Market Pulp Conf May Corr

Global Wood Fiber Supply - Overview and Regional Profiles International Pulp Week May 9, 2005 Montreal, Canada Håkan Ekström Wood Resources International, LLC

Wood Resources International

Outline • Global Wood Fiber Supply • Global Wood Fiber Prices • Eucalyptus Fiber Supply • Regional Profiles

Wood Resources International

So ut Fi h nl an d Br az il Ja pa n S Ca we na de US da, n , N Ea s o Ca rth t n a we da s t ,W In est do ne sia Ru ss ia Ch in a Ch il Fr e a G nce er m an y Sp a No in Ne r w wa Ze y al a Au nd str al ia

US ,

Million odmt

Global Pulpwood Fiber Consumption

90

80

70

60

50

40

30

20

10

0

Source: Wood Resources International Wood Resources International

Global Pulpwood Fiber Mix Conifer roundwood 34.6%

Non-conifer chips 8.7% Source: Wood Resources International LLC

Conifer chips 27.5%

Non-conifer roundwood 29.2%

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Wood Fiber Mix, Con/Non-Con 100% 80% Non-con, chips

60%

Non-con, rwd Con, rwd

40%

Con, chips

20%

C an ,W es C t an ,E as t U S, N U S, W So ut Sw h ed en Fi nl an d Br az il C I n h ile do ne s ia

0%

Wood Resources International

Global Average Wood Fiber Price 1988 – 2004

120 110

US$/odmt

100 90 80 70

Conifer

60

Non-conifer

Source: Wood Resource Quarterly (WRI)

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

50

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Eucalyptus Wood Supply • The Largest Supply of Eucalyptus Fiber is in Latin America and Asia. • Costs of Eucalyptus Plantation Fiber Often Lower than Native Hardwood Fiber in the Northern Hemisphere. • Global Trade of Eucalyptus has Increased the Past Five Years. Wood Resources International

Global Supply of Eucalyptus Fiber Oceania 10.0%

Asia 12.8%

South America 57.2%

Source: Wood Resources International LLC

Africa 12.4% Europe 7.6%

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Wood Fiber Markets – US South The largest pulpwood consumer in the world. 90

The industry consumes almost 70% conifer fiber.

70 60 US$/odmt

Wood fiber prices have trended upward the past 15 years.

80

50 40

C o n ife r R o u n d w o o d

30

N o n -C o n ife r R o u n d w o o d

20 10

04

03

1q

02

1q

01

1q

1q

00

1q

99

1q

98

1q

97

1q

96

1q

95

1q

94

93

1q

92

1q

91

1q

90

1q

89

1q

1q

1q

The supply of hardwood pulpwood is tightening.

88

0

Source: Wood Resource Quarterly (WRI)

Wood Resources International

Wood Fiber Markets – Canada West Major Market Pulp Producer 160

Conifer residuals account for over 85% of total fiber consumption.

C o n ife r C h ip s

120 100 US$/odmt

Wood fiber costs among the lowest in the world.

140

80 60 40 20

04

03

1q

02

1q

01

1q

00

1q

1q

99

1q

98

1q

97

1q

96

1q

95

1q

94

1q

93

1q

92

1q

91

90

1q

89

1q

1q

88

0 1q

Increased wood supply from beetle killed pine the next 10 years.

Source: Wood Resource Quarterly (WRI)

Wood Resources International

Wood Fiber Markets – Canada East Major Newsprint and Market Pulp Producer Conifer wood fiber accounts for almost 75% of total consumption. Wood fiber prices are high and trending upward. Substantial reductions of wood supply the next few years.

Source: Wood Resource Quarterly (WRI)

Wood Resources International

Wood Fiber Markets – Sweden The second largest conifer wood fiber consumer in the world.

C o n ife r C h ip s

04

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

90

1q

1q

1q

89

40 20 0 1q

Imported wood fiber accounts for almost 20% of total supply.

C o n ife r R o u n d w o o d

140 120 100 80 60

88

US$/odmt

After declining prices during most of the 1990’s, prices have increased by over 50% the past three years.

200 180 160

1q

The pulp industry consumes almost 80% conifer wood fiber.

Source: Wood Resource Quarterly (WRI)

Wood Resources International

Wood Fiber Markets – Brazil The fastest growing pulp industry in the world. The pulp capacity has increased by 18% in just two years. The industry consumes mostly logs from fastgrowing pine and Eucalyptus plantations. Dramatic price increases have occurred over the past two years, but Brazil is still one of the lowest cost producers in the world .

Source: Wood Resource Quarterly (WRI)

Wood Resources International

Wood Fiber Markets – Indonesia • Increased use of Plantation Fiber but Still Large Usage of Mixed Tropical Hardwood Fiber. • Wood Fiber Costs are Among the Lowest in the World. • Higher Exports of Wood Chips to China and Japan likely over the Next 5 years. Wood Resources International

Wood Fiber Markets – Russia • Large Volumes of Available Supply • Major Pulpwood Exports from Western Russia

• Limited Demand for Pulpwood Domestically • Wood Fiber Costs are Increasing Wood Resources International

Wood Fiber Markets – China • Rapid Increase in Paper Consumption. • Lack of Domestic Wood Supply. • Plantation Programs by the Government Exist but have Limited Success. • Chinese Investments in Foreign Pulp Capacity Increasing. Wood Resources International

Outlook for Global Wood Fiber Supply • Most of the global expansion of wood supply will be that of Eucalyptus fiber from plantations in the Southern Hemisphere. • Hardwood fiber costs in the Southern Hemisphere are likely to go up near-term but will continue to be substantially lower than wood fiber costs in North America and Europe. Wood Resources International

Summary • Wood fiber consumption for conifer static, while non-conifer demand is increasing rapidly. • Global wood fiber prices reached a bottom in 2001 and have been on an upward trend the past three years. This trend is likely to continue on a shortterm basis. • We can expect to see most additional global pulp capacity in regions with eucalyptus plantations. Wood Resources International

Questions? Håkan Ekström Wood Resources International, LLC Seattle, USA Phone: 1-425-402-8809 Email: [email protected]

www.woodprices.com

Wood Resources International