Market conditions for global softwood trade stronger than for some time, though improvements patchy; industry shifts--notably Nordic producers' new focus on Middle East, North Africa, China--unlikely to be reversed: International Softwood Conference
October 24, 2013
– Underlying market conditions for the international softwood trade are stronger than for some time.
Improvement remains patchy, with some western European countries still facing a tough economic environment. But others are showing increasing signs of escaping the downturn. And the general consensus is one of cautious optimism that, although the softwood sector may have undergone structural changes in the recession, business overall is on the road to recovery.
This is the picture that emerged from presentations by leading industry speakers and economic commentators at the International Softwood Conference in Edinburgh on October 17-18.
Held in association with the European Timber Trade Federation (ETTF) and European Organisation of the Sawmill Industry (EOS), the annual event was co-hosted and organised this year by the UK Timber Trade Federation (TTF) and Confederation of Forest Industries (Confor). It was attended by around 150 delegates from companies and industry organisations across Europe and preceded with a fact-finding tour of the Scottish timber sector.
The varying pace of market upturn was underlined in a panel session, chaired by TTF Chief Executive John White. Stephen King, Commercial Director of SCA Timber Supply Ltd said UK demand was picking up to the point of threatening shortages, while George Webb, Group Purchasing Manager of Norbord Europe Ltd, described healthy investment and growth in Scottish softwood sawmilling.
Andreas von Möller, Managing Director of Jacob Jürgensen and ETTF President, said that construction in a number of European countries continued to contract and some markets still needed a “click of confidence”. But he too confirmed signals that the EU overall is probably through the worst of recession.
Måns Johannson, CEO of Vida Timber and EOS President also said European softwood consumption was recovering slowly, with the qualification that a new market structure had emerged. Strategic industry shifts made during the recession, notably the reorientation of Nordic producers towards the Middle East, North Africa and China, were unlikely to be reversed, he maintained.
Yorkshire Bank Chief Economist Tom Vosa said that global GDP growth remained below trend, but that 2013’s forecast increase of 2.9% would still add nearly US$2.5 trn to the world economy. Contrary to expectations that emerging markets would continue to set the pace, he said indicators now pointed to a bounce back from developed economies. He also predicted an effective end to EU austerity measures in 2014.
Ed Pepke, Senior Timber Trade and Policy Analyst at the European Forest Institute, said overall European demand may currently remain weak, but the outlook for EU, North American and Russian sawn softwood industries was increasingly positive, with sawn and log prices expected to firm. Nineteen EU countries now forecast upward housing start trends after six years of stagnation or decline, and US annual housing starts are forecast to hit 1.6m in 2015, against 900,000 last year.
Setra Group Marketing and Business Development Director Olle Berg’s view was that in the short to medium term, massive house building would continue to drive Chinese softwood import growth. And if the US recovery attracted Canadian suppliers away from China, it would create a gap for European softwood.
Mark Brinkmayer of Idaho Forest Group said the US housing sector could avoid an over-heated “supercycle” recovery, and that America’s 110m ageing homes represented a valuable repair, maintenance and improvement market for US softwood. He also said the sector’s prospects had been improved by the North American industry joining forces in the Binational Softwood Lumber Board, which was devoting US$20m to marketing.
On ISC day two, ETTF Secretary General André de Boer addressed the implementation and impact so far of the anti-illegal timber EU Timber Regulation (EUTR), which was introduced in March. He was critical of the EC’s late approval of EUTR Monitoring Organisations, which could help companies cope with the Regulation, and said ensuring uniform enforcement across the EU was a priority. He also added that early evidence indicated the EUTR was steering EU buyers towards such products as engineered softwood, and away from tropical timber species perceived as higher risk of illegality.
Meanwhile, Kimmo Jarvinen of the European Wood Initiative gave an update on the ETTF and EOS-backed European Wood Promotion Campaign. This has developed a marketing toolbox for the industry, under the Wood Growing Cities banner, to encourage use of timber in urban construction and development.
Other ISC speakers included Ian Murdoch, Director of Global Forest, Paper and Packaging at PriceWaterhouseCoopers, Peter Wilson, Wood Studio Director at Edinburgh Napier University’s Forest Products Research Institute, Martin Gale Chairman of BSW Timber Group, Guillaume Hotellin of Comarbois/Robelbois Morocco, Anders Marklund of Uni4Marketing and Svyatoslav Bychkov of Ilim Timber Industry.
In concluding remarks, Mr von Möller and Mr Johansson concurred that the road ahead for the softwood sector would not be easy, but that it was moving forward with renewed confidence.
A full report on the ISC will appear in the ETTF Winter Newsletter and website, www.ettf.info. Conference presentations are available to attendees at www.isc2013.co.uk.