China’s Role in the Global Forest Sector:
Future Demand and Supply of Timber and Forest Industry Products
Hu Yanjie, Chinese Academy of Forestry Alicia Robbins, University of Washington John Perez‐Garcia, University of Washington
Forest Sector Modeling Conference Lillehammer, Norway
October 2013
Expectations about China’s Role in the Global Forest Sector
Review of:
Demand and Supply of Tropical Wood Products in China Towards 2020.
Draft Report issued March, 2012 by Chinese Academy of Forestry Dr. Hu Yanjie 收件人: "yanjie" <[email protected]>
US export statistics
New Zealand export statistics Russian export statistics
Modeling China’s Forest Sector with partial equilibrium model
Source: FAOSTAT
Softwood Lumber
-5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0
0 10 20 30 40 50 60 70 80 90 100
Share of Consumption (%) in 2004 of 309 million m3
Average 10 yr. Growth Rate (%)
North Am
Japan
W. Europe
Oceania
Latin Am
Asia China
E. Europe
Africa
Market Share Changes: 2004 and 2011
285 MM m3 Consumption
Hardwood Lumber
-10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0
0 10 20 30 40 50 60 70 80 90 100
Share of Consumption (%) in 2004 of 106 million m3
Average 10 yr. Growth Rate (%)
North Am
Japan
W. Europe
Oceania
Latin Am
Asia China
E. Europe
Africa
Source: FAOSTAT
117 MM m3 Consumption
Market Share Changes: 2004 and 2011
Source: FAOSTAT
-0.10 -0.05 0.00 0.05 0.10 0.15 0.20 0.25 0.30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Growth Rate
Market Share
Wood-based Panels Production 2005
North America Japan
Australian Region
Southeast Asia Africa
Europe
Latin America India
Middle East Russia
China
-0.15 -0.10 -0.05 0.00 0.05 0.10 0.15 0.20
0 0.2 0.4 0.6 0.8 1
Growth Rate
Market Share
Wood-based Panels Production 2009
North America
JapanAustralian Region Europe
Southeast Asia Latin America
Russia Africa India
Middle East
China
Source: FAOSTAT
-0.10 -0.05 0.00 0.05 0.10 0.15 0.20 0.25 0.30
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Growth Rate
Market Share
Plywood Production 2005
Southeast Asia
Africa North America Europe
Japan Australian Region
India
Middle East Latin America
Russia
China
-0.15 -0.10 -0.05 0.00 0.05 0.10 0.15 0.20
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Growth Rate
Market Share
Plywood Production 2009
North America
JapanEurope Southeast Asia Latin America
Russia Australian
Region India
Middle East
China
China Forest Products Ranking 2011
% Share Growth Rate Rank (out of 8)
Chips 13% 11% 2
Plywood 45% ‐5% 7
Sawlog C 6% 0% 7
Sawlog NC 8% 0% 6
Sawnwood C 35% 12% 1
Sawnwood NC 29% 20% 1
Veneers 24% 0% 5
Domestic Resource Deficit
Scatter diagram of prices and
quantity for the period 1994 to 2010
$- $50 $100 $150 $200 $250 $300 $350
- 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000
Unit Value per m3
Quantity (1000 m3)
China (Blue) and Japan (Red)
1994
1994
2007 2010
2007
2001 2010
Timber Usage
• Industrial timber is mainly consumed by five industries in China.
