Market Outlook for Wood-Based Panels · increasingly export oriented, although the increase in Russian panel production was ... Russia Source: UNECE Timber Committee, 2006 0 500 1,000

Market Outlook for Wood-Based Panels

Presented by:

Dr. Ivan EastinDirector and Professor

Center for International Trade in Forest Products, CINTRAFORUniversity of Washington, Seattle, WA

and

Ms. Benedicte Hendrickx, European Panel Federation

Prof. Nikolay Burdin, Research & Design Institute on Economics and Information for Forest, Pulp and paper and Woodworking Industries

Presented at theUNECE Timber Committee Market Discussions

Geneva, SwitzerlandOctober 3-4, 2006

Center for International Trade in Forest Products

Recognition

I would like to thank my co-authors (Ms. Benedicte Hendrickx and Prof. Nikolay Burdin) for all their hard workI would also like to support Mr. AlexMcCusker for his tireless work in providing trade statisticsI would also like to thank Mr. Ed Pepke for the opportunity to participate in the Timber Committee Market Discussion


Highlights of Wood-Based Panel Market Review, 2005-2006 (1-3)

Favourable developments in the main demand markets in residential construction and associated demand for cabinetry and furniture had a positive effect on the wood-based panel industry in 2005 throughout the UNECE region.Although production and consumption are increasing, producers express mitigated optimism due to soaring production costs.The European panel industry is becoming increasingly export oriented, although the increase in Russian panel production was used domestically in 2005.



European panel industry, confronted with wood supply problems due to increasing competition with the biomass energy sector, is responding through a Renewable Energy Sources Working Group that provided their input to the EU Biomass Action Plan in 2005.North American production of particle board declined as a result of plant closings attributed to increased competition for wood supplies.Record housing starts in the US drove the demand for structural panels to new highs.



North American OSB production is expected to increase by 16% between 2006 and 2008, but a forecasted demand downturn could weaken prices and profits.In 2006, declining housing starts in North America have structural panel manufacturers looking to expand demand in the non-residential and industrial market segments.High US furniture imports, especially from China, have undermined demand for particle board and MDF within the domestic furniture industry, and panel manufacturers are reducing production.



• The US applied an 8% import tariff on Brazilian plywood imports in mid-2005; however, Brazil exported increasing volumes of plywood and other panel products to the United States and Europe.

• China, the world’s largest plywood exporter, does not yet have the required grade stamp to allow use for North American structural applications; however, imports are increasingly used for other uses.

• MDF and OSB markets continue to grow at a rapid pace.


Particle Board - Europe

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .Production

Imports

Exports

Source: UNECE Timber Committee, 2006


MDF - Europe

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1000

m3 .

Production

Imports

Exports



Plywood - Europe

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 . Production

Exports

Imports



OSB - Europe

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1000

m3 .

Production

Exports

Imports



Particle Board - Russia


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .

Exports

Production

Imports


MDF - Russia

0

200

400

600

800

1,000

1,200

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .

Production

Export

Imports



Plywood - Russia

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .Production

Imports

Exports



Particle Board – North America


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .

Production

Exports

Imports


MDF – North America


0

1,000

2,000

3,000

4,000

5,000

6,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .

Production

Exports

Imports


Plywood – North America


0

5,000

10,000

15,000

20,000

25,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .

Production

Exports

Imports


OSB – North America


0

5,000

10,000

15,000

20,000

25,000

30,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,00

0 m

3 .Production

Exports

Imports


Structural Panels – North America

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

e

2009

e

2011

e

NA

Pan

el P

rodu

ctio

n (m

illion

squ

are

feet

, 3/8

inch

bas

is)

Plywood

OSB

Source: APA-The Engineered Wood Association, various years.

Total


Structural Panels – North America

0

5,000

10,000

15,000

20,000

25,000

30,000

1923

1927

1931

1935

1939

1943

1947

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

e

US

Pane

l Pro

duct

ion,

mill

ion

squa

re fe

et, 3

/8 in

ch b

asis

US Total

W. Plywood

S. Plywood

OSB

Source: APA, The Engineered Wood Association, 2006


China’s Influence in Global Markets

(Photo by Dr. Dave Cohen, UBC)


Export Driven Economic Growth is Critical to Producing Jobs


Future Emphasis on Producing Job Growth in Interior and Rural Regions


Low Cost Labor will Remain Important, BUT…


…Many Firms are Integrating Low Cost Labor Operations….


…With High Tech, Capitol Intensive Manufacturing Operations…


…To Produce World Quality Wood Products.


Annual Increase of Imports from China(by value) between 2000 - 2005

61%46%Flooring28%34%Furniture41%46%Moulding

105%30%Doors

USAEC (15)Item

Source: GTA, 2006

As a Result, Chinese Wood Exports will Continue Growing


Annual Increase of US Imports from China(by value) between 2003 - 2006

Source: GTA, 2006

As a Result, Chinese Wood Exports will Continue Growing

64%$255,264,098$195,571,127$43,321,153SW Plywood43%$392,161,371$222,703,701$76,952,386HW Plywood76%$73,754,235$15,698,763$5,943,992Fiberboard49%$2,548,511$564,047$1,799,452Particleboard

2005/2006200520042003


Environmental Quality Continues to be a Concern as the Olympics Approach


However, Some

Companies are Already Positioning Themselves as Environ-

mentally Responsible


But Always Remember, Market Niches Exist for Imported Wood

Products


Zhujiajiao Timber Bridge, Shanghai


40-km Treated SYP Boardwalk


European Wood Roof Demo Project

Companion Brochure for China

due out by December

2006


Continuing Demand for Imported Fiber Despite Increasing Plantation AreaYuan Remains Undervalued to Support Export-DrivenGrowthIncreasing Competition from Chinese ExportsMarket Demographics ImprovingShift of Investment Inward from Coast (many large cities)Improving Market Access will ContinueHousing Policy Favors Affordability“Reform” Activity Increasing in ImportanceOutdoor Wood Opportunities ExpandGlulam Usage on the RiseInfrastructure Development ContinuesValue-Added Manufacturing Sector ExpandingEmphasis on Energy Efficient Building Materials

(Source: Chris Gaston, Ivan Eastin and Dave Cohen, 2006)

Wood Market Trends in China


Thank you very muchMerci Beaucoup


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Impo

rt V

olum

e (m

3) .

0%

10%

20%

30%

40%

50%

60%

70%

Impo

rt S

hare

(%)

.

CHILE CANADA BRAZIL Brazil Share

$125 million

$308 million

$288 million

US Plywood Imports

Documents

Market Outlook for Wood-Based Panels · increasingly export oriented, although the increase in Russian panel production was ... Russia Source: UNECE Timber Committee, 2006 0 500 1,000