1. Market outlook from a Swedish producer’s perspective
Carl Johan Petersson - Setra Group Cambridge 2016

2. Strong summer season – balanced situation starting up autumn business
Good delivery pace during summer months
Stock decreased slightly more than normal
Whitewood especially strong but also redwood has developed well delivery and stock is under control.
Order intake has been good – and at somewhat higher level than seasonally normal, but slightly lower than lasts year record summer figures.
UK – Brexit dip in July
France/Germany – recovery continues
US and China stable at higher levels than 2015
MENA markets fall back

3. Development production and sawn wood stock

4. Stable production in Sweden
Source: Swedish Forest Industries Federation

5. Source: Swedish Forest Industries Federation
More whitewood, less redwood – a production adapted to market situation
Redwood production in Sweden and Finland Jan – Jul 2016: m3 (-3%) Whitewood production in Sweden and Finland Jan – Jul 2016: m3 (+5%)
Sweden
Sweden
Source: Swedish Forest Industries Federation

6. Stock decreased during the summer more than normal
Swedish whitewood stock decreased significantly over the summer. Also redwood stock down a bit more than normal
Producer’s stock of sawn goods – seasonally adjusted
Whitewood
Redwood
Swedish whitewood stock decreased significantly over the summer. Also redwood stock down a bit more than normal
Source: Swedish Forest Industries Federation

7. Outlook
- Supply Europe & Russia
- UK/Brexit

8. Relatively controlled supply in Europe and Russia
Million m3
Germany
Austria
Finland
Sweden
Russia
Source: Swedish Forest Industries Federation

9. Increase of delivery pace higher than increase of production pace 2016
Estimate of delivery volume of European softwood to different markets
Million m3
Change
Europe
90,1
+2,3%
Middle East
3,7
-5%
Africa
6,3
-2%
Japan
2,8
+11%
China
2,1
+47%
South east Asia , other
1,3
+8%
USA
0,6
+21%
Other
0,5
+13%
Total
107,3
+2,8%
Africa
EUROPE
Right axis
EUROPE
Right axis
Middle East
Million m3
Million m3
Japan
Estimate of delivery volume of European softwood to different markets
China
Southeast Asia, Other
USA
Source: Swedish Forest Industries Federation

10. Russian export to China increases dramatically Un-changed to Europe & Egypt Decrease to Central Asia
Change: Jan-Jun 16 / Jan-Jun 15: -10%
*Afghanistan, Kazakstan, Uzbekistan, Tadzjikistan, Kirgizistan, Turkmenistan
Russian export: we can expect a high supply of Russian goods to China and Egypt. Export is prioritised due to weak domestic demand
The value of the Rubel has been halfed since 2014 to the SEK, and weakened even more to USD and EUR.
Total Russian production is estimated to 33 million m3 2016
Total export increased by 20% 2016 Jan – June compared to same period 2015
Source: Swedish Forest Industries Federation

11. Source: Swedish Forest Industries Federation
Brexit – leading indicators for business (incl. construction) have recovered
Brexit – leading indicators for business (incl. construction) have recovered from low levels directly after brexit referendum. No effect at all for indicators for the retail trade
However dramatic development for the Pound Sterling, but vis a vis SEK less dramatic change
BREXIT
BREXIT
Source: Swedish Forest Industries Federation

12. Consumption

13. Sweden’s construction sector increases wood consumption by 4% 2016 – risk for decrease 2017
New housing
Renovation
New professional building
Renovation professional building
Source: Prognoscentret AB

14. Continued growth in small steps for the European countries
+13% or units
~ +4%
1 Austria, Belgium, Denmark, Finland, France, Germany,
Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,, United Kingdom, Czech Republic, Hungary, Poland, Slovak Republic
Source: EUROCONSTRUCT, June 2016

15. HOUSING PERMITS, millions
USA – New residential construction drives wood consumption – Detached Housing represent 35-40% of consumption
Positive forecast
HOUSING PERMITS, millions
HOUSING STARTS, ‘000
In July +1% comp. to 2015
Increase flattens
Till July 2016

16. USA – residential renovation
Represents ~35% of US wood consumption. Activity develops positively, ~ 5% growth per year
Residential renovation (USD), right axis
Billion USD
Residential renovation (%-change), left axis

17. Germany – wood consumption is estimated to improve
Construction activity is high and wood construction is advancing
Source: Ifo, aug 2016

18. Summary market development
Sweden UK
Germany
China
Japan
MENA
USA

19. Summary

20. Summary + Asia + USA + Europe + Wood as a material
Mena especially Egypt low grade
Hand to mouth buying
Round-wood cost

21. Thank you for your attention!