Based on a massive standing timber resource, Russia’s exports of logs and sawn softwood have boomed in recent years and are set to continue. Unsurprisingly, the dominant recipient continues to be China, whose demand remains massive and continual, soaking up most of the world’s available wood resources. Turning locally, plantation establishment is needed now to ensure long-term domestic supply.
These were some of the take outs at the inaugural FWPA/DANA Insights & Outlook Conference was conducted in Melbourne in late August, with more than 100 delegates joining a dozen speakers from Australia, New Zealand and the world, to consider the future of wood products trade in the region and globally.
The following short points hit some of the highlights and key messages:
- Russia’s softwood saw log production totalled 72.9M m3 in 2015, up 2.1% on the prior year, with plenty of room for frankly, massive expansion. The presentation from Ilim Timber’s Slava Bychkov demonstrated that Russia’s annual available cut was 717M m3 per annum, with the harvest in 2015 reaching 145M m3, just 20% of the potential.
- Russia’s exports of softwood sawlogs, driven by massive currency depreciation, totalled 10.3M m3 in 2015, with China receiving 90% of the total volume.
- In addition, Russia exported 22.4M m3 of sawn softwood in 2015, with China receiving 44%.
- China’s wood imports continue to include massive volumes of hardwood resources, but most of it is in the form of woodchips and logs, as RISI’s Gavin Hao reported. In 2015, China imported 9.7M bone dry metric tonnes of hardwood chips in 2015, up 13% on the prior year. For the first half of 2016, China’s imports are up a further 6.2%, with APRIL and APP receiving 64% of all imports.
- In 2016 YTD, Australia has supplied 34% of China’s total hardwood chip imports.
- As delegates heard at the Conference, while there are emerging market needs in all sectors – wood panels and timber building systems are good examples – the reality is that many of these sectors are relatively small, with future demand growth under-pinned more by traditional products, increasing long-term wood supply is fundamental.
- Recent work for FWPA, led by Ernst & Young’s Andrew Metcalfe AO, to understand and articulate the five key megatrends and their implications for forestry and wood products. The report can be downloaded by clicking here. The megtarends are:
1. A hungrier world — population growth driving global demand for food and fibre
2. A wealthier world — emergence of a new middle class increasing food consumption
3. Choosy customers — information empowered consumers demanding particular ethics, provenance, sustainability
or health attributes
4. Transformative technologies — advances in food and fibre production and transport
5. A bumpier ride — changes resulting from globalisation and a changing climate - While it has other implications, one of the key take outs is that consumers will require – one way or another – more wood fibre now and into the future.
- The Chair of the Forest Industries Advisory Council (FIAC), Rob de Fegely, expanded on the plantation establishment need as one of the key aspects of FIAC’s recent work and findings on transforming Australia’s forest products industry. Based on FIAC’s work.
- Adding detailed operational realities to the call for plantation establishment activities and support, New Forests’ Founder and CEO, David Brand and Midway’s Managing Director, Tony Price, both discussed plantation establishment needs and opportunities, from several perspectives. Focusing on the theme of ‘the right trees in the right places’, topics covered included land use decision making, community engagement, the role of public policy and financial assistance to establish plantations and the importance of international private sector investors and their needs.
- David Brand’s presentation picked up the themes of recent ABARES work for FWPA (presented at the Conference by Kevin Burns from ABARES) to provide forecasts of wood products consumption through to approximately 2050. Even based on the most conservative estimates, timber markets will grow at least 1.5% per annum, and possibly as high as 4.0% per annum.
- The high forecast sees timber demand expanding more than threefold to 2052 and includes significant volumes that will be required for the emerging ‘bio-economy’, which includes products from bio-energy, through engineered materials and into bio-materials such as textiles and nano-cellulose, as well as the most advanced bio-refinery products, which include platform chemicals, resins and polymers.
- Both David Brand and Tony Price discussed how these additional volumes could be achieved, emphasising the gains to be made incrementally by improved plantation productivity management, delivered through a variety of physical and biological means.
- Also considered were the expected returns from different plantations and how they compared with expected lower returns from all forms of investment and financial assets over the next economic cycles.
The Insights and Outlook Conference will be held again next year. Planning at this stage is for a date in early October 2017 and the conference partners will continue to work towards making the event a major contributor to ongoing industry information and development.
