2020 FAO Report Highlights State of Global Forest Markets

The 2020 edition of the United Nations Economic Commission for Europe (UNECE) and the Food and Agriculture Organization of the United Nations (FAO) Forest Products Annual Market Review provides a statistical review of market developments in the UNECE region in 2019 and the first half of 2020 (including initial impacts from the COVID-19 pandemic) and the policies driving those developments.

The global UNECE forest region is divided into three subregions: Europe; Eastern Europe, Caucasus and Central Asia (EECCA), and North America. It encompasses about 1.7 billion hectares (ha) (4.2 billion acres) of forest, which is more than 40% of the world’s total forest area.

The following are direct excerpts and key insights by wood product category from the latest Review using data from 2019 and 2020:

Economic Activity

• Economic activity decelerated markedly in the UNECE region in 2019. The slowdown, which was generalized and affected all subregions, occurred against a background of increasing trade tensions, slower global growth and increasing uncertainty. This adverse external context depressed manufacturing and dampened capital spending, particularly affecting those economies most exposed to global trade.

• The economic outlook is highly uncertain in light of the COVID-19 pandemic, with no clarity on its duration, the spread of the virus or the need for further restrictive measures. Nevertheless, there has been a bounce in economic activity (from very depressed levels) with the easing of mobility restrictions, supported by significant policy stimulus.

Roundwood Consumption

• The total consumption of roundwood – comprising logs for industrial uses and fuel – in the UNECE region was estimated at 1.4 billion cubic meters (m³) in 2019, the first decrease after six consecutive years of increase. The apparent consumption of logs for industrial purposes was down by 3.2%, to 1.16 billion m³, although this was still 7.5% higher than in 2015. Of the total volume of roundwood harvested in the UNECE region in 2019, about 18% (260 million m³) was used for fuel, a decrease of 3.7 million m³ (-1.4%) compared with 2018.
  
  
  • Russian log exports have been in decline for more than a decade. In 2006, the country exported a record 37 million m³ of softwood logs, but this had dropped to just 7.2 million m³ by 2019, which was 35% lower than in 2018.
    
    
  • The biggest increases in European log production in the last two years were in Czechia (up by 50% from 2017, to 25.5 million m³ in 2019) and Germany (up by 23% from 2017, to 53 million m³ in 2019). The increase, which was due to the salvage logging of trees affected by bark beetle, was consumed by domestic industries as well as by forest product manufacturers in neighboring countries and China.
    
    
  • By far the biggest beneficiary of the log surplus in Europe in 2019 was China, which shifted its log sourcing from North America and the Russian Federation to Oceania and Europe. China’s log imports from Europe increased 20-fold between 2017 and 2019. In contrast, its import volume from the US dropped by 80% in less than two years – from 1.5 million m³ in the third quarter of 2018 to 0.32 million m³ in the first quarter of 2020.

Sawn Softwood & Hardwood

• The three UNECE subregions recorded mixed results in the consumption of sawn softwood in 2019, with modest declines in Europe (-1.8%) and North America (-2.7%) offset by a gain in EECCA (+5.3%). The production of sawn softwood was also mixed, increasing in Europe (+0.6%) and EECCA (+3.2%) but decreasing in North America (-3.9%).

• • In Europe, lower demand and higher production meant that sawn softwood exports increased in volume in 2019 (by 3.4%), with ample supplies of low-cost beetle-damaged timber enabling Scandinavian and central European countries to expand both outputs and exports. The volume of European sawn softwood exports increased in 2019 to 55.6 million m³, but average export prices fell by 9.8%.

• • EECCA produced 48.7 million m³ of sawn softwood in 2019 (up by 3.2% over 2018); the subregion’s sawn softwood exports amounted to 37.4 million m³ (+1.7%).

• • North American sawn softwood output was 102 million m³ in 2019, a decrease of 3.9% compared with 2018. Exports dropped significantly (by 7.7%), to 30.0 million m³, with the US recording a dramatic fall of 20.1% (-581,000 m³) and Canada declining by 6.5% (-1.9 million m³). North American imports fell by 4.1%, to 25.2 million m³.

