Development of the Sawmill Industry in Russia 61st FEFPEB Congress 2008, Hamburg
Sampsa J. Auvinen September 19th, 2008
Agenda
•
Short Profile of Pöyry
•
How can Russia affect the European Packaging Industry?
•
Overview of Russia’s Forest Resources
•
The Russian Sawmill Industry
•
Future Development of the Russian Forest Industry
•
The Russian Packaging Market
•
Outlook
Pöyry in brief • Client- and technology-oriented globally operating consulting and engineering service company • Core operations based on three knowhow clusters: – energy – forest industry – infrastructure & environment
• Pöyry operates globally in 45 countries and employs a total of 7300 experts. • Global market leader in forest industry • Strong international position in energy, infrastructure & environment
Pöyry Group - Turnover 1985-2007 EUR Mio 800 700 Infrastructure & Environment
600 500
Energy
400 300
Forest Industry
200 12% annual growth
100 0 1985
1991
1997
2003
2006
2007
Worldwide Office Network
Vancouver
Oslo Stavanger Aberdeen Oxford London Horsham Paris Lyon Hamburg Dresden Mannheim Munich Lörrach Zurich Madrid
Montreal Appleton New York
Stockholm Helsinki St Petersburg Moscow Tallinn Riga Vilnius Lódz Cracow Brno Trenčín Vienna Milano Genoa Budapest
Tunis
Beijing
Seoul
Tehran
Shanghai New Delhi Kunming Guiyang Taipei Abu Dhabi Colcatta Dubai Muscat Hanoi Manil Bangkok a Kuala Lumpur Singapore Brunei
Riyadh Mexico City Dakar Valencia Medellin
Lagos
Bujumbura Jakarta
Lima Lusaka Poços de Caldas São Paulo Durban Buenos Aires
Auckland
Perth Melbourne
How can Russia affect the European Packaging Industry?
• Russia is one of the biggest forest areas in the world • The Russian government’s target is to force investments to the forest industry sector and to promote a domestic competitive forest industry • The whole sector is expected to face an investment boom during the next decade Russia will emerge as one of the world’s largest producers and consumers of wood products in the medium and long term.
How can Russia affect European Packaging Industry? Raw material being purchased in Russia Russia as a target market for European industrial packaging products / services Competition in Europe by Russian players
Overview of Russia’s Forest Resources • Forest Area • Wood Species Distribution • AAC vs. Actual Harvest • Roundwood Prices
Resources - Forest Area 808 193
706
Europe
Russia
436 North & Central America
635 832
283
Western & Central Asia South & South East Asia
1
Africa
- Million hectares -
206
1
South America
Oceania
• South America and Russia are the leading regions by forest area • More than 50% of Russia are forested
Resources - Wood Species Distribution by Region
North West Russia Ural
Russian Far East
Central Russia Sibiria South Russia & Volga
Total Growing Stock in Russia 72.5 billion m3 20% 32%
14%
Larch Pine Spruce Other SW
• With ~80% softwoods dominate the Russian forests • Overall, Larch is the most common wood species
Hardwoods 14%
20%
Resources - AAC vs. Actual Harvest by Region Note: AAC and harvest for final fellings, including fuelwood.
150 120
120
60
150
90
30
150
- Million m3 -
150
90
0
AAC Harvest
150
120
60
90
30
60
0
30
120
120 90 60
AAC Harvest
90
150
30
0
60
AAC Harvest 120
0
AAC Harvest
30
90 0
AAC Harvest
RUSSIA, TOTAL 60 30
Hardwood
0
AAC Harvest
Softwood
SW HW Total
AAC Harvest 297 85 211 32 508 117
• Underutilized harvest potential in nearly all regions – particularly of hardwood. • Largest harvest potential is in Siberia and the Russian Far East.
Resources - Roundwood Prices Austria, spruce Germany, south, spruce Germany, south, pine Finland, south, spruce Finland, south, pine Austria, pine Sweden, north, pine Sweden, south, pine Sweden, central, pine Sweden, north, spruce Poland, spruce Poland, pine Sweden, south, spruce Sweden, central, spruce Latvia, spruce Latvia, pine Chile, radiata pine European Russia, spruce Canada East, SPF European Russia, pine Portugal, pine USA South, SYP New Zealand, radiata pine Brazil, SYP South Africa, pine Argentina, SYP 0
- EUR/m³ sob 10
20
30
40
50
60
70
Stumpage Harvesting Transport Overhead * 1.Q. 2008 80
90
• The Russian price level for roundwood is low compared to the roundwood prices both in Central Europe and the Nordic Countries • Comparably high harvesting and overhead costs
Sawmill Industry • Supply & Demand • Top 10 Producers • Structure of Exports
Sawmill Industry - Sawn Softwood Supply & Demand
40
- Million m3 -
30
20
10
0 1995 1996 1997 1.998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2015e
-10
-20
Exports according to statistics Estimated Production Production according to statistics
Estimated Consumption Domestic Consumption according to statistics
• Domestic consumption is by far higher than the numbers declared in official statistics • Sawn softwood exports have continuously increased over the last few years.
Sawmill Industry - TOP 10 Sawn Softwood Producers Investlesprom Lesosibirsky LDK No. 1 Novoeniseisky Ilim Drev Titan Group Swedwood/IKEA Continental Management Solombala UPM Sawmill No. 3 0
100
200
300
400
500
600
700
800
- 1,000 m³ -
• Major players with several sawmill sites have emerged over the last few years • Compared to Central European and Nordic companies, these groups are still quite small
Sawmill Industry - Structure of Exports 18.000
3
- 1.000 m 16.000 Others 14.000 Japan
12.000 10.000
China
8.000 North Africa 6.000 CIS-States
4.000 2.000
Europe
0 2000
2001
2002
2003
2004
2005
2006
2007
• Russia’s export focus has been on the European markets to a large extent • However, strong increases in its export to North Africa, Asia and the CIS countries have been recorded over the last few years • Shortage of port capacities limits export shipping
Future Development of the Russian Forest Industry Sector • Roundwood Export Duties • Investment Activity • Structural Change
Future Development - Roundwood Export Duties Date
Duty*
Min. duty
Duty
No duty
Pre 01.07.2007
6.5 %
4 EUR/m3
Birch >15cm, all spruce, all pine
Birch 15cm, all spruce, all pine Aspen
Birch 15cm, all spruce, all pine Aspen
Birch 15cm, all spruce, all pine Aspen
Birch