Sawn softwood. The three UNECE subregions recorded mixed results in the consumption of sawn softwood in 2019, with modest declines in Europe (-1.8%) and North America (-2.7%) offset by a gain in EECCA (+5.3%). The production of sawn softwood was also mixed, increasing in Europe (+0.6%) and EECCA (+3.2%) but decreasing in North America (-3.9%).
In Europe, lower demand and higher production meant that sawn softwood exports increased in volume in 2019 (by 3.4%), with ample supplies of low-cost beetle-damaged timber enabling Scandinavian and central European countries to expand both outputs and exports. The volume of European sawn softwood exports increased in 2019 to 55.6 million m³, but average export prices fell by 9.8%.
EECCA produced 48.7 million m³ of sawn softwood in 2019 (up by 3.2% over 2018); the subregion’s sawn softwood exports amounted to 37.4 million m³ (+1.7%).
North American sawn softwood output was 102 million m³ in 2019, a decrease of 3.9% compared with 2018. Exports dropped significantly (by 7.7%), to 30.0 million m³, with the US recording a dramatic fall of 20.1% (-581,000 m³) and Canada declining by 6.5% (-1.9 million m³). North American imports fell by 4.1%, to 25.2 million m³.
Sawn hardwood. The consumption and production of sawn hardwood were varied in the UNECE region in 2019, despite generally good economic conditions. The region is a net exporter of sawn hardwood, with only Europe exporting less than it imports. Apparent consumption rose by 10.2% in Europe in 2019 and by 2.1% in EECCA. Consumption was flat in North America, however, albeit at a much higher level than in Europe and EECCA.
European hardwood lumber production grew by 2.1% in 2019, to 14.4 million m³, but it declined in the EECCA to 3.94 million m³. Sawn hardwood production decreased slightly (by 2.1%) in North America, to 23.4 million m³.
China continued to dominate imports of temperate and tropical sawnwood in 2019, with a volume of 38.8 million m³ (valued at $10.5 billion). UNECE-region countries dominate global exports of sawnwood, with Canada and the Russian Federation the global leaders.
The biggest suppliers of tropical sawnwood to the UNECE region are Malaysia and Thailand. Sawnwood production declined in both these countries in 2019, a trend likely to continue in 2020.
• Sawn softwood
The production of sawn softwood increased only slightly (+0.6%) in Europe in 2019, to 113.4 million m³. Net apparent consumption was down by 1.8%, to 97.1 million m³ (graph 3.1). Sawn softwood production continued to increase in central Europe (Austria and Germany), with relatively inexpensive logs available due to timber salvage programmes. Sawn softwood production grew in Sweden (by 2.0%) but fell significantly (by 3.8%) in Finland.
European sawn softwood dynamics were driven by exports, which were up by 3.4% in 2019, due mainly to China. All major producing countries in central Europe and the Nordic countries increased exports.
European sawn softwood imports declined in 2019 (by 1.6%), especially in Germany (down by 7.1%), which had more domestic supply available, and Turkey (down by nearly 50%).
The sawn softwood sector was influenced by market discontinuities in the first half of 2020. Finland cut production significantly due to labour disputes, and several central European countries harvested more than the industry needed to address infestations of the spruce bark beetle. The COVID-19 pandemic also reduced demand in both domestic and export markets.
• Sawn HARDwood
Sawn hardwood consumption in Europe picked up by 10.2% in 2019, to 15.3 million m³ and production hit a 12 year high of 14.4 million m³ (a 2.1% increase) (graph 3.3). The increase in European sawn hardwood production was due mainly to growth in Bosnia and Herzegovina, Germany and Turkey, which are all among the largest producers in the subregion. Of the larger producers, production declined only in France.
European sawn hardwood exports dropped by 4.5% in 2019 due to growing consumption in the subregion, and imports continued to grow (up by 13.6% in 2019). European sawn hardwood imports have increased by more than 40% since 2015.
Sawn hardwood import unit values in 2019 were well down – by 15.5% – from 2018, and export unit values decreased by 2.3% (graph 3.2). European hardwood sawmills are highly dependent on the international hardwood market (about 42% of production is exported). At the same time, a significant amount of hardwood lumber is imported (about 45% of consumption originates in another country). Demand for oak remained high in 2019, resulting in consistently high prices (Eurostat, 2020). Market opportunities for oak are limited, however, because the supply of oak timber is relatively low. Prices for beech were also high in 2019.
