european spruce & asian woodchip market overview · woodchip imports in the asia-pacific...
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European Spruce & Asian Woodchip Market Overview
Fastmarkets RISI North American Conference
October 2019
John North
Senior Economist, International Timber
Overview
• Norway spruce (Picea abies) has emerged as a suitable
substitution for US softwood
The extensive bark beetle infestation in Europe (Germany, Czech Republic,
Poland, etc.) has forced salvage harvesting and driven down prices
• One Belt, One Road initiative heavily subsidized
Spruce logs and lumber are mainly moving in containers but some lumber
on rail as well
• The Asian pulp and paper market is undergoing a structural shift
Japanese mergers and capacity closures while the number of Chinese
producers increases
• Traditional hardwood chip suppliers are turning away from the
export market while new ones are emerging
Australia, Chile and South Africa
2019 | Fastmarkets RISI | North American Conference 2
European bark beetle
• The Czech Republic has been hardest hit
Approximately 18 million cubic meters of timber have been infected
• Austria, Germany (Bavaria), Poland and Slovakia have also been
affected
Combined total of 16.5 million cubic meters
• Salvage harvesting operations are underway in affected
countries
Dead trees can remain on stump for up to three years
Drought and record heat exacerbating disease
• Sawmill capacity increases are unlikely
Major markets are soft
2019 | Fastmarkets RISI | North American Conference 3
European log exports to World, January 2016 – July 2019Cubic meters
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19
Czech Republic
Germany
Poland
2019 | Fastmarkets RISI | North American Conference 4
Major supplier log exports to China, August 2017 – July 2019Cubic meters
0
100,000
200,000
300,000
400,000
500,000
600,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19
New Zealand US
Australia EU (R)
2019 | Fastmarkets RISI | North American Conference 5
Chinese lumber imports, 1H2017–1H2019Tonnes
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Canada EU Chile United States New Zealand Austria
2017
2018
2019
2019 | Fastmarkets RISI | North American Conference 6
2019 | Fastmarkets RISI | North American Conference
Russian exports of logs and lumber to China, 2016–2019YTDCubic meters
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Logs
Lumber
7
Softwood logs unit price to China, November 2017- July 2019US dollars, FOB
0
20
40
60
80
100
120
140
Europe
New Zealand
Australia
2019 | Fastmarkets RISI | North American Conference 8
Softwood lumber unit price to China, January 2017- July 2019US dollars, FOB
0
50
100
150
200
250
300
350
400
450
Europe
New Zealand
Australia
2019 | Fastmarkets RISI | North American Conference 9
One Belt, One Road network
• Rail is heavily
subsidized by
Chinese
government
• Favorable
container rates
on backhaul to
China
• Customs
inspections, rail
gauge variations,
politically
unstable areas
2019 | Fastmarkets RISI | North American Conference 10
Asian imports of woodchips and wood pulp, 2008-2018Million BDMT and million tonnes
0
4
8
12
16
20
24
28
32200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
Woodchips
Pulp
2019 | Fastmarkets RISI | North American Conference 11
Total hardwood woodchip imports in the Asia-Pacific markets, 2008-2019E Million BDMT
0
5
10
15
20
25
30
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E
China Japan
South Korea Taiwan
India Other
2019 | Fastmarkets RISI | North American Conference 12
Woodchip imports in the Asia-Pacific region, 1H2017–1H201Thousand BDMT
Hardwood 1H17 1H18 1H19 1H19/1H18
Japan 5,373 5,597 5,449 -2.6%
China 5,709 6,299 6,421 1.9%
South Korea 224 258 254 -1.7%
Taiwan¹ 185 210 189 -10.1%
India¹ — 76 48 -36.5%
Indonesia¹ — 2 540 nm
Total hardwood 11,490 12,442 12,901 3.7%
nm = not meaningful.
1. Through May only.
2019 | Fastmarkets RISI | North American Conference 13
Sources of hardwood chips for the Asia-Pacific markets, 2019 YTD
Vietnam41.6%
Australia22.9%
Chile13.2%
Thailand7.7%
South Africa7.6%
Brazil3.0%
Malaysia1.8%
Indonesia1.1%
New Zealand0.7%
Ecuador0.5%
2019 | Fastmarkets RISI | North American Conference 14
China: Average value of hardwood chip imports, 2009-2019 YTDUS dollars per BDMT, nominal prices CIF
100
120
140
160
180
200
220
240
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD
Vietnam Australia
Chile Thailand
2019 | Fastmarkets RISI | North American Conference 15
Asia-Pacific hardwood chip imports from Southeast Asian suppliers and traditional suppliers, 2005-2019EThousand BDMT
0
2
4
6
8
10
12
14
16
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E
Southeast Asian suppliers
Traditional suppliers
2019 | Fastmarkets RISI | North American Conference 16
Australia: New hardwood plantation establishment, 1995-2018Thousand hectares
0
20
40
60
80
100
120
140
2019 | Fastmarkets RISI | North American Conference 17
Chile: Eucalyptus globulus log supply and demand forecast, 2017-2022Million cubic meters
5
6
7
8
9
10
11
12
2017 2018 2019 2020 2021 2022
Demand
Supply
Source: Instituto Forestal.
2019 | Fastmarkets RISI | North American Conference 18
Indonesian imports and exports of pulpwood fiber, 2012-2019EThousand BDMT
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2012 2013 2014 2015 2016 2017 2018 2019E
Chip exports
Pulplog imports
Chip imports
2019 | Fastmarkets RISI | North American Conference 19
Outlook for woodchip supply and demand in the Asia-Pacific market, 2018, 2023 and 2023Million BDMT
Latin America
23.5
24.0
24.5
25.0
25.5
26.0
26.5
27.0
27.5
2018 2023 2028
Demand
Supply
2019 | Fastmarkets RISI | North American Conference 20
Vietnamese hardwood chip exports, 2004-2019EThousand BDMT
0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E
Other
China
Taiwan
South Korea
Japan
2019 | Fastmarkets RISI | North American Conference 21
Vietnamese share of the Asian hardwood chip market, 2000-2019E
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2019 | Fastmarkets RISI | North American Conference 22
Area of Vietnamese eucalyptus and acacia plantations in 2005, 2010 and 2018 Thousand hectares
0
500
1,000
1,500
2,000
2,500
2005 2010 2018
Eucalyptus
Acacia
2019 | Fastmarkets RISI | North American Conference 23
Global imports of wooden furniture from Vietnam, 2006-2019EMillion US dollars
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2019 | Fastmarkets RISI | North American Conference 24
The way ahead
• Asian pulp and paper capacity consolidation
will not outweigh expansion
• Vietnam should be able to increase
11.3 million BDMT in 2019F
• Vietnamese government interference
Biggest potential hurdle
• Non-traditional suppliers
Thailand and Malaysia
2019 | Fastmarkets RISI | North American Conference 25
John North, Senior Economist
International Timber
For more information:
2019 | Fastmarkets RISI | North American Conference