through 2020 Gap is residues Growing demand without energy Source: UNECE/FAO European Forest Sector Outlook Study, 2005

27. Industrial roundwood consumption Million m3 Source: FAOStat, 2012

28. Industrial roundwood production Million m3 Source: FAOStat, 2010

29. Sawnwood consumption Million m3

30. Sawnwood production Million m3

31. Sawnwood exports Million m3

32. Sawnwood imports Million m3

33. Panels consumption Million m3

34. Panels production Million m3

35. Paper & paperboard consumption Million m3

36. Paper & paperboard production Million m3

37. What happens when supply does not equal demand? IV. Trade

38. Global trade all products Doubled in 6 years 2001-2007 Source: FAOStat, 2010

39. Primary-processed products Secondary-processed products Furniture Millwork (windows & doors) Mouldings Etc. made from primary products • Sawnwood • Panels • Plywood • Particleboard • OSB, MDF • Veneer • Paper & paperboard

40. Global trade, primary products Billion $

41. Global roundwood exports Globally exports = imports in value and volume, but not in direction! Europe (including Russia) leads in roundwood Exports. Includes within Europe. Million m3

42. N. American roundwood exports USA increasing roundwood exports Million m3

43. Russian exports • Trend reversal in 2008 • Log export taxes • Global economic crisis Million $

44. African and Asian roundwood exports Slowly rising despite policies to encourage value-added processing

45. North American exports Housing crisis

46. US housing starts, 2002-2013 US housing collapse has global effects. Million units

47. Impacts of US housing crisis • Global economic crisis (a cause) • Massive restructuring of N. American wood industry (unemployment) • Local communities devastated • Long-term consequences for forest sector

48. European exports 2x in 10 years

49. CIS exports, mainly Russia 4x in 10 years Log export taxes

50. Exporting primary vs secondary • Primary (logs, sawnwood, panels, pulp) are commodity products • Easy to export • Correspond to market price • Secondary, value-added products • Higher value and profits • Require greater manufacturing and marketing skills