– wood‐based panels,
– wood pulp and paper‐making, – furniture,
– roads, other infrastructure and building construction and
– interior use and renovation in housing
Average Annual Harvest Levels (MM m 3 )
National forest inventory
Timber Harvest
Level
Cutting
quota Extra quota
cutting As% of cutting quota (%) The third
（ 1984‐1988 ） 277.60 243.60 34.00 14 The fourth
（ 1989‐1993 ） 332.88 290.88 42.00 14 The fifth
（ 1994‐1998 ） 353.28 266.48 86.79 32 The sixth
（ 1999‐2003 ） 331.23 255.69 75.54 29 The seventh
（ 2004‐2008 ） 379.11 271.05 67.76* 25*
Data Source: CAF Report
Timber harvests: 379 MM m3
Non‐industrial Use (Fuelwood): 76 MM m3 (20%) Industrial Uses: 303 MM m3 (80%)
Log Basis (.7): 212 MM m3
Chips, residues: 97.09 MM m3 Sawlogs: 115.13 MM m3
Consumptive uses of logs: 436 MM m3
Wood‐based Panels: 270.4 MM m3
Small‐diameter logs ( < 8 cm), flakes, residues: 76.7 MM m3 Industrial logs: 193.7 MM m3
Pulp: 66 MM m3
Domestic pulp log consumption: 20 MM m3 Wood Furniture: 22 MM m3
Panels (70%) Sawnwood (30%)
General Construction: 72 MM m3 30% of GDP
50% share to wood‐based panels Interior Use and Renovation: 52 MM m3
Urban/Rural/Public floor space: 3 trillion m2 new space Other: 30 MM m3
IMPORTS: 436 – 212 = 214 MM m3
Data Source: CAF Report
0 5 000 000 10 000 000 15 000 000 20 000 000 25 000 000 30 000 000 35 000 000 40 000 000
2007 2008 2009 2010
m3
Log Imports by Port
All other Qingdao Shanghai Huhehaote Nanjing Harbin Manzhouli
Manzhouli 29%
18%
Harbin 23%
12%
Qingdao 2%
13%
Nanjing 21%
29%
‐ 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Thousand cubic meters
Korea, Rep. of Japan
China
‐ 2 000 4 000 6 000 8 000 10 000 12 000 14 000
Thousand cubic meters
Cambodia Myanmar Thailand
Indonesia Malaysia Papua New Guinea
Imports
Exports
Source: ITTO
Softwood Log Import Uses
There are mainly 5 end uses for imported softwood log:
• 1) Construction: including concrete forming support, plywood
• 2) Interior uses: including backing strip, floor spacer, wood doors and flooring
• 3) Landscaping treated wood especially in parks
• 4) Packaging
• 5) Furniture: including outdoor furniture
• Main softwood species include larch, red pine, spruce, radiata pine, scotch pine.
• Imported softwood log mainly come from Russia, New
Zealand, US/Canada, Chile and European countries.
China Softwood Logs Imports from 2005 to 2010
Year Imports Volume
(million m
3） Imports Value ($US million ）
2005 18.27 1387.98
2006 19.71 1713.62
2007 23.27 2404.88
2008 18.58 2414.19
2009 20.30 2234.43
2010 24.27 3239.61
Source: China’s Customs Statistics
$300 $350 $400 $450 $500 $550 $600 $650 $700
jan.05 mar.05 mai.05 jul.05 sep.05 nov.05 jan.06 mar.06 mai.06 jul.06 sep.06 nov.06 jan.07 mar.07 mai.07 jul.07 sep.07 nov.07 jan.08 mar.08 mai.08 jul.08 sep.08 nov.08 jan.09 mar.09 mai.09 jul.09 sep.09 nov.09 jan.10 mar.10 mai.10 jul.10 sep.10 nov.10 jan.11 mar.11 mai.11 jul.11 sep.11 nov.11 jan.12 mar.12 mai.12 jul.12 sep.12 nov.12 jan.13 mar.13 mai.13 jul.13 sep.13
Export Prices 12+ Hi China: Hemlock
Log Exports from PNW
Data Source: USDA Forest Service
‐ 1 2 3 4 5 6 7 8 9 10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
MM m3
To China To all Countries minus China
New Zealand Log Exports
‐ 2 4 6 8 10 12
2004 2005 2006 2007 2008 2009 2010 2011
MM m3
China Log Exports Rest of Log Exports
Source: Statistics New Zealand. Compiled by Information and Analysis, Ministry of Agriculture and Forestry
Russia
0.0 0.5 1.0 1.5 2.0 2.5 3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$ Billions
Sawnwood to China Roundwood to China
Source of Data: Customs Committee of Russia
Russia
0.0 0.5 1.0 1.5 2.0 2.5 3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$ Billions
Sawnwood to China Roundwood to China Both to China
Source of Data: Customs Committee of Russia
Two Strategic Business Questions:
• Under what conditions will China continue to import softwood logs?
