WOOD RAW Materials

Author: Håkan Ekström

Introduction and UNECE region overview

The total consumption of roundwood – comprising logs for industrial uses and fuel – in the UNECE region was estimated at 1.4 billion m³ in 2019, the first decrease after six consecutive years of increase. The apparent consumption of logs for industrial purposes was down by 3.2%, to 1.16 billion m³, although this was still 7.5% higher than in 2015. Of the total volume of roundwood harvested in the UNECE region in 2019, about 18% (260 million m³) was used for fuel, a decrease of 3.7 million m³ (-1.4%) compared with 2018.

Countries in the UNECE region are important in the global wood supply, contributing 60% of the total; seven countries in the region are in the top ten of industrial-roundwood-exporting countries globally. Czechia became the world’s third-largest exporter of industrial roundwood in 2019, exporting 15 million m³ of coniferous roundwood. The US dropped to sixth position, down from third in 2018.

Russian log exports have been in decline for more than a decade. In 2006, the country exported a record 37 million m³ of softwood logs, but this had dropped to just 7.2 million m³ by 2019, which was 35% lower than in 2018.

The biggest increases in European log production in the last two years were in Czechia (up by 50% from 2017, to 25.5 million m³ in 2019) and Germany (up by 23% from 2017, to 53 million m³ in 2019). The increase, which was due to the salvage logging of trees affected by bark beetle, was consumed by domestic industries as well as by forest product manufacturers in neighbouring countries and China.

Within Europe, the major log flows in 2019 were from Czechia to Austria and Germany; from Norway to Sweden; from Poland to Germany; and from Germany to Austria

By far the biggest beneficiary of the log surplus in Europe in 2019 was China, which shifted its log sourcing from North America and the Russian Federation to Oceania and Europe. China’s log imports from Europe increased 20-fold between 2017 and 2019. In contrast, its import volume from the US dropped by 80% in less than two years – from 1.5 million m³ in the third quarter of 2018 to 0.32 million m³ in the first quarter of 2020. 

China is by far the world’s biggest importer of industrial roundwood, and its import volume increased further in 2019. China imported four times more industrial roundwood in 2019 than the other nine countries in the top ten extraregional importers combined.

Europe

An estimated 425 million m³ of logs (77% coniferous) was processed in Europe in 2019 for industrial purposes, and 145 million m³ was used for energy. Log removals of both non-coniferous and coniferous industrial roundwood reached record highs in 2018 and dropped only slightly in 2019. The high levels were driven by a combination of a large supply of insect- and storm-damaged timber in central Europe and healthy demand for lumber, panels and pulp (graph 2.1 and graph 2.2).

The biggest increases in log production between 2017 and 2019 in Europe were in Czechia (up by 50%, to 25.5 million m³) and Germany (up by 23%, to 53 million m³), driven strongly by the bark-beetle infestation (see chapter 1). Turkey, Spain, Sweden, Finland, Romania, Ireland and Austria (in descending order, by volume) all experienced incremental expansions in their timber harvests between 2017 and 2019.

The large log volumes in Czechia and Germany were consumed not only by their domestic industries but also by forest product manufacturers in neighbouring countries and China. China has been the biggest beneficiary by far of the log surplus in Europe, with the country’s log imports from Europe increasing from 440,000 m³ in 2017 to almost 7 million m³ in 2019.

The Confederation of European Paper Industries (CEPI) reported that its members consumed about 153 million m³ of pulp logs in 2019 (down by 1.3% from 2018) (CEPI, 2020). Coniferous wood provided about 76% (comprising 50% softwood logs and 26% wood chips from coniferous sawmills) of the raw-material demand for the pulp-and-paper sector. The intra-European softwood log trade fell in 2019 after reaching a 12-year high in 2018. Imported softwood and hardwood fibre accounted for 14% and 30%, respectively, of total fibre consumption in 2019. Table 2.1 shows the top five intra-European trade flows in 2019.

Import declared unit values for coniferous industrial roundwood dropped by 9.9% in 2019, to an average of $68/m³, and non-coniferous industrial roundwood unit values fell by 6.2%, to an average of $80/m³ (graph 2.3).

