European Panel IndustryEuropean Panel IndustryUNECE Market Discussions, Geneva, October 2007 UNECE Market Discussions, Geneva, October 2007

Mr Ladislaus DöryMr Ladislaus DöryPresident of EPFPresident of EPF

Member of the Board of ConstantiaMember of the Board of Constantia

Ms Bénédicte HendrickxMs Bénédicte HendrickxEconomic adviser EPFEconomic adviser EPF

European Woodworking IndustryEuropean Woodworking Industry

Wood-based panels

9%

Sawing, planing,

impregnation13%

Packaging4%

Other5%

Furniture51%

Construction timber incl.

Parquet18%

EUR 230 billion in EUEUR 230 billion in EU--2727

Source: EPF & EurostatSource: EPF & Eurostat

sawmilling10%

furniture43%

other11%

packaging3%

wood-based panels

1%

construction elements

32%

European Woodworking IndustryEuropean Woodworking Industry

sawmilling11%furniture

55%

other6%

packaging3%

wood-based panels

5%

construction elements

20%

2.3 million jobs in EU2.3 million jobs in EU--2727

Source: EPF & EurostatSource: EPF & Eurostat

340,000 enterprises in EU340,000 enterprises in EU--2727

Plywood7%

Particleboard61%MDF

22%

OSB6%

Hard/Softboard4%

WoodWood--based Panels in Europe* 2006based Panels in Europe* 2006

Total : 60 million m³Total : 60 million m³*excluding Russia & *excluding Russia & TurkeyTurkey

Annual Particleboard ProductionAnnual Particleboard Production

2022242628303234363840

2002 2003 2004 2005 2006 2007*

(1000 m³)(1000 m³)

+4.0%+4.0%+4.0%+4.0%

In 2006: 37 million m³

Overview Particleboard IndustryOverview Particleboard Industry

30,159 31,352 33,220 31,987 33,957

05,000

10,00015,00020,00025,00030,00035,00040,000

2002 2003 2004 2005 2006c o n sump tio n

p ro du c tio n

consumption production

(1,000 m³)(1,000 m³)+4.0%+4.0%

+6.2%+6.2%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

'99 '00 '01 '02 '03 '04 '05 '06 '07*

MDF Production in EuropeMDF Production in Europe(million m³)(million m³)

In 2006: 12.4 million m³ production

+5.9%+5.9%+6%+6%

0

3,000

6,000

9,000

12,000

15,000

'02 '03 '04 '05 '06 '07*c o n sump tio n

p ro d u c tio n

consumption production

annual MDF Production / Consumptionannual MDF Production / Consumption

+6%+6% +5.1%*+5.1%*

+5.9%+5.9%+6%*+6%*

0

0.5

1

1.5

2

2.5

3

3.5

'99 '00 '01 '02 '03 '04 '05 '06

OSB Production in EuropeOSB Production in Europe(million m³)(million m³)

+12%+12%

In 2006: 3.5 million m³ production

annual OSB Production / Consumptionannual OSB Production / Consumption

0

1,000

2,000

3,000

4,000

'02 '03 '04 '05 '06c o n sump tio n

p ro d u c tio n

consumption production

+15%+15%

+12%+12%

0

1,000

2,000

3,000

4,000

5,000

'02 '03 '04 '05 '06

Plywood Production in EuropePlywood Production in Europe(1,000 m³)(1,000 m³)

In 2006: 3.5 million m³ production

+%+% +2.6%+2.6%

01,0002,0003,0004,0005,0006,0007,0008,000

'02 '03 '04 '05 '06p ro du c tio n

c o n sump tio n

production consumption

annual Plywood Production / Consumptionannual Plywood Production / Consumption

+4.5%+4.5% +0%+0% +4.5%*+4.5%*+6.8%+6.8%

Capacity Extensions 2007Capacity Extensions 2007--20092009

LATVIALATVIA500,000 m³ OSB500,000 m³ OSB

LITHUANIALITHUANIA300,000 m³ PB300,000 m³ PB

SLOVAKIASLOVAKIA500,000 m³ PB500,000 m³ PB

SWEDENSWEDEN100,000 m³ PB100,000 m³ PB

ROMANIAROMANIA600,000 m³ PB600,000 m³ PB

POLANDPOLAND600,000 m³ PB600,000 m³ PB

500,000 m³ MDF500,000 m³ MDF

GermanyGermany450,000 m³ MDF450,000 m³ MDF

SPAIN SPAIN 200,000 m³ MDF200,000 m³ MDF

HUNGARYHUNGARY280,000 m³ MDF280,000 m³ MDF

Wood demand (2006)Wood demand (2006)41.4 41.4 mio mio dry dry tonnestonnes

2.4 2.4 mio mio dry dry tonnestonnesadditionaladditional

in 2008in 2008--20102010recovere

d12%

by-products

40%

round-wood48%

Trend of activity indicator Trend of activity indicator -- construction construction compared with previous monthscompared with previous months

strongstrong

improving / goodimproving / good

stablestable

cooling downcooling down

Production furniture Production furniture index 2000 = 100index 2000 = 100

Source: European Source: European CommissionCommission

60

70

80

90

100

110

120

2001 2002 2003 2004 2005 2006

furniturechairs & seatsoffice & shopkitchenother

Challenges

Evolution of Wood Costs in EUEvolution of Wood Costs in EUJanuary 2002 January 2002 –– March 2007March 2007

