UNECE, FAO Release Forest Products Annual Market Review 2010-2011

The UN Economic Commission for Europe (UNECE) and the UN Food and Agriculture Organization (FAO) have released the Forest Products Annual Market Review 2010-2011, according to which consumption of forest products in the UNECE region rose by 5.6% overall in 2010, following two years of falling production and consumption.

Trends in the first half of 2011 lend support to a continued, albeit modest, rise in consumption. Consumption rose by 4.1% in North America, by 6.6% in Europe and 6.3% in the Commonwealth of Independent States (CIS). In line with the increases in consumption, production also rose, although patterns varied significantly in the three subregions: the harvest was up almost 10% in Europe, the highest since 2007; in the CIS, +17%, where the Russian Federation is the principal producer; and in North America production was the second lowest for 30 years.

In spite of relatively subdued demand, prices for many forest products have risen sharply, but not evenly across the region: price rises have been steepest in central and eastern Europe, where it now seems that sawing capacity, as a result of investment over recent years, may have exceeded the available supply of sawlogs. The wood energy sector has enjoyed continued growth as public policies and financial incentives have pushed the expansion of modern technology for producing heat, heat and electricity or electricity alone. Growth in consumption worldwide is forecast to increase by 11% annually until 2020. The report identifies factors expected to drive up demand for wood energy, including: the impact of the nuclear disaster in Fukushima, Japan, and the reconsideration by some governments of their policies on nuclear energy; rising oil and coal prices that provide an incentive to switch to wood, which is generally recognized as a carbon-neutral renewable energy source.

Such has been the demand for feedstock that a wood energy commodity contract exchange market is expected to be launched in the second half of 2011 based on the Port of Rotterdam, through which 15% of the global trade in wood pellets passes. This will allow global trading of, primarily, wood pellets, and the opportunity to forward-buy feedstock for a month, year or possibly up to three years ahead. [UNECE Press Release][UNECE website]