Exports of industrial roundwood increased strongly in 2019 for the second year in a row; volumes grew by almost 50% between 2017 and 2019, to 59 million m³ (of which 45 million m³ was coniferous). Declared unit values for coniferous industrial roundwood exports decreased by 7.9% in 2019, to an average of $70/m³. Average export declared unit values for non-coniferous industrial roundwood contracted by 4.0%, to $105/m³ (graph 2.3).

Sawlog prices in Europe declined throughout 2019 and in early 2020, resulting in a more globally competitive lumber industry. The major change in log pricing in Europe in recent years has been a reduction in differences between country groupings within the subregion. In 2017, the discrepancy in prices among the groups was about €40/m³. By late 2019 and early 2020, however, this had fallen to about €10/m³. The levelling of the price structure across Europe can be attributed largely to an increase in log trade, particularly around the Baltic Sea, and to an oversupply of logs in the highest-cost countries.

Eastern Europe, Caucasus and Central Asia

EECCA countries reported industrial roundwood removals of 229 million m³ in 2019, of which 80% was coniferous. This was down by 6.6%, year-on-year, with the fall driven entirely by lower removals in the Russian Federation (-7.5%); nevertheless, the removal volume in 2019 was still well above that recorded in 2017 (4.3% higher) as well as in previous years. In Belarus and Ukraine (the second- and third-largest timber producers in EECCA after the Russian Federation), removals of industrial roundwood were 16.0 million m³ (down by 1.7% compared with 2018) and 9.3 million m³ (up by 3.6%), respectively. The production of coniferous industrial roundwood in EECCA for 2019 was 182.5 million m³, down by 6.5% from 2018 (graph 2.4).

Exports of industrial roundwood contracted by 15% in EECCA in 2019, to 16.2 million m³. The Russian Federation accounts for the vast majority of log exports in the subregion, given log-export bans in Belarus and Ukraine. Nevertheless, Russian log exports have been in decline for more than a decade. The Russian Federation exported a record volume of 37 million m³ of softwood logs in 2006 but only 9.1 million m³ in 2019, which was 17% lower than in 2018. High log export taxes (imposed ten years ago) have been the main driver of the decline. Export quotas are also in place based on historical shipments, as well as a requirement that exporting companies also produce value-added wood products.

The trend has been in the other direction for Russian exports of hardwood logs, with a substantial increase in the last decade. The country exported just over 8 million m³ of hardwood logs in 2018, more than double the volume in 2009. The upward trajectory was broken in 2019, however, with a decline in export volume of 17.4%, mostly into the Chinese market. Shipments to China, Finland and Sweden accounted for about 95% of total Russian hardwood log exports in 2019. Finland remains the largest market, with more than 4 million m³ of pulp logs crossing the border from the Russian Federation in 2019 to meet increasing wood-fibre demand in the expanding Finnish pulp sector. 

The production of non-coniferous industrial roundwood in EECCA for 2019 was 46.4 million m³, down by 7.1% from 2018 (graph 2.5).

In the EECCA subregion in 2019, declared export unit values decreased by 11% for coniferous industrial roundwood, to an average of $73/m³, and by 5% for non-coniferous industrial roundwood, to an average of $65/m³. Import volumes of industrial roundwood increased by 6.6% in 2019, but import unit values dropped by 6% for coniferous (to an average of $99/m³) and by 9.1% for non-coniferous industrial roundwood (to an average of $82/m³) (graph 2.6).

The consumption of industrial roundwood dropped by 5.8% in EECCA in 2019, to 213 million m³ (down by 5.9% for coniferous and by 5.4% for non-coniferous).

North America

The harvest of industrial roundwood in North America fell by 3.0% in 2019 because of reduced log consumption by the sawmilling industry in Canada and by pulp mills and panel producers in the US.

Removals of industrial roundwood in the US totalled about 388 million m³ in 2019, of which 76% was coniferous. In Canada, removals reached 144 million m³ (81% coniferous), down by 7.5% from 2018 and the lowest quantity in ten years. Most of the decline in log production was in British Columbia, where the annual allowable cut has been in steady decline since 2010 and milling capacity has shrunk.