• The consumption and production of sawn hardwood were varied in the UNECE region in 2019, despite generally good economic conditions. Apparent consumption rose by 10.2% in Europe in 2019 and by 2.1% in EECCA. Consumption was flat in North America, however, albeit at a much higher level than in Europe and EECCA.
  
  
  • European hardwood lumber production grew by 2.1% in 2019, to 14.4 million m³, but it declined in the EECCA to 3.94 million m³. Sawn hardwood production decreased slightly (by 2.1%) in North America, to 23.4 million m³.
    
    
  • China continued to dominate imports of temperate and tropical sawnwood in 2019, with a volume of 38.8 million m³ (valued at $10.5 billion). UNECE-region countries dominate global exports of sawnwood, with Canada and the Russian Federation the global leaders.

• Panel production declined slightly (by 0.7%) overall, and apparent consumption was down by 1.5%, despite the region’s relatively good economic growth. The consumption of structural panels was down by 4.0%, but the consumption of non-structural panels increased by 0.2%.

Pulp & Paper

• The global pulp, paper and paperboard industry experienced general weakness in 2019 compared with 2018 (when pulp prices reached record levels and paperboard demand was strong). The production of graphic paper declined due to closures and reduced consumption, the result of increased electronic communication. In contrast, growth continued in the consumption of sanitary and household papers, certain paperboard products and specialty papers, and pulps, including fluff and dissolving.

• • Prices for printing and writing papers and newsprint fell in EECCA in 2019 due to weaker demand, but prices for paperboard and tissue were relatively stable. Prices for market pulp fell considerably in 2019 after a rapid rise in 2018.
    
    
  • The production of graphic papers declined throughout the UNECE region in 2019 – by 7.1% in Europe, 0.2% in EECCA and 11.2% in North America. Apparent consumption also fell in the three subregions – by 7.1% in Europe, 10.4% in EECCA and 10.7% in North America.
    
    
  • The apparent consumption of packaging material in 2019 fell in Europe (by 2.8%, the first decline since 2011) and North America (by 1.7%, the first drop since 2013); on the other hand, it increased by 2.4% in EECCA.

Wood Energy

• According to official reports, wood fuel production and consumption decreased slightly (by about 3 million m³) in the region in 2019, to 260 million m³. Wood fuel is often traded in informal markets, however, and officially reported volumes are often significant underestimates.

• • The consumption of wood pellets is increasing steadily for both industrial (electricity and heat) and private (household heating) uses. The UNECE region is the global center for the production and consumption of wood pellets: 80% of world production is in the region, and 90% of global exports originate in UNECE countries.

• • A total of 33 million tons of wood pellets was produced in the UNECE region in 2019, an increase of 7.6% compared with 2018. Of the subregions, Europe consumed the most by far, and North America confirmed its position as the number-one exporter of wood pellets worldwide.

• • EECCA countries showed the most dynamic growth in wood pellet production in 2019, albeit from a relatively low base. Of the big producers, production increased in the Russian Federation by 14% and in Belarus by 48%.

Value-Added Wood Products

• CLT production and demand continue to grow at an astonishing pace. Global production capacity in 2020 is estimated at 2.8 million m³, of which 48% is in Europe, 43% is in North America, 6% is in Oceania and 3% is in Asia (Africa and South America have minimal production capacity). Austria, Czechia, Germany, Italy and Switzerland continue to form the epicenter of global CLT production. These five countries accounted for more than 80% of the estimated global production of 920,000 m³ in 2019.

• • Two CLT plants are under construction in the Russian Federation, and another was built recently in Ukraine and is now operative.
    
    
  • A wide variety of products categorized as mass timber panels is in production in North America, including CLT. As of late 2018, ten mass-timber-panel manufacturing plants were in operation in the subregion (five each in Canada and the US), with a combined annual production of about 400,000 m³ (Beck Group, 2018). As of year-end 2019, 14 plants were producing mass timber panels in North America, and a further three were under construction. The current practical capacity (maximum capacity x 0.65) of these plants is 910,000 m³, but industrial matting constitutes more than half this. Thus, the practical capacity of mass timber panels for use in buildings in North America was about 439,000 m³ in 2019, and this is expected to increase by another 62,000 m³ in 2020.

Click here to read the full report that includes more detailed data and analysis for each sector of the global forest products industry.