FRST 100 November 2013frst100.forestry.ubc.ca/files/2012/09/FRST-100-global... · 2013-11-04 ·...
Transcript of FRST 100 November 2013frst100.forestry.ubc.ca/files/2012/09/FRST-100-global... · 2013-11-04 ·...
FRST 100 November 2013
David Cohen 1
Trends in Global Trade in Wood Products ‐ 2013
(using FAOSTAT data, Statistics Canada through Strategis, IMF WEO, Global Trade Atlas and more)
David Cohen ‐ UBC
David Cohen
Summary
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Global Trends –The Big Picture
Global Trade in Forest Products Forest Resources – WhereWhat is harvested – for what
2. Forestry Drivers
3. Business Transformation
1. Global Shift to
Bioeconomy
David Cohen
Four drivers but one result:the emerging bio‐economy
1. Population growth
2. Growing economic power of developing countries AND growth of global middle class
3. Squeeze on world resources (both renewable and non‐renewable)
4. Increasing environmental degradation
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1. Global Population Growth
0123456789
10
Billion
s of p
eople
2.5 4.1 6.1 7.0 9.0
Source: UN World Population Prospects – 2010 Revision, medium variant
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2. Changing Economic Importance
0
5
10
15
20
25
Percen
t of globa
l GDP
Proportion of World GDP (PPP) by Country
USA China India Canada Germany
6
Source: International Monetary Fund, (IMF) World Economic Outlook (WEO) Database, October 2011
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What is Purchasing Power Parity
“it is the number of units of a country’s money required to buy the same quantity of goods and services as $1 buys in the United States” UN HDR 2004 Box 6 page 257
based on a basket of 150 – 200 goods & services adjusts the measurement of items, such as GDP, to be free
of distortions from price & exchange rates based on the concept that it is not the size of a persons
income that is important but what it can purchase i.e.Is $30,000 a year a good income in Vancouver? in Vietnam?
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3) Squeeze on World Resources
Rush for long term resource supply existing & new agricultural land in Africa forest concessions in Asia mineral deposits in Mongolia private equity ownership of forest land
Fundamental shift in commodity pricing (change since 1860s)
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Commodity Price Growth 1900 – 2013
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Source: Dobbs et al., 2013 Resource Revolution: Meeting the world’s energy, materials, food and water needs. McKinsey Global Institute. 44 pages
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Commodity price index 2000‐2012
0
100
200
300
400
500
600
700
800
10
Source: Bank of Canada February 2013
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4. Global Ecological Footprint
Source: Global Footprint Network August 2013http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/
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Life Cycle Assessment (LCA)
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Why is bio‐economy growing?
More people (population growth) need more stuff that require more resources higher prices & environmental degradation
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higher prices for non‐renewables extraction innovation+ shift from non‐renewable to renewable
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Resource scarcityEco‐efficiency
(leaning operations)
Sustainable businessSecure supplyResource access
Clean techEnergy efficiency
Good governanceSocial equality
Licence to operate
BIOECONOMY
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Bioeconomy ‐ “the sustainable, eco‐efficient transformation of renewable biological resources into food,
energy and other industrial products” Schmid et al., 2012 quoting DG Research, 2005
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Impacts of Shift to BioeconomyRenewables replacing nonrenewables bioplastics, ethanol, cellulose/plastic composites
Environmental externalities valuedwater rates, green energy premium, carbon tax
Already occurring but not yet recognized
Shared green value profit by solving environmental problems
e.g. tall wood buildings, GE ecomagination,
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Vancouver Sun May 25, 2012 pG12
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http://upload.wikimedia.org/wikipedia/commons/thumb/6/69/T%C3%BCrinnenverkleidung_Hanf-PP_nova.jpg/642px-T%C3%BCrinnenverkleidung_Hanf-PP_nova.jpg
