The presetation gives an overview of the big drivers in forest industry worldwide during the last 15 years, as well as the current financial downturn effect and prospects some keywords for the future

1. FUTURE TRENDS IN FOREST BASED INDUSTRY Juan Picos Asociación Galega Monte Industria Brno 05.12.08

2. Galicia – Spain: where I come from

4. Galicia produces 50-55 % Spanish roundwood

6. A PRIMEIRA TRANSFORMACION DA MADEIRA EN GALICIA

7. BIG DRIVERS (1990-2005)

8. 3.953 millones de hectáreas 33% 50% 66% World’s Forests

9. Million m3 /yr Global forest products consumption Average Annual Growing for the last 35 years 1,5% - 200 400 600 800 1.000 1.200 1961 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 Paper and Paperboard Panles and Veneer Sawnwood

10. One third of the global forest products productions ins traded internationally International Forest Products Trade 0 20 40 60 80 100 120 140 160 180 200 1962 1968 1974 1980 1986 1992 1998 2004

11. Imports of Forest Products (Value)

12. Imports of Forest Products (Value) USA Holanda Reino Unido e Irlanda Japón Europa

13. Exports of Forest Products (Value)

14. Exports of Forest Products (value) Canada Escandinavia Sureste Asiático Malasia Indonesia Europa del Este Chile Brasil Portugal Italia Alemania Federación Rusa?? Australia?? Austria NZ SA

15. Imports of Forest Products (Value)

16. China USA Uruguay Península Ibérica Increase of Forest Area Iberian peninsula data prior 2004 – Huge Impacts of forest fires in Portugal – Not updated data for Spain

17. Imports of Forest Products (Value)

18. Forest Area Decrease

19. Main Net Trade Flows of Wood Raw Materials Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions in 2000 (in 1000 cum)

20. Main Net Trade Flows of Sawn Hardwood Main Net Trade Flows of Sawn Hardwood Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions in 2000 (in 1000 cum)

21. Main Net Trade Flows of Sawn Softwood Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions in 2000 (in 1000 cum) Main Net Trade Flows of Sawn Softwood

22. Main Net Trade Flows of Wood Based Panels Main Net Trade Flows of Wood Based Panels Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions in 2000 (in 1000 cum)

23. Main Net Trade Flows of Wood Pulp Fuente: FAO- Trade and Sustainable Forest Management - Impacts and Interactions in 2000 (in 1000 cum) Main Net Trade Flows of Wood pulp

24. 2005-2007

25. Decline in Wood Apparent consumtion in North America 2006-2007 (m3Eq): Sawnwood: -11,2% Wood Based panels: -11,3% Paper and Paperboard: -2,5% Total: -7% US Forest Product Market Crash

26. Oil prices and Wood Energy Policies Record fossil-fuel prices and Public Policies (EU) drive wood energy markets Wood for energy continues to compete for raw material to produce wood and paper products, especially in Europe. Some policies formed in isolation risk failing to achieve their objectives, or creating market distortions in doing so. Wood for energy must be considered in a holistic manner, using a life-cycle approach

27. Forest Certification Area of Certified Forest 2007-2008: +8,8 % Accounts for 13% of world managed forests (but most of it in UNECE region) CoC certificates: 2006-2007: +50% Sawnwood: -11,2% Wood Based panels: -11,3% Paper and Paperboard: -2,5% Total: -7%

29. Policies combating illegal logging and trade Tropical log production in member countries of the International Tropical Timber Organization (ITTO) has been declining progressively since 2004, dropping to 126.2 million m3 in 2007, caused mainly by reduced resource availability and crackdowns on illegal logging, particularly in Indonesia, thereby constraining log supplies for tropical sawnwood and plywood industries. • Accounting for half of ITTO log imports in 2007, China continues to dominate tropical log and sawnwood imports, which are supported by continued high economic growth and sustained exports of secondary processed wood products. • EU continued to work with many countries under the Forest Law Enforcement, Governance and Trade Initiative to develop voluntary partnership agreements in which partner countries would be subject to strict licensing requirements. • Differences in government procurement policies create uncertainty for tropical timber suppliers, who demand a common approach for standards of legal origin, legal compliance and verification.