• Sawn softwood
EECCA produced 48.7 million m³ of sawn softwood in 2019, up by 3.2% over 2018 (graph 3.4). The Russian Federation made up most of this volume, at 41.3 million m³, up by 4.5% in 2019. Apparent sawn softwood consumption increased in the subregion by 5.3%, to 16.1 million m³.
Russian sawmills continued to produce and export sawn softwood even though prices were down, as seen in declared unit values (graph 3.5). The Russian Federation exported 31.5 million m³ of sawn softwood in 2019, an increase of 5% compared with 2018.
The Russian Federation has increased its sawn softwood exports to China each year for the last five years, to 19.2 million m³ in 2019. The country’s 2019 exports of sawn softwood declined to Egypt by about 7% (to 1.15 million m³); to Iran, by 36% (to 488,000 m³); and to the Netherlands, by 21% (to 311,000 m³). Export sales increased to Japan by 13% (to 970,000 m³); and to Germany by 7% (to 566,000 m³) (WhatWood, 2020b).
• Sawn HARDwood
Sawn hardwood production decreased by 4.3% in EECCA in 2019, to 3.9 million m³, with Ukraine seeing the biggest drop (down by 36%, with a reduction of 189,000 m³). Consumption of sawn hardwood increased in EECCA by 2.1%, to 1.8 million m³ (graph 3.6). The Russian Federation produced 3.2 million m³ of sawn hardwood in 2019, almost unchanged from 2018.
Sawn hardwood exports from EECCA amounted to 2.4 million m³ in 2019 (a decline of 8.3% compared with 2018), of which 1.9 million m³ was from the Russian Federation (down by 2.2%).
• Sawn softwood
North American production of sawn softwood declined by 3.9% in 2019, to 101.6 million m³ (graph 3.7). The main cause of the slowdown in 2019 was delayed US demand, due mainly to extremely wet weather in the first half of the year, which limited house construction (Forest Economic Advisors, 2020a). Friction between the US and China resulted in a tariff war, which, coupled with slowing demand in China in 2019, restricted US trade, especially for hardwoods, until tariff exemptions commenced in the first quarter of 2020.
Although countervailing and antidumping duties on Canadian sawn softwood exports to the US continue to negatively affect Canadian producers, these are expected to drop from the current 20.2% to 8.2% in October 2020. Another policy issue affecting British Columbia (which accounts for more than 40% of Canada’s production) is increased government stumpage rates* (Forest Economic Advisors Canada, 2020b).
* Stumpage is the price of logs at the stump.
US demand was strong late in the fourth quarter of 2019 and for much of the first quarter of 2020, but the COVID-19 pandemic caused the curtailment of up to 30% of the North American sawn softwood capacity early in the second quarter. On the other hand, the repair and remodelling business roared to life as stay-in-place homeowners started do-it-yourself projects. Coupled with home construction (considered an essential service in most areas of the US), dealer inventories were quickly depleted. This caused prices to soar from late April through early July, and curtailed mills restarted production. The outlook is clouded, but it appears that there will be a steady rebound in sawn softwood in the US and Canada and increased demand going into 2021 – as long as there is not a strong resurgence of COVID-19 infections (Forest Economic Advisors, 2020c). The market discussions to be held at the 2020 Committee on Forests and the Forest Industry in Geneva in November 2020 will address this issue in more detail.
In general, declared unit prices for Canadian and US sawnwood exports were lower in 2019 than in 2018. This was also true for Canadian and US imports of coniferous sawnwood (graph 3.8).
• Sawn HARDwood
Sawn hardwood production fell by 2.1% in North America in 2019, to 23.4 million m³ (graph 3.9). The net apparent consumption of sawn hardwood was flat at 20.8 million m³, and the export volume dropped by 14.6%.
Sawn hardwood imports declined in 2019 as a result of reduced intraregional trade between the US and Canada and lower European beech imports by the US (US FAS, 2020).
The decline in North American exports in 2019 was the result of decreased US shipments (US FAS, 2020). Canadian exports remained relatively constant (Statistics Canada, 2020). US exports to China declined by 786,000 m³ (39%), while exports to Viet Nam increased by 16,000 m³ (3%). US exports to Europe declined by 32,000 m³ (9%).