http://pacifictruss.net/wp-content/uploads/2012/03/the_case_for_tall_wood_buildings.jpg
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Impacts of Shift to Bioeconomy
Renewables replacing nonrenewables bioplastics, ethanol, cellulose/plastic composites
Environmental externalities valuedwater rates, green energy premium, carbon tax tax shift toward pollution + taxes
Shared green value profit by solving environmental problems
e.g. tall wood buildings, GE ecomagination,
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Resource Shortage 5 F’s (Nilsson)
Competition for (forest) land use : Food – conversion to agricultural land
Fuel ‐ fuelwood + biofuels
Fodder – grazing
Fibre – pulp, rayon,
Feedstock – for emerging bio‐products
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Forestry Drivers
Business Transformation
Global Shift to Bioeconomy
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David Cohen
Graphic paper production in NA and NW Europe (1961‐2011)Selective Cuttings 5/29/13 http://cfs.nrcan.gc.ca/selective‐cuttings/36 (FAOSTAT data)
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Percent change 1995 – 2010Global GDP growth = 59%
Europe USA Canada
Newsprint ‐3 ‐56 ‐5
Printing & writing 20 ‐23 ‐17
Folding box board 60 6 ‐15
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FBB is made up of multiple layers of chemical and mechanical pulp used for health and beauty products, frozen goods,
confectionaries, pharmaceuticals, etc.
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Bottom LineComputers (tablets & smart phones) + internet
finally paper use lower demand/value for chips P&P transformation underway in Europe & NA
Firms in developed countries know past P&P profits unsustainable
Great interest, concern, expenditures, & fear for firm and sector transformation
Lumber production requires profitable market for waste (chips)
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Forestry Drivers
Business Transformation
Global Shift to Bioeconomy
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Two Business Responses Based on current (Cohen/Nikolakis) research with 43 interviews with executives in N. Europe (14 firms) &
NA (21 firms) and 12 with industry experts
1. Traditional business response efficiency, productivity, process innovation,
leaning operations, expansion, contraction, specialization, etc.
2. Transform to compete in bioeconomy technology driven product and process innovation
(high risk, high reward)
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Traditional business response• Downsizing: shrink & focus on improving P&P efficiencies
• Focus on lumber production: increase efficiencies as low cost lumber producers
• Change product mix: P&P & lumber or panel production
• Specialty products: develop specialty pulp and/or paper products for niche markets (intellectual property rights)
• Move up value chain: closer to consumer e.g. packaging, media, consumer products e.g. adult incontinence products
• Move down the value chain: focus on forest land & manufacturing (e.g. TIMOs)
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Transforming to Bioeconomy• Bioenergy: develop commercial bioenergy production e.g.
co‐generation, pellets, ethanol production, etc.
• New bioproducts: developing new bioproducts and to commercialize new technology (e.g. NCC)
• Create new biocomplex: create a sustainable biorefinery (in planning and research stage – high risk, high reward)
• Become forest products producers: Shift to produce wider array of forest products e.g. environmental services, recreation, carbon offsets, water management, community forest, etc.
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Forestry in 2030• forests providing food, fuel, forage, fibre, feedstock, and
environmental services in complex interactions of human economic, social & environmental needs
• wood still a very important component of environmentally broad and sustainable product portfolio from forests
• forests become important part of restorative economy
• biorefineries replacing oil refineries as they age once pricing for environmental externalities becomes a reality
• partnerships key – gov’t/industry, civil society/industry, inter‐industry, intra‐industry, developing/developed and more
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2. Forestry Drivers
3. Business Transformation
1. Global Shift to Bioeconomy
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Thinking Points
Will the response to resource scarcity be the same for non‐renewable & renewables?
How will they differ?
How might if affect wood use, supply & prices?
