26 | Sector Market Update: ISC
PLANETARY PRIORITIES – CLIMATE FOCUS AT THE ISC
Above: Will environmental concern lead to greater emphasis on using more wood while protecting more forest?
Environmental issues naturally formed a core focus of the ISC, with Finnish MEP Nils Torvald reviewing EU climate strategy and the role within it of timber and forest sectors. International forest policy, he said, must differentiate between tropical, boreal and wider temperate forest and acknowledge that Europe’s managed forests provide a better carbon sink than unmanaged. He identified new generation engineered softwoods as prime materials for low carbon construction.
But he stressed that, to ensure continued development in the wood sector, government policy needed to strike a balance between the environmental and economic. “If businesses don’t make money, they don’t make investments and you don’t get innovations coming down the pipeline,” said Mr Torvald. Taking the topic Wood Construction and Climate Change, Professor Matti Kuittinen, senior specialist at the Finnish Environment Ministry, highlighted the urgency of decarbonising building, which currently consumes 50% of all global raw materials. To this end, Finland is working on development of climate declarations for buildings, addressing not just their carbon impact, but their capacity to deliver climate positives – their environmental handprint. Materials, he added, are key to this and consequently must meet internationally and regionally applicable environmental performance and carbon storage standards. Critically, this demands accurate data. “The future looks bright for wood construction,” he said “But I urge your industry to engage with scientists on how
to maintain delicate carbon flows and biodiversity in forest systems, to ensure social and environmental acceptability of increasing use of timber for building.” While the role of forests in combating the climate crisis is widely discussed, less so is the adverse impact climate change can have on them. But, said Marcus Lindner, principal scientist at the European Forest Institute (EFI), this is a critical issue and something the forestry and timber sectors must prepare for and adapt to. In particular, the forestry sector needs to adopt management practices to make forests more resilient to global warming ‘disturbances’, such as increased drought and resulting reduced resistance of trees to disease and insect pests. In support of this, the EFI initiated the Resonate project. “This is undertaking studies Europe- wide to evaluate how best to adapt forests to cope with climate-induced disturbances, with the aim of providing recommendations, decision support and tools to forest operations,” said Mr Lindner. ■
◄ Looking forward, a key concern is raw material availability. There are fears environmental regulation to combat the climate crisis may further restrict forest available for timber production, while longer term climate change itself looks increasingly set to impact harvest volumes and species mix. Russia’s log export ban in 2022 is also expected to exacerbate supply stress. However, ISC presentations provided a picture of a resilient industry capable of adapting to extraordinary market conditions. It’s also clearly upbeat about market prospects for its low carbon, renewable material, especially in construction, as governments worldwide step up transition to a low emission bioeconomy.
The ISC was co-organised by the ETTF and European Organisation of Sawmill Industries (EOS), with the Finnish Sawmills organisation as national host and former UK Timber Trade Federation president Keith Fryer as moderator. And the event clearly underlined the appetite for market analysis and data in today’s fast- changing trading environment. Around 300 delegates attended; 200 in person, 100 online. EOS president Herbert Jöbstl said that, while the European softwood sector was
used to dealing with volatility, nothing could have prepared it for the extraordinary market developments of the last 19 months. But despite the challenges, the sector had come through the pandemic strongly. EOS country production is forecast to rise a record 6.8% in 2021 to 88 million m3
, with a further 0.6%
growth predicted for 2022, and until now, there has been limited market pushback on price, with the industry enjoying healthy margins as a result. One significant market shift has been the strong increase in European exports to America, driven by its construction boom. Sales of European timber in European markets have also increased. The UK’s sawn softwood imports, for example, were 59% higher in the first half of 2021.
China’s switch from sawn softwood to log imports was raising concerns and the worry is that Russia’s impending log export ban will see Chinese buyers sourcing more from Europe. To secure log supply long term, said Mr Jöbstl, the softwood sector also needed to engage with the EU on its Land Use, Land Use Change and Forestry policy, which threatened to further limit harvestable forest area.
TTJ | November/December 2021 |
www.ttjonline.com
Despite obstacles ahead, however, the future held opportunities.
“The pandemic saw an increase in wood use, with growth in home refurbishment expanding our client base,” said Mr Jöbstl. “Construction confidence remains high, the European industry has gained a stronger foothold in the US and there’s growing recognition of the value of increasing wood use in building to help combat climate change.”
Looking at the Finnish timber sector, Kai Merivuori of Finnish Sawmills said that Finland’s economy was back on track post-pandemic, with second quarter GDP up 7.5% on the same period in 2020. Softwood producers have been boosted by a strong building renovation market, and investment in sawmill capacity is at its “highest in decades”.
Exports have been robust. Sales to Asia are down, largely due to a decrease in exports to China, falling from 1.7 million m3 an expected 500,000m3
in 2018 to this year. However,
sales to the rest of Europe have increased, with a 109% rise in exports to the UK making it Finland’s biggest foreign market in the first half of 2021.
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