Global Forest Products Industry:
         Overview and Trends

                NERCOFE Workshop
                  March 9,...
Overview



Focus on the BIG picture!




March 9, 2009                                2
                      Forest Rese...
Overview
                 Snapshot     of global
                  industry
                 Recent trends
             ...
Forest Area as a
                     Percent of World Total
                            0%   5%    10%     15%     20%   ...
Private Forest Land
                        0%   5%   10%    15%     20%      25%   30%   35%   40%

                 USA
...
Plantation Forest Area
                            0%   5%     10%        15%   20%   25%   30%

                   China
...
Global Timber Plantations
                    Type                              Location
                                 ...
Segments
            Lumber   and pulp
            Wood as fuel

            Biofuels and chemicals




March 9, 2009  ...
Global
        Industrial Roundwood Production
                           0%   5%      10%       15%   20%   25%   30%

  ...
Global
                   Sawnwood Production
                           0%   5%      10%      15%        20%   25%   30% ...
Lumber and Housing Starts
                           7,000                                                                ...
Lumber
 Battered  by the world economic
    slowdown
     – Housing construction down
     – Repair and remodeling down
 ...
Global
                      Wood-based Panels
                           0%   5%     10%       15%    20%   25%   30%

  ...
Global Wood Pulp
                            0%   5%      10%      15%        20%   25%   30%   35%

                     ...
Pulp
 Economic      slowdown has weakened
  markets
 Worldwide demand declined 9% in
  2008
 Inventories increased to r...
Wood Energy
  In some industrialized countries, 50% of

  wood demand is for wood energy!
 In developing countries, may ...
Liquid Biofuels and Chemicals
 First         generation
     – Biofuels, such as
       ethanol, from food-
       relate...
Fuels and Chemicals
    Worldwide investment in

    biofuels and chemicals
     – Industry
           OldTown Fuel and ...
Bright Spots!
  May be at bottom of cycle

 US large timberland owners
     – NCREIF 2008 return roughly
       +7.3%
  ...
Summary
 It’sa global industry
 Global markets will recover, but may
  be after 2009
 Forests will increasingly be used...
Global Forest Products Industry:
         Overview and Trends

                NERCOFE Workshop
                  March 9,...
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Global Overview

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Global Overview

  1. 1. Global Forest Products Industry: Overview and Trends NERCOFE Workshop March 9, 2009 Don MacKay, Ph.D, CFA Forest Research, LLC March 9, 2009 1 Forest Research, LLC
  2. 2. Overview Focus on the BIG picture! March 9, 2009 2 Forest Research, LLC
  3. 3. Overview  Snapshot of global industry  Recent trends – Mostly bad – Bright spots  Segments – Lumber and pulp – Wood energy – Biofuels and chemicals March 9, 2009 3 Forest Research, LLC
  4. 4. Forest Area as a Percent of World Total 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 Source: FAO March 9, 2009 4 Forest Research, LLC
  5. 5. Private Forest Land 0% 5% 10% 15% 20% 25% 30% 35% 40% USA Australia Canada Sweden Finland Japan Chile France Spain Peru Rest of World Source: FAO March 9, 2009 5 Forest Research, LLC
  6. 6. Plantation Forest Area 0% 5% 10% 15% 20% 25% 30% China USA Russian Federation Brazil Sudan Indonesia Chile Thailand France Turkey Rest of World Source: FAO March 9, 2009 6 Forest Research, LLC
  7. 7. Global Timber Plantations Type Location Africa and Pines Oceania 28% Other 5% Europe Hardwoods 32% 42% Asia N. and 48% C. Other America Eucalyptus Softwoods S. 11% 5% America 25% 4% Source: Carle and Holmgren 2008 March 9, 2009 7 Forest Research, LLC
  8. 8. Segments  Lumber and pulp  Wood as fuel  Biofuels and chemicals March 9, 2009 8 Forest Research, LLC
  9. 9. Global Industrial Roundwood Production 0% 5% 10% 15% 20% 25% 30% USA Canada Russian Federation Brazil China Sweden Germany Finland Chile France Rest of World Source: FAO March 9, 2009 9 Forest Research, LLC
  10. 10. Global Sawnwood Production 0% 5% 10% 15% 20% 25% 30% 35% USA Canada Germany Brazil Russian Federation Sweden India Japan Finland Austria Rest of World Source: FAO March 9, 2009 10 Forest Research, LLC
  11. 11. Lumber and Housing Starts 7,000 3,500 Housing Starts, Seasonally Adjusted 6,000 3,000 Lumber Production (MMBF) 5,000 2,500 (thousands) 4,000 2,000 3,000 1,500 2,000 1,000 1,000 500 - - 1/1/1995 1/1/1997 1/1/1999 1/1/2001 1/1/2003 1/1/2005 1/1/2007 1/1/2009 North American Softwood Lumber Production US Housing Starts Source: Forest Research Group March 9, 2009 11 Forest Research, LLC
  12. 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 12 Forest Research, LLC
  13. 13. Global Wood-based Panels 0% 5% 10% 15% 20% 25% 30% China USA Canada Germany Brazil Russian Federation Malaysia Poland France Italy Rest of World Source: FAO March 9, 2009 13 Forest Research, LLC
  14. 14. Global Wood Pulp 0% 5% 10% 15% 20% 25% 30% 35% USA Canada Finland Sweden Brazil Japan Russian Federation Indonesia China Chile Rest of World Source: FAO March 9, 2009 14 Forest Research, LLC
  15. 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 15 Forest Research, LLC
  16. 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 16 Forest Research, LLC
  17. 17. Liquid Biofuels and Chemicals  First generation – Biofuels, such as ethanol, from food- related biomass – Oilseed based biodiesel  Second generation – Non-food sources residues Agricultural biomass Woody March 9, 2009 17 Forest Research, LLC
  18. 18. Fuels and Chemicals Worldwide investment in  biofuels and chemicals – Industry  OldTown Fuel and Fiber  Weyerhaeuser/Chevron – US federal funding – Other countries  China Type of trees preferred varies  – Hardwoods may be preferred March 9, 2009 18 Forest Research, LLC
  19. 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 19 Forest Research, LLC
  20. 20. Summary  It’sa 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 20 Forest Research, LLC
  21. 21. Global Forest Products Industry: Overview and Trends NERCOFE Workshop March 9, 2009 Don MacKay, Ph.D., CFA Forest Research, LLC Acknowledgements: Jack Lutz March 9, 2009 21 Forest Research, LLC
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