Global Trends Review, July 01-07, 2013: Russian lumber exports to Japan to grow 9% in 2013; EUTR changing EU plywood market

The Japan Foreign Timber General Supply and Demand Liaison Conference has released forecasts for timber imports in 2013, ITTO said. While total demand for logs in 2013 is forecast to be as much as it was in 2012, demand for tropical logs is expected to fall by around 40% largely because of the closure of one Japan’s major tropical plywood mill.

Total Japan imports in Q1 2013 (growth year-on-year)

Forecast for Japan imports in 2013 (growth year-on-year)

Continuing brisk demand coupled with a reasonable supply caused prices for European assortments to rise again slightly on the Japanese softwood lumber market in the second quarter of 2013, EUWID Wood Products said. This was especially characteristic for pine assortments, while price of spruce products remained flat. Shippers had already been assuming at the beginning of May that the brisk pace of business activity would continue into the third quarter, enabling more price increases to be pushed through on the market. The upward trend in prices was also given further impetus by a limited supply and higher prices for lumber and glulam-beam deliveries from Russia and North America to Japan.

US softwood lumber market recently also saw the first price increase after 13 weeks: 2-by-4 free Great Lakes region inched up by $2 to $375/1000 bft, Holzkurier said. Therefore, European suppliers receive around €186/m3 which is €10/m3 less than last year. Ex-works US softwood lumber sells at around €136/m3.

Meanwhile, slack demand in the UK caused British imports of softwood lumber to fall in the first three months of this year, according to EUWID. Also, Swedish and Latvian lumber imports are being replaced by cheaper rough products made in the UK. At the same time, the lumber volume earmarked for the UK was reduced due to the cuts in output in Sweden, although the same cuts in Finland did not lead to decreasing deliveries to the UK. Eurostat data shows that British imports of rough-sawn and planed softwood lumber in the first quarter were 9% lower year-on-year at 1.06 million m3. Deliveries from the EU fell by 10% to 979,610 m3. Decreasing imports from Sweden, Latvia, Germany, and Estonia coincided with rising imports from Finland, Ireland, and the Czech Republic. A 3% reduction was recorded in deliveries from non-EU countries to 79,860 m3.

Is EUTR changing the market?

According to FSC’s Global Market Survey, the biggest driver for sourcing certified products is increased environmental awareness of end consumers, while legislation such as EUTR was cited by just 4.5% of respondents. FSC-certified forests in Europe now make up 43.04% of the total certified area, while the figures for other regions are North America (40.7%), Asia (3.29%), South America and the Caribbean (7%), and Africa (4.26%).

At the same time, EUTR is enforcing several trends that were already present in the plywood trade. The larger Chinese manufacturers are already demonstrating strong capacity to adapt to the new market requirements, ITTO says. The most immediate change may be just a switch in the face veneers used by these manufacturers, away from species perceived in Europe to be “high risk” (such as bintangor or Russian birch), in favour of species perceived to be “low risk” such as dyed poplar or certified meranti or sapele. Some of the smaller manufacturers in China may well struggle now to compete in the EU market as buyers focus more on those manufacturers that have chain of custody and are geared up to provide the required evidence of legality.

These changes are already increasing prices of Chinese plywood products to European buyers. In coming months, China may become slightly less dominant in the EU plywood market. However it’s likely to maintain its position as the largest single supplier. Chinese plywood prices may now be rising for EU buyers, but they remain highly competitive. For example, European CIF prices for 18 mm BB/CC Mixed Light Hardwood plywood from China were around $380/m3 in the last quarter of 2012. Prices for comparable Chinese plywood with an FSC-certified sapele face and eucalyptus core now stand at around $420-440/m3. Even these prices are still $100/m3 less than those for 18 mm BB/CC meranti from Malaysia and $150/m3 below prices for Indonesian lauan plywood.

Exporters in other countries wishing to regain market share for tropical hardwood plywood in the EU market need to do more than provide new forms of legality verification at a competitive price, ITTO comments. They need to focus at least as much on the considerable quality and technical performance benefits of their products.

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As part of the bank restructuring and privatisation initiative demanded by the EU, the Slovenian government is planning to divest its stakes in 15 companies, including its majority share in the tissue and hygiene paper producer Paloma d.d., EUWID Paper announced. Slovenia currently holds 70.97% of Paloma via the state-owned holding company PDP d.d. (Posebna Družba za Preoblikovanje). Paloma has an annual capacity of approximately 70,000 tonnes of tissue, of which 30% is made from recycled pulp. The company is primarily active in the consumer tissue segment, producing toilet paper, facial tissue, paper towels, kitchen towels and napkins. Around 9% of Paloma’s total production capacity is used for the away-from-home products market, in particular toilette paper and towels.

EUWID also reported several wood industry chemicals news last week. In May and June, major titanium dioxide producers have announced their plans to increase TiO2 prices for third quarter deliveries. Producers are set to charge up to $250/t with effect from 1 June or 1 July, depending on the sales market. However, due to weak demand customers are sceptical about this. Meanwhile, native starch prices remain under downward pressure in Western Europe amid growing supply competition (as demand from the graphic paper industry slows down) and falling commodity prices for wheat and corn used in starch production. Also, European contract price for methanol will remain at its present level of €390/t FOB Rotterdam in the third quarter of 2013, as EUWID said.

Holzforschung Austria – the national institute for wood research – has recently presented a brochure summarising the results of research projects and practical experiences from the use of cross-laminated timber (CLT) from the viewpoint of building physics, Holzkurier announced. The guideline which is also available in English includes current building requirements and recommendations for the building practice – also when it comes to the implementation of multi-storey timber constructions.

Bark and forestry residues can be used in the production of high-quality methanol biofuel for the price of €0.5-0.7 per litre. After a lengthy study and industrial piloting in Finland and the USA, the VTT Technical Research Centre of Finland has broken the news to the motor world last week. According to VTT quoted by Holzkurier, pressurised fluidised-bed gasification of lignocellulose biomass can generate transportable liquid fuels at a price which is on the same level with current pre-tax prices of fossil fuels, and cheaper than existing biofuels. The study also points out that production of the new biofuel could achieve an energy efficiency of 50% to 67%. If the heat generated during production is exploited for municipal heating or industrial steam, this figure could go up to 80%, VTT experts say.

Prepared using corporate press releases, Holzkurier, ITTO, EUWID Wood Products, and EUWID Paper.