Global Timber Market Overview

2020 | Fastmarkets RISI | North America Conference

Fastmarkets RISI North American Conference

October 2020

John North

Senior Economist, International Timber

International timber in the time of COVID-19

• Trade slowed but did not fall off a cliff

Asia woodchip market down 14.5% year-over-year

China softwood log imports down 15.4% year-over-year

• Supply sources are continuing to shift

Trade war and increased transport costs

2020 VLSFO: $392/mt avg

2019 IFO380: $424/mt

• Dominant suppliers and dominant producers are becoming more so

Vietnam is majority supplier in hardwood chip market

Japanese P&P consolidation

• Atlantic wood fiber market is growing

EU regulation incentivizing woody biomass

Portuguese plantation issues

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Bunker fuel price, Singapore IFO 380 and VLSFOWeighted average price

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Total woodchip imports in the Asia-Pacific markets, 2007-2020EMillion BDMT

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020EJapan China South Korea Taiwan India Other

Woodchip imports in the Asia-Pacific region, 2018-2020 YTDMillion BDMT

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2018 2019 2020 2020/2019 2019 share

Hardwood

Japan 6,293 6,401 5,028 -21.4% 39%

China 7,505 7,620 7,431 -2.5% 57%

South Korea 299 288 239 -17.0% 2%

Taiwan¹ 271 212 235 10.9% 2%

Indonesia¹ 9 632 0 -100.0% 0%

Total hardwood 14,377 15,153 12,933 -14.6% 100%

Softwood

China 169 112 149 33.4% 17%

Japan 980 918 752 -18.1% 83%

Total softwood 1,149 1,030 901 -12.5% 100%

Total all 15,526 16,182 13,834 14.5% 100%

Average hardwood chip import CIF prices in Asia, 2009-2020YTDUS dollars per BDMT, nominal prices

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Japan China South Korea Taiwan

Sources of hardwood chips for the Asia-Pacific markets, 2020YTD

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Vietnam50%

Australia18%

Chile14%

South Africa4%

Thailand5%

Brazil4%

Indonesia2%

Malaysia2%

Minor suppliers1%

Asia-Pacific hardwood chip imports from Southeast Asian suppliers and traditional suppliers, 2007-2020EMillion BDMT

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E

Southeast Asian suppliers Traditional suppliers

China: Softwood log imports by source, 2014-2020EMillion cubic meters

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Russia New Zealand USA Canada Australia Other

China: Imports of softwood logs from the United States, 2014-2020EMillion cubic meters

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China: Softwood log imports from Latin America, 2018-2020 YTDThousand cubic meters

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China: Softwood log imports from Europe, 2018-2020 YTDThousand cubic meters

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China: Average price of softwood log imports by major supplierUS dollars per cubic meter, CIF

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F

USA Canada New Zealand Russia

Australia Europe Linear (USA) Linear (New Zealand)

China: Total softwood log and lumber (RWE) imports, 2004-2019Million cubic meters and RWE (L), percentage (R)

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Logs Lumber RWE % Lumber

Russia: Exports of softwood logs and lumber to China, 2005-2019Million cubic meters, RWE

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Logs Lumber RWE % Lumber to China

South Korea: Wood pellet imports, 2014-2020EThousand tonnes

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Other Thailand Indonesia Malaysia Vietnam

Japan: Wood pellet imports, 2014-2020EThousand tonnes

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Vietnamese wood pellet exports, 2014-2020EThousand tonnes

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South Korea Japan

Portugal: Hardwood chips yearly import volume, 2013-2020EGMT

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Uruguay Brazil Spain Rest of World

Portugal: Hardwood chips imports by supplier, 2020YTD

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Uruguay62%

Brazil33%

Other Europe5%

Portugal: Hardwood chip yearly prices, 2013-2020YTDUS dollars per GMT, CIF

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Portugal: Hardwood logs yearly import volume, 2013-2020ECubic meters, US dollars per cubic meters, CIF

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Hardwood Eucalyptus Hardwood $ Eucalyptus $

Turkey: Woodchip imports, 2009-2020EThousand GMT

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Softwood Hardwood

Europe: Wood pellet import volumes, 2013-2020EMillion tonnes

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2013 2014 2015 2016 2017 2018 2019 2020E

Denmark Finland France Ireland Sweden Italy

• US presidential election

US/China relations

US South softwood log trade

• Fiber sourcing radius will continue to shrink

Transport and labor costs will increase

• Frontier country activity will increase

Thailand, Mozambique, Ecuador

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International timber in the times after COVID-19

26

John North, jnorth@fastmarkets.com

For more information:

2020 | Fastmarkets RISI | North American Conference