Wood Raw-Material Markets – Globally and Locally Mapping the Course - The 7 th Annual Forest Industry Conference January 23, 2020 Vancouver, Washington Hakan Ekstrom Wood Resources International LLC Wood Resources International
Key Market Factors Mountain Pine Beetle President Trump Spruce Bark Beetle Climate Change Wood Resources International
A Few Numbers of Interest BC Lumber Production - 21% US Log Exports to China - 52% Russian Lumber Exports to China +12% German Log and Lumber Exports +150% and +16% Wood Resources International
Global Production of Pulp and Lumber 130 120 Volume (Index 2002=100) 110 100 Wood Pulp 90 Softwood Lumber 80 Sources: FAO and WRI Databank 70 Wood Resources International
Global Trade of Forest Products 225 200 175 Volume (Index 2002=100) 150 125 100 Wood Chips 75 Pulp 50 Softwood Lumber Sources: Customs Statistics and WRI Databank 25 Softwood Logs 0 Wood Resources International
Global Sawlog Price Index (GSPI) 1Q/95-3Q/19 100 80 60 US$/m3 40 20 Source: Wood Resource Quarterly 0 1Q 95 1Q 97 1Q 99 1Q 01 1Q 03 1Q 05 1Q 07 1Q 09 1Q 11 1Q 13 1Q 15 1Q 17 1Q 19 Wood Resources International
Wood Markets - China • Continued Strong Lumber Imports • Expansion of Pulp Capacity has Slowed • Domestic Forest Resources Insufficient • Largest Hardwood Chip Importer in the World • High Log and Wood Fiber Costs Wood Resources International
Imports of Softwood Logs and Lumber to China 60 Logs 50 Lumber (rwe) 40 Million m 3 30 20 10 Sources: Customs data and WRI est. 0 Wood Resources International
Softwood Log Imports to China 25 New Zealand 20 Russia North America Other Million m 3 15 10 5 Sources: Customs data and WRI estimates 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e Wood Resources International
Softwood Lumber Imports to China 18 16 Russia 14 Canada 12 Finland Million m 3 US 10 8 6 4 Sources: Customs data and WRI estimates 2 0 Note. 1 mbf ~ 1.7 m 3 Wood Resources International
Wood Markets – North America • Mixed Wood Raw-Material Cost Trends the Past Few Years • Expanding Forest Industry in the US South • Reduced Timber Harvests in British Columbia • Outlook for Increased Demand for Lumber in the US • Reduction in Log Exports from North America to Asia • Canada no Longer the Largest Lumber Exporter in the World Wood Resources International
Overseas Lumber Imports to the US 1200 Germany 1000 Sweden Brazil 800 Chile 1000 m 3 600 400 200 0 Sources: Customs data and WRI Databank Wood Resources International
Log Exports From Western US to Asia 10 China 8 Japan S. Korea Million m 3 Total 6 4 2 0 Wood Resources Sources: Customs data and WRI estimates International
Log Exports From British Columbia to Asia 7 6 China Japan 5 S. Korea Million m 3 4 Total 3 2 1 0 Wood Resources Sources: Customs data and WRI estimates International
Sawlog Prices – US Northwest 225 200 Price Index, US$ (1Q/08 = 100) 175 150 125 100 Douglas-fir (Domestic) 75 Hem-fir (Domestic) Douglas-fir (Export) 50 Hem-fir (Export) Source: WRI databank 25 Wood Resources International
Sawlog Prices – British Columbia 175 150 Price Index, US$ (1Q/08 = 100) 125 100 75 HemBal (Domestic) 50 HemBal (Export) 25 SPF Source: Wood Resource Quarterly 0 Wood Resources International
Sawlog Prices for Key Lumber Producers 3Q/19 140 120 10 year avg 100 3Q/19 US$/m 3 80 60 40 20 0 l W t h t e n d y s s i t l e n z n e a i u N d a a h a W E o l r m C e a B S , w , S e a r , a , S Z e U d S d G a U w a n n a e a C N C Wood Resources Source: Wood Resource Quarterly International
Residual Chip Prices in North America 150 125 US$/dry metric ton 100 75 US West 50 US South 25 Canada West Source: North American Wood Fiber Review 0 1Q/05 1Q/06 1Q/07 1Q/08 1Q/09 1Q/10 1Q/11 1Q/12 1Q/13 1Q/14 1Q/15 1Q/16 1Q/17 1Q/18 1Q/19 Wood Resources International
Gross Margins in the Sawmilling Industry BC Interior 350 300 Net Wood Costs Lumber Price 250 "Gross Margin" US$/m 3 200 150 100 50 Source: Wood Resource Quarterly 0 1Q/05 1Q/06 1Q/07 1Q/08 1Q/09 1Q/10 1Q/11 1Q/12 1Q/13 1Q/14 1Q/15 1Q/16 1Q/17 1Q/18 1Q/19 Wood Resources International
Gross Margins in the Sawmilling Industry 225 200 Profit Margin Index (1Q/05=100) 175 US South US NW, Hem-fir 150 Can BC, Interior 125 100 75 50 25 Source: Wood Resource Quarterly 0 Wood Resources International
Key Takeaways • Global forest product production, which had been in a steady expansion mode for almost ten years, levelled off in 2018 and 2019. • China continued to increase importation of softwood lumber in 2019 and surpassed the US to become the world’s largest importer in late 2019. • Wood raw-material costs were generally lower for both the pulp and sawmilling sectors in 2019, with the biggest declines occurring in Europe and Western North America. • Lumber and pulp prices are likely to increase in 2020, resulting in moderate upward pressure on prices for pulpwood and sawlogs in the coming year. Wood Resources International
Questions? Wood Resources International LLC Seattle, USA Publisher of the Wood Resource Quarterly WoodPrices.com Wood Resources International
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