2000 = 100

0%10%20%30%40%50%60%70%80%90%

I/02

III/02 I/0

3III/

03 I/04

III/04 I/0

5III/

05 I/06

III/06 I/0

7

Wood oil price CPS (Unctad)Wood oil price CPS (Unctad)May 2004 May 2004 –– April 2007April 2007

2000 = 100

100

120

140

160

180

200

220

240

260

280m

ai20

04

juil2

004

sep2

004

nov2

004

jan2

005

mar

s200

5

mai

2005

juil2

005

sep2

005

nov2

005

jan2

006

mar

s200

6

mai

2006

juil2

006

sep2

006

nov2

006

jan/

07

mar

s200

7

agricultural raw materialsNon-coniferous woods, UK import price index ($ equivalent)Crude petroleum, average of Dubai/ Brent/ Texas equally weighted ($/baril)

Wood availability indicator 2Q2007Wood availability indicator 2Q2007

shortfallshortfall

sufficientsufficient

criticalcritical

•• Forest inventories are very inaccurateForest inventories are very inaccurate•• Small forest owners are difficult to persuade to Small forest owners are difficult to persuade to

enter the wood marketsenter the wood markets•• Large forest owners are not interested in market Large forest owners are not interested in market

share. Higher wood prices allow them to earn what share. Higher wood prices allow them to earn what they need by cutting lessthey need by cutting less

•• RES policy is directing the long term price of wood RES policy is directing the long term price of wood to its energy content, thereby linking it to fossil fuel to its energy content, thereby linking it to fossil fuel pricesprices

Key problems to wood mobilisationKey problems to wood mobilisation

Build POSITIVE Information Flow About Wood and Wood-

Based Products

European Commission statesEuropean Commission states::

•• Wood plays a major role in combating climate changeWood plays a major role in combating climate change•• Greater use of wood products will : Greater use of wood products will :

stimulate the expansion of Europe‘s forests, andstimulate the expansion of Europe‘s forests, andreduce greenhouse gas emissions,reduce greenhouse gas emissions,by substituting for fossil fuel intensive productsby substituting for fossil fuel intensive products

•• The Commission is examining ways to encourage these The Commission is examining ways to encourage these trendstrends

Wood tackles climate changeWood tackles climate change

((Enterprise UpdateEnterprise Update, , March March 2003)2003)

“It has been estimated that an annual 4% increase to 2010 in Europe’s wood

consumption would sequester an additional 150 million tonnes of CO2per year and that the market value of this environmental service would be

about € 1.8 billion a year”CEI-Bois Roadmap 2010, Executive Summary, 2004

Tackle climate change: use wood! The science

The The woodwoodworkingworking industrindustry y gives value to the forest...gives value to the forest...

…and respects the carbon cycle!…and respects the carbon cycle!

Added Value Chains ComparedAdded Value Chains Compared

(FBI Forum, 2003)(FBI Forum, 2003)Multiplication Multiplication FFactor 10actor 10

Social Value Chains ComparedSocial Value Chains Compared

(FBI Forum, 2003)(FBI Forum, 2003)Multiplication Multiplication FFactor 30actor 30

Use Wood BEFORE Burning It!Use Wood BEFORE Burning It!

Respect the value and employment chains of wood!Respect the value and employment chains of wood!

Use MORE woodUse MORE wood--based productsbased products: they are eco: they are eco--efficient and efficient and mitigate Climate Changemitigate Climate Change

EPF Recommends:EPF Recommends:

Use Wood BEFORE Burning It!Use Wood BEFORE Burning It!

Respect the value and employment chains of wood!Respect the value and employment chains of wood!

Use MORE woodUse MORE wood--based productsbased products: they are eco: they are eco--efficient and efficient and mitigate Climate Changemitigate Climate Change

EPF Recommends:EPF Recommends:

Mobilise more woodMobilise more wood by:by:

Optimising use of net annual forest growthOptimising use of net annual forest growthMore efficient use of harvest residuesMore efficient use of harvest residuesImproved logistic/technical facilitiesImproved logistic/technical facilitiesPromoting afforestation & short rotation forestryPromoting afforestation & short rotation forestryIdentifying Unknown Forest OwnersIdentifying Unknown Forest Owners

Enhance wood recycling/recovery practices and stimulate Enhance wood recycling/recovery practices and stimulate selectiveselective collection of recovered woodcollection of recovered wood

EPF Recommends:EPF Recommends:

Focus all Biomass Action Plans on Focus all Biomass Action Plans on wood mobilisationwood mobilisationAlways involve the woodAlways involve the wood--based sector using their competence based sector using their competence in the forestin the forest--wood chainwood chainThis will allow to take account of the specific regional/local This will allow to take account of the specific regional/local situationsituation

Encourage efficient use of wood biomass energyEncourage efficient use of wood biomass energy, , (e.g. CHP)(e.g. CHP)

EPF Recommends:EPF Recommends:

Stop subventions to industrial and energyStop subventions to industrial and energy--inefficientinefficientinstallationsinstallations as they distort competitionas they distort competition

More information:More information:

www.europanels.orwww.europanels.orgg

www.osbwww.osb--info.orginfo.org

www.mdfwww.mdf--info.orginfo.org