Global Trends Review, October 14-20, 2013: European glulam consumption fell; Malaysia to emerge as major pellet exporter

Data from the UNECE Timber Committee indicates that European glulam consumption fell 2.6% to 2.83 million m3 in 2012, ITTO reported. Germany and Austria have traditionally been the largest markets for glulam, while Italy and France showed rapid growth in consumption prior to 2007. Consumption of glulam in other European countries is still low despite significant growth potential.

The downturn in EU consumption in 2012 was mainly due to declining construction and other economic problems in Italy. For 2012 Italy‘s glulam consumption is estimated at 830,000 m3, down 5.7% compared to 2011. Consumption in Austria increased 12% to 230,000 m3 in 2012, while it was stable in Germany (850,000 m3) and France (300,000 m3).

In 2012, 125,000 m3 of glulam was imported into the EU, 8% less than the previous year. This is just 4.4% of total consumption, down from 4.7% in 2011. Glulam imports have continued to decline this year. In the first 6 months of 2013, imports were 57,300 m3, 15% less than the same period in 2012.

The leading external suppliers of glulam to the EU are Malaysia, Indonesia and Russia, followed by China. In the first 6 months of 2013 compared to the same period in 2012, EU imports declined from Malaysia (-38% to 9400 m3), Indonesia (-18% to 11000 m3) and Russia (-20% to 8600 m3).

However, deliveries from China increased by 3% to 8000 m3, mainly due to rising sales in the UK. The European glulam market is currently suffering from saturation. Also, several other engineered wood products are now competing with glulam in Europe, such as laminated veneer lumber (LVL), which is gaining importance in northern Europe.

Competition from LVL may intensify this year as Pollmeier in Germany is expected to begin production of LVL from beech, starting with 150,000 m3 of production capacity. European glulam manufacturers have been increasing their efforts to expand markets outside the EU, notably in Japan and the Middle East. The main focus is on big projects and eco-buildings, including government buildings, retail developments and sports and recreation centres.

A big part of the market development strategy focuses on ability of European glulam producers to provide a one-stop shop integrating design, manufacture, and installation. Commenting on their Middle Eastern marketing operation one large European manufacturer said, “We are reducing outsourcing and developing our own capacity to manufacture steel connectors and undertake hybrid buildings, combining wood with other materials, as well as projects using solid timber frame and cross-laminated timber”.

British company James Jones which has around 40% of the UK I-joist market is going to install another finger-jointing line to increase capacity. The company has noticed a significant uplift in the I-joist market since May, which initially caused a lengthening of lead times for its JJI-Joist, as reported by TTJ. The acquisition of the extra land and construction of a new line there will give the company possibilities to meet “sustained demand from the housing market over the next few years.”

A new campaign was also launched in the UK to help support the domestic timber industry. “Grown in Britain” aims to encourage consumers to buy wood and wood products that are grown and processed in the UK. Currently, 40% of the timber used in the UK comes from internal supply, which is already much higher than 10% a few decades ago. As WhatWood reported in one of its earlier Global Trends review, Central European companies also aim to boost domestic market and develop regional brands, following the successful case of Switzerland.

New markets

The Malaysian business promotion agency Agensi Inovasi Malaysia (AMI) sees potential for raising pellet production in the next five years from the present output of just under 100,000 tonnes up to 5-7 million tonnes per year in the future. CEO of the agency Mark Rozario explained that such an increase would require close collaboration with timber plantation operators. The first memorandums of understanding on an increase in pellet deliveries have been signed between Malaysian pellet producers and potential industrial-pellet buyers in China and South Korea.

Schweighofer Fiber reported that its pulpmill in Hallein, Austria, has risen to become the market leader in softwood viscose pulp in China only six months after the start of production. In 2011, wood industry tycoon Gerald Schweighofer bought the former paper mill in Hallein and invested €60 million in new dissolving pulp technology with a production capacity of 140,000 tonnes per year. The pulp is transported to Bremerhaven, Germany, on two bock trains per week and from there most of it is shipped to China.

Meanwhile, Japan emerged as domestic logs exporter: exports doubled in seven months of the year to 118,628 m3. The main destination is China: exports there increased to 45,726 m3 (+377.2%). Logs from Japan are complementing shortfall in deliveries from North America, ITTO reports. The prices of Japanese logs have become competitive to logs from other sources because of weakening yen.

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Sawlog price trends around the world were mixed in the 2Q/13, with prices increasing in regions exporting logs to China (Pacific US and Canada, New Zealand), but declining in Northern and Eastern Europe, WRQ reported. The Global Sawlog Price Index (GSPI) increased to reach $86.60/m3.

With New Zealand becoming the world’s largest log exporter, prices for sawlogs in the country have gone up dramatically the past five years and in the 2Q/13 were almost double those in 2009. New Zealand has surpassed Russia in 2013 to become the largest softwood log supplier to China.

Finnish commercial roundwood removals have reached record high amounts this year (+3% on 2012) and will further increase modestly in case an increase in export trade will actualize accordingly to the forecast, as Pellervo Economic Research Institute (PTT) said. The total use of forest chips will reach the level of 10 million m3 next year. Log prices in 2014 will be steady, PTT forecasts.

Paper production in Finland will decline this year 3-4% and further down next year. The reduction is driven by structural change in demand. The Finnish export of paperboard, on the contrary, is expected to grow. Pulp market will also be steady, with exports increasing and prices growing.

German Energy Wood and Pellet Association (DEPV) reported a 1.6% price increase for pellets in October. The average price is currently at €282.37 per tonne. Price for 6-tonne party, delivered, is €278.75 in Central Germany and reaches €285.14 in the South. The DEPV said the stocking rate is currently high and in winter the pellets will be widely available.

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