March 9, 2009 Forest Research, LLC 1
Global Forest Products Industry:
Overview and Trends
NERCOFE Workshop
March 9, 2009
Don MacKay, Ph.D, CFAForest Research, LLC
March 9, 2009 Forest Research, LLC 2
Overview
Focus on the BIG picture!
March 9, 2009 Forest Research, LLC 3
Overview
Snapshot of global industry
Recent trends
–Mostly bad
–Bright spots
Segments
– Lumber and pulp
–Wood energy
–Biofuels and chemicals
March 9, 2009 Forest Research, LLC 4
Forest Area as a
Percent of World Total
Source: FAO
0% 5% 10% 15% 20% 25% 30% 35% 40%
Russian Federation
Brazil
Canada
USA
China
Australia
Dem. Rep. of the Congo
Indonesia
Peru
India
Rest of World
March 9, 2009 Forest Research, LLC 5
Private Forest Land
Source: FAO
0% 5% 10% 15% 20% 25% 30% 35% 40%
USA
Australia
Canada
Sweden
Finland
Japan
Chile
France
Spain
Peru
Rest of World
March 9, 2009 Forest Research, LLC 6
Plantation Forest Area
Source: FAO
0% 5% 10% 15% 20% 25% 30%
China
USA
Russian Federation
Brazil
Sudan
Indonesia
Chile
Thailand
France
Turkey
Rest of World
March 9, 2009 Forest Research, LLC 7
TypeAfrica
and
Oceania
5%
Asia
48%
Europe
32%
S.
America
4%
N. and
C.
America
11%
Other
Softwoods
25%
Pines
28%Other
Hardwoods
42%
Eucalyptus
5%
Location
Global Timber Plantations
Source: Carle and Holmgren 2008
March 9, 2009 Forest Research, LLC 8
Segments
Lumber and pulp
Wood as fuel
Biofuels and chemicals
March 9, 2009 Forest Research, LLC 9
Global
Industrial Roundwood Production
Source: FAO
0% 5% 10% 15% 20% 25% 30%
USA
Canada
Russian Federation
Brazil
China
Sweden
Germany
Finland
Chile
France
Rest of World
March 9, 2009 Forest Research, LLC 10
Global
Sawnwood Production
Source: FAO
0% 5% 10% 15% 20% 25% 30% 35%
USA
Canada
Germany
Brazil
Russian Federation
Sweden
India
Japan
Finland
Austria
Rest of World
March 9, 2009 Forest Research, LLC 11
Lumber and Housing Starts
Source: Forest Research Group
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1/1/1995 1/1/1997 1/1/1999 1/1/2001 1/1/2003 1/1/2005 1/1/2007 1/1/2009
Lum
be
r P
rod
uct
ion
(M
MB
F)
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Ho
usi
ng
Star
ts, S
eas
on
ally
Ad
just
ed
(th
ou
san
ds)
North American Softwood Lumber Production US Housing Starts
March 9, 2009 Forest Research, LLC 12
Lumber
Battered by the world economic slowdown
–Housing construction down
–Repair and remodeling down
– Inventory build up
–Weak 2009
–Now at bottom of cycle?
–Solid wood price recovery in 2010?
March 9, 2009 Forest Research, LLC 13
Global
Wood-based Panels
Source: FAO
0% 5% 10% 15% 20% 25% 30%
China
USA
Canada
Germany
Brazil
Russian Federation
Malaysia
Poland
France
Italy
Rest of World
March 9, 2009 Forest Research, LLC 14
Global Wood Pulp
Source: FAO
0% 5% 10% 15% 20% 25% 30% 35%
USA
Canada
Finland
Sweden
Brazil
Japan
Russian Federation
Indonesia
China
Chile
Rest of World
March 9, 2009 Forest Research, LLC 15
Pulp
Economic slowdown has weakened markets
Worldwide demand declined 9% in 2008
Inventories increased to record levels
Prices are down
2009 weak, upside risk China demand growth
March 9, 2009 Forest Research, LLC 16
Wood Energy In some industrialized countries, 50% of
wood demand is for wood energy!
In developing countries, may be 90%
US, Canada, Finland, Sweden are largest users of wood for industrial bioenergy
–Residues, black liquor
Plantations will be a big factor
–Roughly 10% of planted wood is for bioenergy
Wood pellet stoves more efficient
March 9, 2009 Forest Research, LLC 17
Liquid Biofuels and Chemicals
First generation
–Biofuels, such as ethanol, from food-related biomass
–Oilseed based biodiesel
Second generation
–Non-food sources
Agricultural residues
Woody biomass
March 9, 2009 Forest Research, LLC 18
Fuels and Chemicals
Worldwide investment in biofuels and chemicals
– Industry
Old Town Fuel and Fiber
Weyerhaeuser/Chevron
– US federal funding
– Other countries
China
Type of trees preferred varies
– Hardwoods may be preferred
March 9, 2009 Forest Research, LLC 19
Bright Spots!
May be at bottom of cycle
US large timberland owners– NCREIF 2008 return roughly
+7.3%
– Fourth quarter roughly +2.7%
Wood energy– Growth of wood pellets in US and
Europe
Biofuels and chemicals– Worldwide investment
March 9, 2009 Forest Research, LLC 20
Summary It’s a global industry
Global markets will recover, but may be after 2009
Forests will increasingly be used to produce wood energy and fuels
Technological changes continue–Biofuels and chemicals
–Biotechnological changes
March 9, 2009 Forest Research, LLC 21
Global Forest Products Industry:
Overview and Trends
NERCOFE Workshop
March 9, 2009
Don MacKay, Ph.D., CFAForest Research, LLC
Acknowledgements: Jack Lutz