Apparent sawn hardwood consumption dropped in Canada and was flat in the US in 2019. Estimated US sawn hardwood consumption increased for industrial applications (pallets and sleepers) but dropped for appearance applications, due mainly to a reduction in solid hardwood flooring production as substitute products found greater acceptance. There was a small increase in single-family housing starts in 2019. However there was a decline in the value of single-family construction put in place in 2019 (US Census Bureau, 2020b, c), which suggests reduced consumption of higher-priced hardwood products. Sawn hardwood consumption for furniture production remains at historically low levels, with a further slight drop in 2019.
The price of #1 common hardwood lumber (a hardwood lumber grade indicating two-thirds clear with cuttings of a minimum size) started to decline in late 2018 and continued downward in 2019 and the first half of 2020. The price of pallet cant (hardwood log centres) increased in 2019 but declined in the first half of 2020. These price trends reflect relative changes in the consumption of appearance versus industrial products in North American hardwoods (Hardwood Market Report, 2020).
China remains a powerhouse in the global sawnwood trade, importing considerably more sawnwood in 2019 than the next top nine extraregional importers combined (table 3.1). In 2019, US exports of sawn hardwood dropped by 786,000 m³ (39%) to China but increased by 16,000 m³ (3%) to Viet Nam.
Globally, eight of the top ten sawnwood exporters are countries in the UNECE region, with Chile and Thailand the only countries outside the region in the top ten in 2019 (table 3.2).
Asia is the main driver of the world’s tropical sawnwood trade. China and, to a lesser extent, Thailand, India and Viet Nam are the major importers and Thailand and Malaysia are the major exporters. African suppliers – particularly Cameroon and Gabon – are also important in the tropical sawnwood trade (table 3.3). China’s imports from Thailand are predominantly of lower-value rubberwood, and Africa supplies China with mainly high-value specialty timbers for high-end markets.
Balsa was the most important tropical hardwood species, by volume, imported into the US in 2019, and ipé was the most important by value (with 27% of the tropical market share in 2019).
China’s tropical sawnwood imports slowed in 2019. Imports declined by 5.4% in 2019, to 6.5 million m³, with 77% of imports originating in Thailand. Preliminary data on tropical sawnwood imports from member countries of the Association of South East Asian Nations indicate that trade dropped significantly in the first quarter of 2020 – by 81% by volume and 82% by value – compared with the same period in 2019 (ITTO, 2020b).
China’s construction and manufacturing has been affected by a plunge in both international and domestic demand for construction and wooden furniture. China’s gross domestic product contracted for the first time in 50 years in the first quarter of 2020, although it is still expected to reach 1.7% (on an annual basis) by year end (The Economist, 2020). The outlook for China’s tropical sawnwood demand remains uncertain.
Thailand was the top-ranked exporter of tropical sawnwood – mostly plantation rubberwood – in 2019. Nevertheless, its export volume was down by 13% (to 3.9 million m³) compared with 2018. This reflects a drop in demand in China’s secondary processed wood products industries, which are the major destinations for Thailand’s exports. Thailand’s rubberwood sector was reportedly severely affected by declining demand in China in the first half of 2020 and by logistical supply issues arising from measures imposed by China to control COVID-19. By May 2020, 60% of Thailand’s sawmills had ceased production and 40% were operating at minimal levels (ITTO, 2020c).
African sawnwood exporters have also been affected by logistical issues in China, reporting severe restrictions in unloading imported sawnwood at some Chinese ports due to strict measures to control COVID-19 (ITTO, 2020c). Cameroon’s exports have fluctuated because of supply-side problems, notably shipment delays caused by bureaucratic procedures, poor port infrastructure at Douala (the country’s only major port), and heavy and disruptive rains in early 2020 (ITTO, 2020b).
Table 3.4 summarizes data on sawnwood production, consumption, trade and the 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 the production of sawnwood will decrease in the UNECE region at an annual rate of 2.0% in 2020 and increase 1.1% in 2021. Subregionally, the forecast is for Europe to decline by 2.8% in 2020 and increase by 3.8% in 2021; EECCA to increase by 2.4% in 2020 and 2.8% in 2021; and North America to shrink by 3.1% in 2020 and 1.5% in 2021.