Competitiveness Of The Forest Industry In Western North America

Competitiveness of the Forest Industry in Western North America Forest Resources Association October 6, 2004 Harrison Hot Springs, British Columbia

Håkan Ekström Wood Resources International

Wood Resources International

Western North America • How Important is the Forest Industry? • Is the Pulp Sector Competitive? • Is the Sawmilling Sector Competitive? • What’s the Future?

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What if …….?

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Timber Harvest Profile Western North America

Total Harvest Share of Global Harvest

180 million m3 11 %

Softwood Share of Pacific Rim 60 %

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Pulp Industry Profile Western North America

Pulp Production

17 million tonnes

Share of Global Production

10 %

Number of Pulpmills

46

Wood fiber consumption

28 million odmt Wood Resources International

Softwood Lumber Industry Profile Western North America

Lumber Production 61 million m3 Share of Global Production 20 % Number of Sawmills

470

Lumber Exports 3.7 million m3

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Low wood cost is the key to being competitive

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Production Costs of Softwood Pulp 100% 90% 80% 70% 60%

Other Chemicals Labor Wood

50% 40% 30% 20% 10% 0% US NW

BC

Nordic

La Am

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Global Conifer Wood Chip Prices 2q/2004 180

Index (US Northwest = 100)

160 140 120 100 80 60 40 20 0

US NW

US South

Canada, West

Source: Wood Resource Quarterly (WRI)

New Zealand

Sweden

Japan

Canada, East

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Conifer Wood Chip Prices 1988-2004 180 160 140 US$/odmt

120 100 80 60 40 20

WRQ Global Index

Source: Wood Resource Quarterly (WRI)

US NW

04

1q

03

1q

02

1q

01

1q

00

1q

99

1q

98

1q

97

1q

96

1q

95

1q

94

1q

93

1q

92

1q

91

1q

90

1q

89

1q

1q

88

0

BC Wood Resources International

Wood Costs for Sawmills in the US NW, BC and for their Competitors

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Production Costs of Softwood Lumber 100% 90% 80% 70%

Other variable Energy Labor Wood

60% 50% 40% 30% 20% 10% 0% US NW

BC

Avg 10

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Conifer Sawlogs Cost Changes (in US dollars) 2q/1999 vs 2q/2004 Austria Germany Finland Sweden Latvia New Zealand Chile BC Coast US NW -40

-20

0

Source: Wood Resource Quarterly (WRI)

20

40

60

80 Wood Resources International

Sawlog Costs for Lumber Suppliers to Japan 2q/2004 Index (US Northwest = 100)

180 160 140 120 100 80 60 40 20

Source: Wood Resource Quarterly (WRI)

La tv ia Sw ed en Fi nl an d G er m an y A us tr ia

Ze al an d

N ew

C oa st BC

sia R us

C hi le

U S

N W

0

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Conifer Sawlog Price Index 1995-2004 140 120 100 80 60 40 20

1q /9

3q 1q /9 6 3q 1q /9 7 3q 1q /9 8 3q 1q /9 9 3q 1q /0 0 3q 1q /0 1 3q 1q /0 2 3q 1q /0 3 3q 1q /0 4

0 5

1q/1995=100 (Based on local currency)

160

US NW

BC, Coast

Source: Wood Resource Quarterly (WRI)

US South

Sweden

Chile Wood Resources International

Conifer Sawlog Price Index 1995-2004 120 100 80 60 40 20

1q /9

3q 1q /9 6 3q 1q /9 7 3q 1q /9 8 3q 1q /9 9 3q 1q /0 0 3q 1q /0 1 3q 1q /0 2 3q 1q /0 3 3q 1q /0 4

0 5

1q/1995=100 (Based on US dollars)

140

US NW

BC, Coast

Source: Wood Resource Quarterly (WRI)

US South

Sweden

Chile Wood Resources International

The Future …. • Increased Exports Next Year? • Will Wood Costs Change in 2005? • Will the Forest Industry Stay Competitive?

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Summary – Western North America • The Forest Industry is an Important Global Player • The Pulp Sector Enjoys Low Wood Fiber Costs • Conifer Sawlog Costs in BC Very Competitive • Opportunities for Increased Exports Next Year

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Questions? Håkan Ekström Wood Resources International Phone: 1-425-402-8809 Email: [email protected] www.woodprices.com

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