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Summary
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Global Trends –The Big Picture
Global Trade in Forest Products Forest Resources – WhereWhat is harvested – for what
2. Forestry Drivers
3. Business Transformation
1. Global Shift to
Bioeconomy
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Global Forest Resources 2010area in millions ha: annual change 2000 ‐ 2010
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N/C America 7050
S America 864‐8.0
Asia593+4.5
Europe1,005+1.4
Africa674‐3.4
Oceania191‐1.4
Source: FAO 2000 Yearbook of Forest Products, published in 2002.
Region#,######
View from Toronto
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Global Forest Resources 2010area in millions ha: annual change 2000 ‐ 2010
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N/C America 7050
S America 864‐8.0
Asia593+4.5
Europe1,005+1.4
Africa674‐3.4
Oceania191‐1.4
Source: FAO 2000 Yearbook of Forest Products, published in 2002.
Region#,######
View from Vancouver
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Global Forest Resources 2010Country data (% of world’s forest area)
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Canada – 7.7
Source: FRA 2010
USA –7.5
Russia – 20.1
Brazil – 13.0
China –5.1
Indonesia – 2.3
Sweden/Finland – 1.2
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Global Forest Resources 2010Country data (% of world’s forest area)
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Canada–7.7
Source: FRA 2010
USA –7.5
Russia – 20.1
Brazil – 13.0
China –5.1
Indonesia – 2.3
Sweden/Finland – 1.2
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Source: http://www.fao.org/docrep/016/i3010e/i3010e00.htm
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Forests 30% of land in world is forested, increasing in some areas (e.g. Asia) decreasing in others (e.g. Africa, Oceania, S. America) great fluctuations in deforestation in countries e.g. Brazil
Overall forest cover is increasing
Hotbed of NGO activism WHY?
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What is harvested
Harvest of 3.3 billion m3/yr from ~400 billion m3 of trees on 4 billion ha of forest land (0.8% annually)
Subsistence (~50%) vs Industrial (~50%)good and bad of subsistence use?
Coniferous (1/3) vs Non‐coniferous (2/3)C (2/3 industrial) vs NC (~2/3 subsistence)
Missing data due to illegal, underreported, and unreported logging =10‐25% of total
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Some forest issuesDeforestationRole of plantations (extensive vs intensive)Forests / Wood & GHG storage Forests and: indigenous peoples poverty alleviation rural sustainability agriculture
Forest preservation, conservation or multiple useUrbanization and loss of connectivity with forests
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David Cohen
Rest of presentation focuses on Industrial Wood Supply and Use
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Industrial Roundwood Production 2012total of 1,661 mcum (little change in 25 years)
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Can. 9.1%
Brazil 8.4%
Russia 10.7%
US 20.2%China 6.2%
Sweden 3.8%Finland 2.7%Germany 2.6%
Chile 2.4%
Indonesia 3.7%
Forest Resource vs Industrial RWin % of world for 2010 and 2012
Source: UN Food and Agriculture Organization FORSTAT Database 2012 and FAO 2010 FRA
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increase harvest?
harvestmaxxed?
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Trends in Forest Management
equity ownership of private forest land private ownership 2.7 million ha annually 1990 ‐ 2000
multi use forest management shift to forest (not wood) products e.g. PES
ecosystem management ‐ people as part of ecosystem
market driven deforestation & illegal logging
plantation forestry from 1990 – 2010 >92 million ha ‐‐ increase of 54%
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Ten countries with largest area of productive forest plantations 2005 in %
0 5 10 15 20 25 30
ChinaUSA
RussiaBrazilSudan
IndonesiaChile
ThailandFranceTurkeyOthers
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Source: FAO 2005 FRA
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Forest PlantationsGood for the World
– Rapid growth less land needed natural forest conservation
– Good use of scarce resources– Creates continuous, long term
wood supply– Economically beneficial
Bad for the World
– Biological deserts – NO biodiversity
– Depletes soil / requires fertilization
– Creates hydrological problems
– Monoculture increases pest & disease problems
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0
50
100
150
200
250
300
1961 1967 1973 1979 1985 1991 1997 2003 2008 2014 2020
US$ Billions
Current Global Recession
$267 billion
Value of world exports of forest products – increasing at 8.5% annually
(Source: CIBC) David Cohen
Trends in Industrial Log Supply
in supply from fast grown plantations e.g. Eucalyptus (7 year rotation) heavily subsidized by governments
supply from developed natural forest costs, NGO’s, bark beetle, other uses, etc.)
supply Russia, E. Europe, Baltics, etc.
