Global Supply

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Global Supply Demand Trends How Does Australia
Fit In?
For NAFI Future of Forests - 2002 November 3,
2002 Melbourne By Russell E. Taylor, RPF,
MBA President R.E. TAYLOR ASSOCIATES
LTD. and Managing Director INTERNATIONAL WOOD
MARKETS RESEARCH INC. Vancouver, B.C., Canada
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Presentation Outline

• Global Perspective
• Major Global Trends in Log Consumption
  Production
• Major Global Trends in Sawnwood Consumption
  Production
• Global Sawmill Costs Whose got the Competitive
  Advantage How Does Australia Fit?
• Summary

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1. Current Global Situation

• A global oversupply of (lower cost) wood
• From virtually all regions in Canada
• From all regions in the US
• From many countries in Europe - including the
  Scandinavia, Germany, France, Austria, Baltics,
  E. Europe
• From Russia
• From tropical timber
• From Plantations - softwood pine various
  tropical and temperate hardwood.

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2. Global Shifts in Log Demand
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Roundwood Output Peaked in the late 1980s
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Roundwood Demand Has Not (Yet) Rebounded
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Industrial Roundwood Demand Slower Growth than
in the 1980s
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Major Growth in Forest Area in Plantations
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Plantation Pine Harvest to Increase Sharply
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3. Global Shifts in Sawnwood
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Sawnwood Output Flat

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Sawnwood Demand Flat
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European S. Hemisphere Lumber Production has
been Rising
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European S. Hemisphere Exports Rising N.
Americas Declining
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Southern Hemisphere Lumber Production To Rise...
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Southern Hemisphere Lumber Exports To Rise
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European Exports to Japan have Soared!
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European Lumber Imports Taking Market Share from
N.A. Lumber
Europe 4.5 of U.S. imports 1.5 of U.S.
consumption in 2001 Canada 91 of U.S. Imports
35 of U.S. consumption in 2001
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European Lumber Imports Into the US To Continue
Growing!
Europe could grow to 13 of U.S. imports 5 of
U.S. consumption
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S. Hemisphere Lumber Imports Into US Also Taking
Market Share
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Offshore Lumber Imports Taking Market Share from
N.A. Lumber
Non-Cdn Imports 8.5 of U.S. softwood imports
3.0 of U.S. consumption
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4. Southern Hemisphere vs. North American
European Sawmill Costs

• Whos got the competitive advantage?

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Australia Has the Highest Sawmill Price Returns
in the World!
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Australias Sawnwood Prices High Rising in
2002
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Australias Stumpage Low
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Australias Log Costs Low
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Australias Sawmill Costs High
Appearance Grade Mills
Structural Grade Mills
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Australia Total Log Sawmill Costs Above
Average Globally
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Australias Earnings Highest!
Appearance Grade Mills
Structural Grade Mills
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Australia is the Place to be in the World for
Sawnwood!

• A high quality plantation fibre base
• Low stumpage rates (on a global basis)
• Low delivered logs
• Highest sawnwood price returns to sawmills
• But some of the highest sawmill costs
• Australia had the best sawmill earnings in the
  world in 2000 ( 2001 and probably 2002!)
• Expect changes in the Australian industry!
• Regardless of global supply and demand trends,
  Australia is the place to be (for now)

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Russell E. Taylor, RPF, MBA
President R.E. TAYLOR ASSOCIATES LTD.
and Managing Director INTERNATIONAL WOOD MARKETS
RESEARCH INC. Vancouver, B.C., Canada
Suite 501 - 543 Granville Street Vancouver, BC
V6C 1X8 Tel [phone] or -5998 / Fax (604)
801-5997 Email retaylor_at_woodmrkts.com www.woodmar
kets.com
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Selected Forest Industry Clients CANADA
Canadian Forest Products Saskfor Forest
Products Clearwater Forest Prod. Slocan Forest
Products International Forest Prod. Teal
Cedar Jannock Tembec MacMillan Bloedel West
Coast Forest Products Noranda Forest West
Fraser Timber Northwood Pulp Timber Weyerhaeuse
r Canada Orenda Forest Products Agrafibre
Industries Repap B.C. CC Wood
Products Riverside Forest Products Tara Forest
Products Norske Skog Canada TimberWest
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Selected Forest Industry Clients OUTSIDE of
CANADA
SOUTHERN HEMISPHERE USA Arauco
Forestal Chile Boise Cascade Bio Bio
Forestal Chile Columbia Forest Prod. Fundacion
Chile Chile ICI Polyurethanes Terranova Forest.
Prod Chile Louisiana-Pacific Corp. Comfloresta
Brazil Merrill Ring Battistella Ind. E Com
Ltda. Brazil Plum Creek Timber Forestry Corp. of
NZ N. Z. Potlatch Corporation Fletcher
Challenge N. Z. Champion Tasman Lumber N.
Z. Temple-Inland Wenita Forest Prod. N.
Z. Carter Holt Harvey N. Z. Various
Confidential Hyne Sons Australia
Clients Mondi Timber S. Africa
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About R.E. TAYLOR ASSOCIATES LTD.
Consulting Projects US Markets

• Segment Analysis
• Decking Lumber
• Siding Products
• Studs
• Dimension Lumber
• Treated Lumber
• Moulding/Millwork

• Lumber Substitutes
• Fibre Cement Products
• Vinyl Products
• Steel Studs
• Engineered Wood
• European Southern Hemisphere Imports

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About INTERNATIONAL WOOD MARKETS Research Inc
Publications

• WOOD Markets - Monthly Newsletter
• WOOD Markets 96
• WOOD Markets 2000 - The Five Year Outlook for
  North American Producers
• Data-Base Research Services
• Available on request!

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About R.E. TAYLOR ASSOCIATES LTD.
Consulting Projects Global Markets

• Specialty Products
• OSB Specialty Products
• MDF
• Engineered Wood
• I-Joists
• LVL
• Finger-joint items
• Edge-glued panels
• Doors Windows
• Mouldings

• Global Topics
• Benchmarking
• Manufacturing
• Market Audits
• Competitor Analysis
• Timberland Comparative Valuations
• Global Supply Demand Forecasts
• Price Forecasts

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Summary
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Summary