European Wood-Based Panels Market Prospects UNECE Timber Committee Market Discussions th September 2002 Geneva, Switzerland By Mr. Olli Koskiranta Vice-President, Business Development Finnforest Corporation

2 Contents European Woodworking Industry & Companies WBP* Consumption Structure in Europe WBP Production, Prices & Consumption in Europe** Plywood OSB Particle board MDF Market Observations in Europe vs. North America Future Trends * WBP is wood-based panels ** Including Russia

3 European woodworking industry excluding furniture Production: 60 billion EUR/year Workforce: workers Over companies Typical SME-sector, with many sub-sectors

4 Major Wood Working Industry Companies in Europe AssiDomän Södra Nexfor Finsa (est.) Frati (est.) Kunz (est.) Kronospan (est.) Swiss Krono (est.) Stora Enso Timber Pfleiderer UPM-Kymmene Wood Products Sonae Industria Egger Finnforest - Moelven Million € Solid WoodPanelsEWPBuilding systemsOther Source: FF

5 Wood-based panels Consumption Structure in Europe Plywood Particle board OSB MDF Other fiberboard Million m 3 Source: FF, FAO,UNECE, WPI

6 European Plywood Production & Consumption Sources: FF, FAO,UNECE, WPI, SW Ply Prod.HW Ply Prod.SW Ply Cons.HW Ply Cons. *HW plywood includes tropical,birch and other temperate plywood

7 Finnish Softwood & Birch Plywood Price Development ' €/m3 FIN Birch PlyFIN SW Ply Source: Finnish Customs

8 European OSB Production, Price & Consumption m EUR/m3 ProductionConsumption Est. Price av.* Sources: FF, FAO,UNECE, WPI

9 European Particleboard Production, Price & Consumption m EUR/m3 ProductionConsumptionGER Price av.* Sources: FF, EPF, FAO, UNECE, WBI, *EUWID

10 European MDF Production, Price & Consumption m EUR/m3 ProductionConsumptionUK Price av.* Sources: FF, EPF, FAO, UNECE, WBI

11 Engineered wood products and wood-based panels: North America vs. Western Europe North America (US+CDN) Population 300 million 1) GDP Billion EUR 2) Wood-based panels: Plywood16,6 Mil. m3 OSB19,3 Mil. m3 Particleboard11,1 Mil. m3 MDF 4,4 Mil.m3 Total51,4 Mil. M3 Engineered Wood Products: LVL1,5 Mil. m3 Glulam0,8 Mil. m3 I-beams270 Mil. linear m Western Europe (EU-15+CH&N) Population390 million 1) GDP8 815 Billion EUR 3) Wood-based panels: Plywood5 Mil. m3 OSB1,6 Mil. m3 Particleboard29 Mil. m3 MDF7,5 Mil. m3 Total43,1 Mil. M3 Engineered Wood Products: LVL0,2 Mil. m3 Glulam1,2 Mil. m3 I-beams8 Mil. linear m Sources: FAO, RISI, APA, Jaakko Poyry 2) =EUROSTAT forecast 3) =EU-15 only (EUROSTAT forecast) 1) =Census, US&CAN; EU-15 + SUI&NO

12 European Plywood vs. MDF and OSB Consumption Plywood Consumption 4,0 3,5 1,8 2, Million m 3 HW PlywoodSW Plywood MDF & OSB Consumption 1,6 8,4 0,2 1, Million m 3 MDFOSB Sources: FF, EPF, FAO, UNECE, WBI,

13 Plywood and OSB End Use Changes by Segments in USA Plywood Consumption 3,5 5, Million m 3 IndustryRenovation New Building OSB Consumption 5,1 13, Million m 3 IndustryRenovation New Building Source: RISI

14 Biggest European wood-based panels producers by capacity in 2001 Sources: FF, EPF, WBI, Finnforest Constantia Wyerhaeuser Fantoni Kunz Schauman Spano Unilin Nexfor Finsa Frati Hornitex Pfleiderer Swiss Krono Egger Sonae M&P Kaindl/Kronospan Plywood Particleboard MDF Fibreboard OSB Total European market 50 Mm3

15 Future Trends The role of Russia & former East-Europe as panel producer is increasing – as is consumption in that area. Manufacturing plants are growing in size and simultaniously becoming multi-product manufacturing centers North American plywood will not be back to Europe, Asian plywood decreases its volume and Central - and South European plywood production will become niche business. Wood chip raw materials will increase in price (regionally) due to the growing popularity of bio-energy (subsidies).

16 Future Trends Price competition in bulk products Competition by substitutes Construction increasingly R&R Demand shifts to DIY chains Industry, distribution & customer consolidation Building systems: Engineered Wood Green values & recycling Note! Demand and supply forecasting becomes more and more relevant for investment and business – Where to get reliable information and statistics?