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CHINA
GFC
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China – 21st Century Game Changer
At start of 21st century China was worried about wood supply due to National Forest Protection Plan (NFPP)
Study predicted sufficient wood available for import for rapidly growing sector
In 2000 China was not in top 10 producers, importer or exports of any wood products
LESS THAN 10 YEAR LATER
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CHINA 2009China now a powerhouse in wood production
1st largest exporter (by value)2nd largest importer (by value)
Furniture #1 Plywood, MDF, blockboard #1 HW lumber #2 Particleboard #3 SW lumber #3
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China’s Forest Product Production2003‐2010
0
50
100
150
200
250
300
350
Billion
s of U
S$
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Source: International Wood Markets Group 2010 through UNECE Forest Products Annual Market Reviews
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China’s wood import & exports
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
millions of U
S$
Imports
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Exports
China usually adds 30% of value to imports, uses ¼ domestically and exports slightly higher value than it imports
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China and Logs
By 2000 China’s forest seriously overharvested soil erosion, reduced harvests, water pollution, etc. NFPP
Great in imported logs & establishment of plantations China has largest area of forest plantations using GM trees to ameliorate soil degradation,
improve fibre quality, & quantity
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China’s Share of World Log Imports(about 1/3rd of imports – Russia about 1/3rd of exports)
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0%
10%
20%
30%
40%
50%
Globa
l Log
Impo
rts NFPP
Source: WTA and FAO data set
WTO
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Suifenhe Rail Yard 2003
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Russia’s Share of World Log Exports
10%
20%
30%
40%
50%
Globa
l Log
Exports
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Source: WTA and FAO data set
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Proposed Russian Tax Rate
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TBA
X
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Russia Joins WTO 22/8/12
EC support for entry required access to logs
Set quotas and new tariffs based on region within quota tariff reduced: 25% to 13% for spruce &
fir logs and 80% outside quota
2013 quota 5,950,600 m3 to Europe and 285,900 m3 outside of Europe (Japan remains at 25%)
7% for birch logs which go to Europe
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China SW Log Imports
0
5,000
10,000
15,000
20,000
25,000
30,000
Thou
sand
of cum
NZ USA Canada Other Total Russia
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Canada
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What is the Story
1. China bans logging on natural forests2. Wood industry grows using imported logs3. Russia increases log exports to China
Also from NZ & illegal logging (e.g. Indonesia)
4. China global leader in wood production5. Russia wants more manufacturing so tax6. China decreases log imports & increases lumber
imports7. Russia backs down but for Europe & not China
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Current Topics – Log SupplyIllegal Logging (Brazil & Indonesia)
Certification / Legality / Import Regulation
Climate Change and Forests – REDD++
Forests and Indigenous Peoples
Forests and Poverty Alleviation
Forests and Carbon Sequestration
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Zhang Jiagang Port near Shanghai 2001
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Global Lumber Production & Exports
90
140
190
240
290
340
390
Millions of cum
Exports Production
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Largest Sawnwood Producers 2012
0
10
20
30
40
50
60
70
millions of cum
Sawnwood Production 2012
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China’s Share of World Log Imports(about 1/3rd of imports – Russia about 1/3rd of exports)
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0%
10%
20%
30%
40%
50%Globa
l Log
Impo
rts NFPP
Source: WTA and FAO data set
WTO
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Chinese Lumber Imports
0
5
10
15
20
25
millions of cum
all SawnwoodC Sawnwood
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What is the Story
Taxes, corruption, overharvesting, etc. costly unstable log supply from Russia
Shift to importing softwood lumber with Canada supplying almost half
Rising costs in China plus higher cost for logs makes imported lumber more competitive
Continued growth or short window of opportunity?
