Global Trends Review, November 25 – December 01, 2013: lumber trade hindered by protectionism; CLT may add value to the European market

At the Timber Market conference, organised by the Swedish Forest Industries Federation, it was reported that global timber market growth is expected in 2014, but protectionism in some markets constitutes a problem, TTJ said.

Swedish exports to North Africa and the Middle East remain high, and deliveries to China could be expected to double or treble over 2013. The figure could also double again during 2014.

Protectionism is quite strong in Japan, where the domestic production is not competitive, and the government uses various methods to stimulate consumers to buy home-made lumber. In China, a 14% import duty is imposed on wood products.

Major softwood producer countries of Germany, Austria, Finland and Sweden are not expected to increase production significantly in 2014, so the present balance of supply and demand can be expected to remain.

Due to strong housing starts in Japan, prices for European-made lumber in September recovered after some decline, Holzkurier said quoting Japan Lumber Journal (JLJ). Imports from Europe were 265,307 m3. Prices for laminated timber were 0.8% higher than in August, and the upward trend is expected to continue.

JLJ also says that Russian lumber loses some ground to Europe due to high prices and doubts of supply stability. In Chubu region (Central Japan) which was the leading consumer of Russian spruce and fir, a shift to European spruce producers is reported.

Canadian company Canfor is going to focus more on China: a 50/50 joint venture will be established with local company Tangshan Caofeidian Wood Industry Co. Ltd. in order to build a sawmill near a deep-water port close to Beijing. Construction of a new port will be finished there soon, and it will be a major timber imports hub.

This will allow Canfor to produce metric-sized wood products for the Chinese market. Company’s sawmill in Quesnel, British Columbia which is to be closed soon was one of the few able to produce metric-sized lumber. Presently Canfor has to ship timber in North American sizes and re-cut it in China.

Meanwhile, China Securities Regulatory Commission approved trade of fibreboard and plywood futures contracts at the Dalian Commodity Exchange. According to EUWID, the country speeds up development of commodity futures markets in order to give companies more tools to influence the global pricing of commodity products.

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Central European woodworking companies need to consolidate to perform well, but this involves decisive personnel cuts which are impossible for many enterprises, as Dr. Dieter Kainz, former senior executive of Stora Enso Timber, said in an interview to Holzkurier.

Kainz noted that for the industry it would be much more reasonable to operate fewer lines, but to full capacity. “If several companies joined up together, they could reach the critical production volume and balance the markets,” Kainz added.

If the European woodworking industry really used its innovation potential to a greater extent, there would be enough demand for higher-priced products in Europe, Kainz says: “It’s not a long-term business model to ship Mabashira from Europe to Japan or 2-by-4 to the USA. We need higher value-added products which would also take the focus off the roundwood price.”

He sees cross-laminated timber (CLT) as such a product. But as the production was ramped up too quickly, without preparing the market, CLT turned into a commodity product.

Also, according to Kainz, the current “hype around biomass and pellets” will not be for long, as there are intense discussions on the place of biomass in the value chain.

Edged spruce lumber in France (27 mm, class 0) appreciated in the third quarter from €280 to €283, according to Fordaq. Pine lumber (class 0, 18 & 27+ mm) remained at the level of €292.

Slovenian company Talum is going to build a mill to produce glulam and CLT with a total capacity of around 45,000 m3 per year. The first phase also includes the construction of a cogeneration plant. The project cost is around €20 million, out of which 25% are own assets. For the rest of the funds, the company is going to find an investor.

Romanian OSB exports in January-August 2013 exceeded full-year 2012 results, reaching €119.2 million. This is due to considerable investments by Egger and Kronospan into its Romanian mills. Russia remains by far the largest market for Romanian OSB: in the eight months of 2013, shipments grew from €16.6 to €37.8 million on-year.

Metsä Fibre will increase prices of Botnia Nordic Pine and Botnia Nordic Strong (NBSK pulp grades) in China from December 1, 2013, up to $760 and $770 per tonne respectively.

French government plans to raise VAT for firewood and pellet production since January 1, 2014 from 7 to 10%, Fordaq reported. Operators worry that this will benefit only illegal operators, as fair companies will be driven out of the market. VAT hike will lead to a much higher price of purchase for clients, as the tax is implemented three times: for the imports, for sales to retailers and for sales to consumers.

The European Commission has announced on Friday, 22 November, that it will open formal antitrust proceedings against several container liner shipping companies to investigate whether they have been engaged in price agreements since 2009, in breach of EU antitrust rules.

WhatWood’s reviews are prepared using corporate press releases, Holzkurier, Timber Trades Journal, Fordaq, EUWID Wood Products, ITTO, ForestTalk, and EUWID Paper.