Global Trends Review, February 10-23, 2014: EU timber consumption slowly rising; Japanese timber demand prospects are unclear

Consumption of softwood lumber in Europe is slowly increasing from a very low level, according to Fordaq which quotes study by International Forest Industries (IFI) published at woodnet.se. The sharp decline by 32% in past years was mainly caused by the collapse of the EU construction market.

Some signs of recovery could have been noticed in 2013, although recovery in European lumber consumption will be very slow and will take time. One of the consequences of the collapse of lumber consumption in Europe is that Scandinavian sawmills redirected their exports to non-European markets such as North Africa (where shipments of sawn pine doubled in a few years) and Asia (especially Japan and more recently to China). Meanwhile, sawn pine imports to main markets in Europe decreased by close to 50%, the IFI report concludes.

As Holzkurier reported quoting Japan Lumber Journal (JLJ), Japanese demand for imported logs in 2014 is expected to be 4.37 million m3 (-5.4% compared to 2013), lumber demand – 6.93 million m3 (-10.8%).

Also, North American logs and lumber exports to Japan in 2014 are expected to decline by 4.5% and 3.7%, respectively, according to forecasts presented at the 49th Japan North American Lumber Conference. This can mainly be attributed to forecasts of an abating building activity in Japan in the second half of 2014 and to China’s strong competition for wood.

In 2013, import supply did not cope with expanding demand, so domestic production also grew. Chugoku Lumber, the largest Douglas fir lumber manufacturer in Japan, sold 1.44 million m3 of products, which is 19% higher than in 2012.

However, after the growth of consumption tax rate in April 2014, it is difficult to predict further construction activity and timber demand. As Japanese Forestry Agency announced at a meeting, the first quarter would stay without much change but the second quarter demand may drop.

By the end of the first quarter, Stora Enso will close its Austrian Sollenau sawmill and laminated timber mill which produced 300 to 400 thousand m3 of timber per year, as reported by EUWID. Orders will be shifted to the remaining sawmills in Austria and the Czech Republic. Production of planed goods and Japanese-standard beams will probably also close there later, in the second quarter of 2015. Annual further processing capacity in Sollenau is roughly 270,000 m3.

At the same time, Stora Enso is planning to invest €28 million in modernising and developing Murow sawmill in Poland to increase its capacity and improve its competitiveness, EUWID said. The mill will increase sales on the growing Central and Eastern European markets and will also be used to support growth in selected overseas markets. The production capacity of the sawmill will rise to 140,000 m3 per shift per year. Over the next five years, Stora Enso plans to increase gradually this mill’s output to 400,000 m3 per year.

Holzindustrie Schweighofer will possibly acquire a site in Czech Republic to build a sawmill, but as the local people decide on almost everything, a referendum will take place which may deny the project. According to Holzkurier quoting company CEO Gerald Schweighofer, the site will probably be used for mill construction or developed and resold to another industrial company. A sawmill in Czech Republic would definitely impact the sawmill industry in Austria, the journal says, as last year the country imported over 2.1 million m3 of logs from the Czech Republic.

As of April 1, 2014, Södra Timber will double production and working shifts at its sawmill in Traryd, Sweden, due to the growing market. The demand for mill’s hardwood products is huge in China, Southeast Asia and Sweden; for softwood timber the largest markets are the UK and the Netherlands, the company said. With two shifts, Södra will double the sawmill production up to 30,000 m3. Of this, 20,000 m3 will be planed construction softwood, the remaining 10,000 m3 – hardwood (oak and birch) used in flooring and furniture making.

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Due to falling demand in Scandinavia, UPM abandons deliveries of Baltic pulpwood and pulp chips. At certain moment, UPM accounted for 20% of Latvian chip exports, company’s local affiliate director Daiga Veisa said. But in late 2013 the company changed its strategy and stopped logging in Ltihuania and Latvia. Local market players were disappointed by this decision. From now on, Metsa Forest Latvia, affiliate of another Finnish giant, will become the leader in Latvian pulpwood exports.

Osula Graanul, the subsidiary of AS Graanul Invest, is beginning the construction of the largest pellet plant in the Baltic countries in Võrumaa, Estonia. The new plant has production capacity of around 250,000 tonnes per year. Forest owners and wood processors of South Estonia will have a chance to utilize wood wastes and low quality logs, the company said. The plant is expected to start test production in the end of 2014. It is company’s seventh pellet factory which will increase its production capacity to over one million tonnes annually.

In early February, Dutch utility company Eneco has launched its Bio Golden Raand biomass power plant, located in Farmsum Delfzijl, the Netherlands. The company claims the plant to be “the largest and most efficient bio-energy power plant in the Benelux”, Fordaq says. The capacity will generate 49.9 MW of green energy and will reduce emissions by 250,000 tonnes per year. The new plant requires 300,000 tonnes of wood resources annually.

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