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Trends in Sawnwood
in supply from lower cost natural forests & southern plantations
technology enables sawnwood replacement with EWP, other materials, HW lumber, etc.
real decline in price over time
what to do with the wood chips given the decline in writing & graphic paper and newsprint
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China and Wood Panels
China is largest producer of MDF, blockboard & Plywood in the world
China uses wood panels for its large furniture production
Chinese production but exports as domestic consumption has grown
Many old plywood plants being replaced by modern facilities
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Largest Panel Exporters 2012
0246810121416
millions of cum
Panel Exports 2012
7070
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Chinese Panel Production, Exports & Imports
0
20
40
60
80
100
120
140
millions of cum
Production
Export
Import
71 72
OSB Replaces Plywood
0
5,000
10,000
15,000
20,000
25,000
30,000
1923
1927
1931
1935
1939
1943
1947
1951
1955
1959
1963
1967
1971
1975
1979
1983
1987
1991
1995
1999
2003
2007
US
Pan
el P
rodu
ctio
n, m
illio
n sq
uare
feet
, 3/8
inch
bas
is US Total
W. Plywood
S. Plywood
OSB
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Trends in Panels
OSB gaining in Europe – entry in Asia China produces >1/3 of world supply of MDF
use of alternative materials for panels Kenaf, strawboard, bamboo board, etc.
production & exports from China & Brazil
trade & production of wood panels
new types of panels e.g. CLT
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What is the Story
China dramatically increasing production of wood panels (MDF & plywood) MDF used for furniture & other manufacturing plywood used for concrete forming
use of wood panels world wide much in wood housing which is growing rebirth of some panel types (eg SIP and CLT) use wood, store carbon
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Pulp & Paperboard Production
020406080100120140160180200
Millions to
nnes
China USA Japan Germany Canada Total
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Largest Pulp Producers 2012
0
10
20
30
40
50
60
millions of tonn
es
7676
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Chinese Pulp Production and Imports
0
5
10
15
20
25millions of ton
nes
ProductionImport
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Trends in Pulp & PaperMost pulp used to make 3 types of paper (derived demand)
1. P&W (printing & writing)declining due to spread of internet
2. Packagingholding steady with use balanced by in recycled material
3. Hygienegrowing faster than GDP
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Newsprint End‐use Factorin thousand tonnes / billion dollar of real US GDP
from CIBC World Markets 1/28/09
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Trends in Pulp technology high quality pulp from poor fibre
impact of internet on paper use newspaper readership (newsprint)
growth in absorbent pulps (for tissues, etc.) fast grown southern hardwoods e.g. eucalyptus
material from the urban forest
use of “waste” driving up cost of some pulp
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Recovered Paper Production
50
70
90
110
130
150
170
190
210
230
Millions of ton
nes
81
steady growth in recovered paper
technology & design keeps increasing % of paper recovered
“urban pulp supply”
needs strong pulp added each time it is recycled
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Largest Recovered Paper Producers 2012
0
10
20
30
40
50
60
millions of ton
nes
82
Recently China has surpassed USA as largest producer of recovered paper.
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Trends in Recovered Paper
trade in recovered paper mechanical pulp used to add strength
backhaul waste paper to China and Korea
recovery rates due to technology
NA public willing to subsidize recycling (strong support for blue box programs)
Some states require % recycled content
Is recycled paper always better?
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What is the Story
China importing pulp to produce paper paper use for newsprint, office paper & packaging
(except in rapidly developing economies) but for fluff pulp decline in northern SW pulp & increase in pulp from
eucalyptus plantations
Increase in pulp prices due to competing uses for waste input (eg biofuels, rayon
No new pulp mills in developed countries WHY? Shift to agroforestry ‐monoculture plantations
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