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Global Overview

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  • 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. Overview Focus on the BIG picture! March 9, 2009 2 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 3 Forest Research, LLC
  • 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. 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. 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. 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. Segments  Lumber and pulp  Wood as fuel  Biofuels and chemicals March 9, 2009 8 Forest Research, LLC
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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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