• What is the likelihood that these conditions will continue into the future?
The answer lies in an examination of the
important supply and demand factors in log
trading and a focus on key economic indicators
to discern possible future trends.
Some Key Chinese Macroeconomic Data
from 12 th Five‐year Planning Period Ending 2015
• the total population will reach 1.39 billion
(an annual growth rate of < 1%) ,
• the GDP 58.98 trillion yuan
(an average annual growth rate of 8%) ,
• urbanization rate will reach 51.5%
(an average annual growth rate of 2%) ,
• affordable housing projects (urban area) will reach 36 million units.
Data Source: CAF Report
Key Macro‐Economic Indicators for 2015‐2020
Indicator 2010 2015
Annual average
growth rate
2020
Annual average
growth rate GDP（Trillion yuan） 40.12 58.98 8% 82.6 7%
Total population
（million people） 1,341 1,390 0.72% 1,450 0.85%
Urbanization rate（%） 47.5 51.5 2% 60.0 3%
Per capita disposable income of urban
residents（yuan） 19,109 28,077 8% 39,379 7%
Per capita net income of rural residents
（yuan） 5,919 8,897 8% 12,479 7%
Source: CAF Report
Factor 1: Demand in China
• Chinese Demand: Forecast of national
industrial timber consumption in 2015‐2020 (million m 3 )
Consumption structure 2010 2015 2020
Wood‐based panel① 194 204 235
Pulp and papermaking
industry② 66 120 155
Interior uses 52 55 62
General construction 72 63 55
Furniture industry③ 22 38 54
Other④ 30 35 40
Total 436 515 601
Factor 2: Supply
• What are the Log Supply Issues
– International: What countries can supply to China?
• Russia
– The Far East is a traditional softwood log supplier to China – New direction? Chinese investments in Russia?
• New Zealand
– Limited supplies?
– North America: Other demands (housing)?
Russia Exports to China
Source of Data: Customs Committee of Russia
0 5 10 15 20 25 30 35
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Million Cubic Meters
Logs
Lumber Everything Else
Russia Exports to China
Source of Data: Customs Committee of Russia
0 5 10 15 20 25 30 35
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Million Cubic Meters
Logs
Lumber Everything Else
Tariff quota
Russia Exports to China
Source of Data: Customs Committee of Russia
0 5 10 15 20 25 30 35
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Million Cubic Meters
Logs
Lumber Everything Else
?
RUSSIA‐CHINA FUND TO INVEST IN FORESTRY FIRM
• VLADIVOSTOK, Russia, Sept 7, 2012 (Reuters) ‐ A joint Russian‐Chinese fund will invest over $200 million in a Russian forestry company under a preliminary deal announced on Friday on the fringes of a summit held to promote economic
cooperation in the Asia‐Pacific region.
• The Russia‐China Investment Fund would become a shareholder in Russia Forest Products, Russia's second‐largest forestry products firm, in a deal that would enable the business to produce higher‐value processed products.
• The deal was announced by the Russian Direct Investment Fund (RDIF), which was set up last year with $10 billion from the state to co‐invest in private‐equity style deals with foreign partners.
