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Transcript of Globalisation of forest products markets Marc Boutin Quebec Lumber Manufacturers ’ Association...
Globalisation of forest Globalisation of forest products marketsproducts markets
Marc Boutin
Quebec Lumber Manufacturers ’ Association
October 2, 2001
QLMAQLMA
QLMAQLMAFactors which are driving Factors which are driving extraterritorial trade of forest productsextraterritorial trade of forest products
Emerging economies with commensurate rising
consumer demand
The information technology revolution
Investor preference for « pure play » companies
that focus on fewer products on a larger scale
QLMAQLMAFactors which are driving Factors which are driving extraterritorial trade of forest productsextraterritorial trade of forest products (cont ’d)(cont ’d)
Switch to lower cost fiber from forest plantation regimes
Increased capital mobility, continued integration of the
world economy and, investor portfolios seeking more
global diversification
Improving transportation logistics
QLMAQLMAFactors which are driving Factors which are driving extraterritorial trade of forest productsextraterritorial trade of forest products (cont ’d)(cont ’d)
Larger buying groups, especially home center chains
and retailers, sourcing wood products (primary,
secondary and finished goods) on a global scale
Labor shortages in developed economies favoring a
shift to abundant, lower cost, labor in developing regions
QLMAQLMAFactors which are driving industry Factors which are driving industry consolidationconsolidation
Higher capitalization of companies
Synergies and economics of scale
Better opportunities to manage trade
International / regional diversification
Lower average cost structure
Forest companies are small compared with other manufacturing sectors
QLMAQLMAForest Products IndustryForest Products Industry
Top 5 global forest products companies
– around 20% of global sales
versus
– 40% in the oil industry
– 50% in the steel industry
– 60% in the automotive industry
Source
CIBC World Markets
QLMAQLMA
Why growth?Why growth?
Securing available fibre
Only way to gain market share
Economic imperative - it is often cheaper to buy rather than build (the pulp paper industry is very capital intensive)
New facilities tend to be subjected to higher environmental standards
QLMAQLMA
Why growth?Why growth? (cont ’d)(cont ’d)
Acquisition of know-how and human capital
Less impact on supply-demand equilibrium
Customer base is increasingly global and also growth driven
Establishes a framework for future growth
QLMAQLMAWorld ’s biggest paper and paperboard World ’s biggest paper and paperboard producers capacity, m tonnesproducers capacity, m tonnes
Extracted from
The Economist September 15th 2001
QLMAQLMATrade of Forest ProductsTrade of Forest ProductsRecent cyclic and structural eventsRecent cyclic and structural events
Break up of the USSR
Environmental and sustainability constraints
Upswing of the U.S. housing market since 1992
Asian financial crisis of 1997
Events of September 11, 2001
QLMAQLMA
Global Forest Resource Global Forest Resource (1990)(1990)(Million ha)(Million ha)
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
0
200
400
600
800
1000
1200
NorthAmerica
LatinAmerica
WesternEurope
EasternEurope
Ex-USSR Asia Oceania Africa
QLMAQLMA
Standing Timber Standing Timber (1990)(1990)
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
0
10
20
30
40
50
60
70
NorthAmerica
LatinAmerica
WesternEurope
EasternEurope
Ex-URSS Asia Oceania Africa
Billion m3
QLMAQLMA
Change in Forest Area Change in Forest Area (1990-2000)(1990-2000)
Change in Forest Area, 1990-2000 ('000 hectares)
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
Africa Asia Europe North and CentralAmerica
Oceania South America
Sources : FAO ; QLMA
Total forest, 1990 Total forest, 2000
QLMAQLMA
World Distribution of standing timber World Distribution of standing timber (%)(%)
14
522
15
1
15
28
North America
Central and SouthAmericaEurope
Ex-USSR
Asia
Oceania
Africa
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
QLMAQLMA
Southern Hemisphere Pine Plantations Southern Hemisphere Pine Plantations (1999-2000)(1999-2000)
Southern Hemisphere Pine Plantations - 1999/2000(Million hectares)
1,83
1,53
1,47
0,95
0,78
0,50 0,45
Brazil
New Zealand
Chile
Australia
South Africa
Argentina
Uruguay
Sources : Wood Markets ; QLMA
QLMAQLMAIndustrial Roundwood Production by Industrial Roundwood Production by
Continent Continent (x 000 m(x 000 m33))
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
South America
North and CentralAmerica
Oceania
Africa
Europe (+ Baltic States)
Ex-USSR
Asia
TOTAL
QLMAQLMAThe six largest softwood industrial The six largest softwood industrial
roundwood producing countries roundwood producing countries (000 m(000 m33))
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
0
50 000
100 000
150 000
200 000
250 000
300 000
350 0001
98
9
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
United States
Canada
China
Sweden
Finland
Russian Federation
QLMAQLMAForest harvest in the United States by Forest harvest in the United States by
region region (in million m(in million m33))
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
0
50
100
150
200
250
300
350
400
4501
95
1
19
62
19
70
19
76
19
86
19
91
20
00
*
20
10
*
20
20
*
20
30
*
20
40
*
North
South
Rocky Mountains
Pacific Region
TOTAL
QLMAQLMAForest capacity and actual harvest - Forest capacity and actual harvest -
Canada Canada (Millions m(Millions m33))
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
150 145
120
150165 165 170
180 178 180
155 153168 170 170 176 178
187
230 230 230
210 210 210
230240 238
225
253 250 248
228 230 233 234 237
0
50
100
150
200
250
300
Harvest
Capacity
QLMAQLMAThe imperative to develop new The imperative to develop new products and marketsproducts and markets
World demand should not change significantly over
the coming decade. Strong demand is expected in
Asia, mainly from Japan and increasingly from China
Demand will be stronger for wood based panels and
paper products
QLMAQLMAThe imperative to develop new The imperative to develop new products and marketsproducts and markets (cont ’d)(cont ’d)
Large scale producing countries will maintain their
relative market share, although export distribution will
be significantly realigned
Significant growth is anticipated from countries which
hold large plantation resources in the Southern
hemisphere
QLMAQLMAThe imperative to develop new The imperative to develop new products and markets products and markets (cont ’d)(cont ’d)
Size and quality of roundwood changing
Environmental pressures come into play
New source of supply will be from high yield
plantations but fiber quality will pose its own set of
problems
QLMAQLMAThe imperative to develop new The imperative to develop new products and markets products and markets (cont ’d)(cont ’d)
A movement towards trade in value-added wood
products is evolving in many countries. There
are growing constraints in the export of
unprocessed goods
Forestry management practices and inputs could
allow for increases in future harvest
QLMAQLMAThe imperative to develop new The imperative to develop new products and markets products and markets (cont ’d)(cont ’d)
Increasing pressure towards certification
Securing fiber supply, technological efficiency,
certification of products and/or of systems, and
value-added will be the future focus of industry
QLMAQLMA
ConclusionConclusion
Output of forest products increasing in most producing regions: Europe, North America, South America and Australia/New Zealand
Strong incentive for all producers to stimulate demand on a global scale: supply of wood products exceeds demand at a growing rate
Industry and customer consolidation to continue: fewer manufacturers, bigger production units, larger customers