In the US, the timber harvest was down slightly in 2019 but still substantially above the five-year average. The sawmilling sector has grown faster than other sectors, continuing a sequence of ten year-on-year increases in 2019.

North America produced 410.1 million m³ of coniferous industrial roundwood in 2019, down 3.0% from 2018 (graph 2.7).

The production of non-coniferous industrial roundwood in North America was 121.5 million m³ in 2019, down by 3.1% from 2018 (graph 2.8).

US softwood log exports fell from 9.8 million m³ in 2018 to 5.9 million m³ in 2019, the lowest level in more than 30 years and the first time that the US has exported less than Canada. The decrease was due mainly to a decline in US shipments to China, itself a result of the trade dispute between the two countries. The decline in US log exports continued in the first quarter of 2020, when only 260,000 m³ was shipped to China, down from 710,000 m³ in the first quarter of 2019.

Canadian softwood log exports declined by 11.3% in 2019, to 7.11 million m³. More than 90% of the export volume went overseas, with a majority (66% of total exports) destined for China. Relatively small volumes were shipped to Japan (26%) and the Republic of Korea (8%). All overseas exports of softwood logs from Canada originated in British Columbia. With tight log supplies and government moves to further restrict log shipments from the province, importers in Asia are likely to increasingly turn to other regions to satisfy their wood demand.

North American declared unit values for exports decreased by 1.6% (to an average of $120/m³) for coniferous and by 2.7% (to an average of $310/m³) for non-coniferous industrial roundwood in 2019. Declared unit values for imports increased by 5.7% (to an average of $63/m³) for coniferous and by 4.7% (to an average $79/m³) for non-coniferous industrial roundwood (graph 2.9).

Extraregional influences on the UNECE

Seven of the ten major industrial-roundwood-exporting countries worldwide are in the UNECE region. There were two major changes in the top-ten ranking in 2019, with Czechia jumping to third place (with an export volume of coniferous roundwood of 15 million m³) and the US dropping to sixth place, down from third in 2018 (table 2.2).

China is by far the world’s biggest importer of industrial roundwood, and its import volume increased again in 2019 (by 17%). Table 2.3 shows the top ten extraregional industrial roundwood importers in 2019; China imported four times more industrial roundwood than the other nine countries in the top ten combined.

China shifted its log sourcing away from North America and the Russian Federation in 2019 towards Oceania and Europe. The major reasons for this were the trade dispute between the US and China and the large volumes of insect-damaged timber available in central Europe. China’s import volume from the US fell from 1.5 million m³ in the third quarter of 2018 to only 0.32 million m³ in the first quarter of 2020, and the market share of total imports held by the US fell from 14% to 4%.

The presence of logs from central Europe in the Chinese market is a new phenomenon (Ukraine has exported logs to China since 2010). Relatively small volumes of logs were shipped from Europe to China in 2016 and 2017. There was a significant increase in 2018, to 1.3 million m³, and a dramatic jump in 2019, to almost 7 million m³. The main European countries supplying China in 2019 were Germany, Czechia and Poland (in descending order, by volume), all of which were affected by storms and insects in 2018 and 2019. Europe’s share of softwood logs imported into China increased from 3% in the first quarter of 2018 to 25% in the first quarter of 2020 (table 2.4).

UNECE subregional data summary and forecast

Table 2.5 summarizes data on industrial roundwood production, consumption, trade and declared value of cross-border trade. Additional information and the complete forest products database is available at www.unece.org/forests/fpamr2020-annex.

Initial data supplied by UNECE member States (all figures are year over year) indicate that removals of industrial roundwood will decrease in the UNECE region by 1.3% in 2020 and 0.8% in 2021. Subregionally, the forecast is for Europe to decline by 3.5% in 2020 and grow by 1.4% in 2021; EECCA to increase by 0.2% in 2020 and 0.5% in 2021; and North America to shrink by 0.6% in 2020 and 2.6% in 2021.

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