United Nations – Economic
Commission for Europe
Timber Committee
Timber
market statement 2001 - Denmark
The
Danish Forest and Nature Agency, September 2001
1. General economic trends affecting the forest
and forest industries sector
The Danish economy experienced a good growth rate in 2000
and a low inflation. The retail price index increased by around 2.5 % in 2000,
which was a little less than the previous year. The wholesale price index
increased by 4.1 % in 2000.
The development in the expectations in the
construction industry in Denmark was falling during most of 2000. At the end of
2000 there was a severe decrease in construction activity following the repair
work after the storm damages, and this situation has kept on in the first half
of 2001.
The Danish currency during 2000 was stable
towards EURO, SEK and DM, but weakened to USD.Up till now in 2001 the SEK has
seriously gone down by 10 % causing severe problems for the Danish
competitiveness. This has made imports from Sweden cheaper, but at the same
time the strong USD has improved the sales situation fore especially the
secondary wood industry. The Danish Krone is still strong and causes difficult
conditions for the competitiveness of our wood industry.
Looking at the general development of the wood
industry in Europe it is obvious, that Denmark being a small country with a
small forest area and high labour costs is caught in a very difficult
situation. International mergers and take-overs have become the normal
situation in Europe these days, and in this context Danish forestry is to small
to be really interesting strategically – especially when it comes to the
primary wood industry. Many industries are caught in a trap, where they have
paid out the buildings and machinery. Thereby they are able to cut cheaply and
survive for long time, but at the same time does not earn enough to invest in
the future.
In stead the development goes in the direction of Danish
sawmills outsourcing the trading with roundwood as well as sawnwood – this
making it possible to concentrate on the core-business in a situation, where
knowledge about the ever more complex market situation becomes crucial. The
hardwood-sawmills now almost entirely cuts planks and the more detailed cutting
is done in eastern European countries, where the lower labour costs justifies
the extra transport before the Danish furniture industry takes over.
Encouragement has been given to the primary wood industry
to develop their products further. But when it does so with a viable product it
almost inevitably leads to the industry finding out it’s a better business.
They then stop the sawmill and import the sawnwood. And forestry is back to
nil.
The major factor in Danish forestry in 2000
has been the wind-throw following the hurricane on the 3rd December 1999. It
took down 3.6 million CUM or almost twice the normal yearly Danish production –
the vast majority being softwoods. The windfall was unevenly distributed
leaving parts of the country almost untouched, whereas other parts lost 30
years of normal production. All has now been harvested, and some 400 thousand
CUM lumber of the best qualities are under water irrigation to be sawn over the
next 3 years.
Luckily the forest health situation after the
hurricane is good due to the cold summer of 2000 and even rainfall all summer
in 2001.
Cuttings are now down at 35 % of the normal in softwoods in
the state forests and 50 – 60 % in private forests. Sales conditions in general
are almost back to the situation before the hurricane – prices are still
lacking behind.
2. Developments in forest products markets sectors
2.1.
Pulp and Paper
There is no wood pulp production left in Denmark. The production of
paper and paperboard is relatively stable.
2.2.
Roundwood
including sawlogs and pulpwood
The market in 2000 was as mentioned heavily affected by the wind-throw
at the end of 1999. Demand was unsatisfying and much more wood was put under
water irrigation than expected. Prices on the best qualities and biggest
dimensions of softwood went down 15 – 20 % and the lower qualities 30 – 40 %.
In the beginning of 2000 hardwood prices were stable, but under the influence
of the central European wind-throw at the end of December they came under
pressure ending up with unexpected high needs for water-storage in May/June,
covering most of the demand in the second half of 2000.
A big effort has over the last years been put
in to widening the Danish market for wood fuel. The goal is to be able to use
most of the lower quality wood residues from the wood industry and the forests
for wood fuel in Denmark. In 2000 it was not possible to heighten the
production considerably, but in 2002 a new power energy plant in Jutland will
be ready to consume 200.000 tons of wood fuel.At the same time an other power
plant in Copenhagen will be ready to consume 200.000 tons of wood pills,
thereby solving the total wood waste problem from the flooring industry
Junckers. This will hopefully stabilise the weak market for the lowest
qualities of roundwood in Denmark.
No major changes took place in 1999 and first
half of 2000 in the Danish wood industry. Some smaller sawmills have shut down
– not really affecting the market. The market is heavily affected by the set up
of the large sawmill in Wismar, Germany (Klausner Nordic Timber) demanding the
better qualities of short timber and supplying sawnwood in intense competition
with other sawmills in the region. The same has been the case in the hardwood
market with Pollmeyer.
The Danish production of softwood pulpwood is
exported – mainly to the Nordic countries. This is due to the fact, that the
Danish production of pulpwood is too small to support a Danish pulp mill.
2.3.
Sawn softwood
The sawn softwood timber market in Denmark was weak through 2000 with a
hard competition in the country and from import. This caused extremely low
revenues in the wood industry and the Danish production was almost unchanged
despite the wish to cut large quantities from the wind-throw.
The large Danish import of sawnwood stayed
relatively unchanged from 1999 to 2000. The largest impact has therefore so far
been seen on the prices for sawn timber and on the demand for roundwood during
the wind-throw. The demanded species and qualities for the Danish furniture
industry can’t be supplied from Denmark.
2.4.
Sawn hardwood
The hardwood market is dominated by beech, which despite of increased
log export to China and other Far East countries experienced falling average
prices during 2000. The average quality and dimension fell, and the market were
difficult. The export consisted of the better qualities and achieved slightly
falling prices.
However the Danish sawmills were under
pressure in processing the rest of the roundwood production, facing the
problems cutting the lower qualities with larger sorting costs due to high
Danish labour costs in comparison to the competing eastern European sawmills.
The oak and ash market stabilised on a relatively low price level.
2.5.
Wood-based panels
(particle board including OSB, fibreboard including MDF, plywood) and
engineered products
There is only one particleboard plant in Denmark. The only MDF-plant
were shut down in 2000. The mill have been operating at capacity although
market conditions for the boards have been difficult. The particleboard mill
has benefited from increasing availability of chips from the Danish sawmills
and cheap wood of the lowest qualities from the wind-throw. On the other hand
the sales prices for particleboard’s have been on a critical level mainly due
to the large production in for instants Poland.
2.6.
Certified forest
products
In Denmark no buyers groups has as yet shown up, and no real demand for
certified forest products has been seen in the marketplace. The private forest
owners have therefore been relatively reluctant to invest time and money in
having their forests certified. A FSC scheme is expected to be at place at the
end of 2001, but important economic stakeholders have not as yet involved
themselves in the process, and consider the criteria’s for the sustainable
forest management to be far to economically burdening to ensure viable private
forestry. A PEFC scheme is expected to be ready in the summer 2002.