Transcript MS-Power Point presentation

QLMA
Globalisation of forest
products markets
Marc Boutin
Quebec Lumber Manufacturers ’
Association
October 2, 2001
QLMA
Factors which are driving
extraterritorial trade of forest products

Emerging economies with commensurate rising
consumer demand

The information technology revolution

Investor preference for « pure play » companies
that focus on fewer products on a larger scale
QLMA
Factors which are driving
extraterritorial trade of forest products
(cont ’d)

Switch to lower cost fiber from forest plantation
regimes

Increased capital mobility, continued integration of
the world economy and, investor portfolios
seeking more global diversification

Improving transportation logistics
QLMA
Factors which are driving
extraterritorial trade of forest products
(cont ’d)

Larger buying groups, especially home center
chains and retailers, sourcing wood products
(primary, secondary and finished goods) on a
global scale

Labor shortages in developed economies favoring
a shift to abundant, lower cost, labor in
developing regions
QLMA
Factors which are driving industry
consolidation

Higher capitalization of companies

Synergies and economics of scale

Better opportunities to manage trade

International / regional diversification

Lower average cost structure

Forest companies are small compared with other
manufacturing sectors
QLMA
Forest Products Industry

Top 5 global forest products companies
– around 20% of global sales
versus
– 40% in the oil industry
– 50% in the steel industry
– 60% in the automotive industry
Source
CIBC World Markets
QLMA
Why growth?

Securing available fibre

Only way to gain market share

Economic imperative - it is often cheaper to buy
rather than build (the pulp paper industry is very
capital intensive)

New facilities tend to be subjected to higher
environmental standards
QLMA
Why growth?
(cont ’d)

Acquisition of know-how and human capital

Less impact on supply-demand equilibrium

Customer base is increasingly global and also
growth driven

Establishes a framework for future growth
QLMA
World ’s biggest paper and paperboard
producers capacity, m tonnes
Extracted from
The Economist September 15th 2001
QLMA
Trade of Forest Products
Recent cyclic and structural events

Break up of the USSR

Environmental and sustainability constraints

Upswing of the U.S. housing market since 1992

Asian financial crisis of 1997

Events of September 11, 2001
QLMA
Global Forest Resource (1990)
(Million ha)
1200
1000
800
600
400
200
0
North
America
Latin
Western
America Europe
Eastern Ex-USSR
Europe
Asia
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
Oceania
Africa
QLMA
Standing Timber (1990)
Billion m3
70
60
50
40
30
20
10
0
North
America
Latin
America
Western
Europe
Eastern
Europe
Ex-URSS
Asia
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
Oceania
Africa
QLMA
Change in Forest Area (1990-2000)
Change in Forest Area, 1990-2000 ('000 hectares)
Total forest, 1990
Total forest, 2000
1 200 000
Sources : FAO ; QLMA
1 000 000
800 000
600 000
400 000
200 000
0
Africa
Asia
Europe
North and Central
America
Oceania
South America
QLMA
World Distribution of standing timber
(%)
14
15
North America
Central and South
America
Europe
1
Ex-USSR
15
Asia
Oceania
28
Africa
22
5
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
QLMA
Southern Hemisphere Pine Plantations
(1999-2000)
Southern Hemisphere Pine Plantations - 1999/2000
(Million hectares)
1,47
1,53
Brazil
New Zealand
Chile
0,95
Australia
South Africa
Argentina
Uruguay
0,78
1,83
0,50
0,45
Sources : Wood Markets ; QLMA
QLMA
Industrial Roundwood Production by
Continent (x 000 m3)
1 800 000
South America
1 600 000
1 200 000
North and Central
America
Oceania
1 000 000
Africa
1 400 000
800 000
Europe (+ Baltic States)
600 000
1998
1997
1996
1995
1994
1993
0
1992
Asia
1991
200 000
1990
Ex-USSR
1989
400 000
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
TOTAL
QLMA
The six largest softwood industrial
roundwood producing countries (000 m3)
350 000
300 000
250 000
United States
Canada
China
Sweden
Finland
Russian Federation
200 000
150 000
100 000
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
1989
50 000
QLMA
Forest harvest in the United States by
region (in million m3)
450
400
350
300
North
South
Rocky Mountains
Pacific Region
TOTAL
250
200
150
100
2040*
2030*
2020*
2010*
2000*
1991
1986
1976
1970
1962
0
1951
50
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
QLMA
Forest capacity and actual harvest Canada (Millions m3)
300
253
250
240
230
230
230
230
210
210
180
150
150
150
145
248
228
225
230
233
234
237
210
200
165
250
238
165
170
178
180
168
155
170
170
176
178
187
153
120
100
50
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Source
Wood Markets 2000 Edition. The Solid Wood Products Outlook 200-2004
Harvest
Capacity
QLMA
The imperative to develop new
products and markets

World demand should not change significantly
over the coming decade. Strong demand is
expected in Asia, mainly from Japan and
increasingly from China

Demand will be stronger for wood based panels
and paper products
QLMA
The imperative to develop new
products and markets (cont ’d)

Large scale producing countries will maintain their
relative market share, although export distribution
will be significantly realigned

Significant growth is anticipated from countries
which hold large plantation resources in the
Southern hemisphere
QLMA
The imperative to develop new
products and markets (cont ’d)

Size and quality of roundwood changing

Environmental pressures come into play

New source of supply will be from high yield
plantations but fiber quality will pose its own set of
problems
QLMA
The imperative to develop new
products and markets (cont ’d)

A movement towards trade in value-added
wood products is evolving in many countries.
There are growing constraints in the export of
unprocessed goods

Forestry management practices and inputs
could allow for increases in future harvest
QLMA
The imperative to develop new
products and markets (cont ’d)

Increasing pressure towards certification

Securing fiber supply, technological efficiency,
certification of products and/or of systems, and
value-added will be the future focus of industry
QLMA
Conclusion



Output of forest products increasing in most
producing regions: Europe, North America, South
America and Australia/New Zealand
Strong incentive for all producers to stimulate
demand on a global scale: supply of wood
products exceeds demand at a growing rate
Industry and customer consolidation to continue:
fewer manufacturers, bigger production units,
larger customers