30. What about Russia? Russian Forest Code 2007 Export Roundwood Taxes: Increased to reach a minimum €15/m3 [April 2008]. Russian Log exports: to Europe -44% to Asia -15%, Mill Closures (eg. Stora, UPM;…) It was planned January 2009 Tax = 50€/m3 [=end Russian exports of logs] [25.000 jobs in FInland jeopardized] [by now “defferred”] Will whether the taxes will significantly boost value-added production in Russia in the near term. There is some evidence of increased foreign investment in the Russian woodprocessing industry.

32. What about Canada? Mountain Pine Beetle: 8 Million Hectares (400 Mm 3 ) affectted only in Canada Devastated effect of US housing market collapse. “ Forest Industry Bailout” claimed but improbable (Softwood lumber trade dispute with US)

33. AND THEN CAME … 2008

34. Forest products industry worldwide caught between rising wood costs and weakening markets

35. Forest products industry worldwide caught between rising wood costs and weakening markets ¡ And with no credit !

36. FUTURE TRENDS

37. Scarcity of Wood Scarcity of Wood

38. (Even) Higher environmental concerns (Even) Higher environmental concerns and constraints

39. Growing Timber Growing Timber

40. Climate Change – Effect Climate Change – Effect

41. Climate Change – Mitigation Climate Change – Mitigation

42. Sawn Timber Lower energy use Less timber losses Improve dimensional stability Surface treatments Changes in chemicals used / preservatives

43. Wood Based Panels RECONSTITUTED WOOD ENGINEERED WOOD WOOD BASED COMPOSITES

46. Silvichemicals

47. A PRIMEIRA TRANSFORMACION DA MADEIRA EN GALICIA

50. Galician Forests - Main Figures “ 4th National Forest Inventory is starting” 3rd National Forest Inventory 1996 Change 1986-96 Forest 1.342.222 ha + 34% Standing Volume 133 M m 3 o.b. + 47 % Average Volume / ha 94,70 m 3 o.b. + 42 % Annual Increment 11 M m 3 + 35 % Annual Fellings 6 M m 3 (1996)  7,4 M m 3 (2007)

51. Galician Forests - Main Figures 98% of the forest is PRIVATE FOREST 672.000 individual forest owners (in a 2.7 million population) less than 2 hectares in 2 or 3 different plots per owner . 80% of the plots is smaller than 0,5 ha. 2.800 private communal forests average size 250 ha, 36% managed by Forest Service through contracts Industry Manages directly less than 12.000 hectares

52. Galician Forest Stands

53. Average Rotation Eucalyptus: globulus 12 - 17 years (20-30 High Quality sawlogs) Pinus pinaster: 30 – 35 years Pinus radiata: 25 – 30 years Pinus sylvestris: 60 years Quercus robur : 80 years Castanea sativa: 60 years :

54. Annual Fellings

56. Galicia produces 50-55 % Spanish roundwood

57. Galicia produces 50-55 % Spanish roundwood 40% Spanish Sawnwood, 33% Spanish Panels, (74 % Spanish Fibreboards) . 30% Spanish Pulp (Supplies 50% of Spanish wood for pulp). Forest Based Industries in Galicia – Basic Figures

58. Forest Based Industries in Galicia – Basic Figures

60. Forest Value Chain in Galicia * (*) Firewood and other minor uses outside the FBI value Chain not Included FIRST TRANSFORMATION IN GALICIA Eucalyptus 3.171.000 m 3 o.b. Softwood (99% Pine) 3.767.000 m 3 o.b. Other Broadleaves 463.000 m 3 o.b. GALICIAN TOTAL ROUNDWOOD HARVEST : 7.401.000 m 3 o.b. Sawmills 353 companies 3.220.000 m3 o.b. Panel, Plywood and Veneer 22 production lines 2.024.000 m3 o.b. Pulpmill 1 plant 1.305.000 m3 o.b. 1.867.000 m 3 Sawnwood 2.007.000 m 3 Panels 423.500 Tn Pulp T.C.F. 100% Particles 34 % M.D.F. 54% Plywood 5 % Other 3% Veneer < 1% Hardboard 3% Softwood 83% Eucalyptus 9% Other Hardwoods 9% 970.000 t 65.000 t Recovered wood