• Russian Forest Product holds annual allowable rights to fell more than 4.5
million cubic metres of timber and has long‐term leases on 6.4 million hectares of forest. It accounts for around 10 percent of Russia's timber exports to China, the RDIF said. (Reporting by Douglas Busvine; editing by Vladimir Soldatkin)
New Zealand
‐ 5 10 15 20 25 30 35
Million Cubic Meters
Rest of Harvest
Log exports to China
Lumber exports to:
Japan China
Rest of log exports
Log exports to India Log exports to Japan
Source: Statistics New Zealand. Compiled by Information and Analysis, Ministry of Agriculture and Forestry
New Zealand: Export Supply Slack
‐ 5 10 15 20 25 30 35
Million Cubic Meters
Rest of Harvest
Log exports to China
Rest of log exports
~ 3 million m3
Maximum Biological Availability from plantat
Source: Statistics New Zealand. Compiled by Information and Analysis, Ministry of Agriculture and Forestry
Harvest Volume Douglas‐fir and Hemlock Westside Private Lands
1949 ‐2011
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Harvest volume (billion board feet, Scribner rule)
Calendar year
Hemlock
Douglas‐fir
Source: WADNR Timber Harvest Reports
Harvest Volume Projection
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Harvest volume (billion board feet, Scribner rule)
Calendar year
Recovery with growth in log exports up to first energy shock
Source: WADNR Timber Harvest Reports
Harvest Volume Projection
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Harvest volume (billion board feet, Scribner rule)
Calendar year
Projected Growth
2016
Harvest Constraint
Source: WADNR Timber Harvest Reports
Lumber Demand: 2010
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Harvest volume (billion board feet, Scribner rule)
Calendar year
2010 log consumption by sawmills and others except export
Source: WADNR Mill Survey 2010 Report
Lumber Demand Projection
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Harvest volume (billion board feet, Scribner rule)
Calendar year
Projected growth in
product demand for logs
Source: WADNR Mill Survey 2010 Report
Background Summary
• China imports a substantial volume of its wood requirements (50% of its domestic consumption)
– But softwood log imports are only a small percentage (around 11%) and
– Those sectors using sawlog products are in decline from 134 to 117 MM m3 from 2010 to 2020
• Russian export tariff has changed to a quota with tariffs:
– Suggests a decline from 16 to 12 MMm3 China log exports – Log sources have responded (NZ, US)
– Lumber imports have grown (Chinese sawmills in Russia)
• US growth in log exports will be constrained by
– Harvest availability
– US housing demand
CINTFSFA Global Trade Model
• Supply constraints include China’s own domestic timber harvesting policies as well as policies in other countries to reduce the flow of illegally harvested wood products.
– We will examine the impact of shifts in supply sources on China and other forest sectors around the Pacific Rim and Europe.
• Infrastructure needs and capital investments in China’s forest sector are likewise needed.
– Scenario analysis using the trade model will investigate the costs associated with an expansion of milling and processing capacity.
• Thirdly, demand is changing rapidly around the world due to government policies aimed at stimulating economic activity.
– We will examine potential changes in global demand for wood
products and their implications on the Chinese forest product sector using the CAF model.
Spatial equilibrium for two sectors outlining the feedback effect
Production, Consumption, Exports, Imports of Plywood
0 5 000 000 10 000 000 15 000 000 20 000 000 25 000 000 30 000 000
1960 1970 1980 1990 2000 2010 2020 2030 2040
Coastal China
Blue: Production (H), Green: Production (F), Lt Blue: Consumption (H), Purple: Consumption (F), Orange, E (F), Teal M (F)
0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
1960 1970 1980 1990 2000 2010 2020 2030 2040
Sweden
Production, Consumption, Exports, Imports of Plywood
Blue: Production (H), Green: Production (F), Lt Blue: Consumption (H), Purple: Consumption (F), Orange, E (F), Teal M (F)
0 200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000
1960 1970 1980 1990 2000 2010 2020 2030 2040
Finland
Production, Consumption, Exports, Imports of Plywood
Blue: Production (H), Green: Production (F), Lt Blue: Consumption (H), Purple: Consumption (F), Orange, E (F), Teal M (F)
Plywood Prices
$‐
$200 $400 $600 $800 $1 000 $1 200
1960 1970 1980 1990 2000 2010 2020 2030 2040
Sweden
SWEUVXPLY 82 SWEp
Plywood Prices
$‐
$100 $200 $300 $400 $500 $600
1960 1970 1980 1990 2000 2010 2020 2030 2040
Coastal China
CHNUVMPLY 82 CCOp
