What is the market potential for CLT in Australia? There is continuous strong interest in Cross Laminated Timber (CLT) in Australia/New Zealand and around the world.
New CLT facilities plans have been announced and some are getting ready to start-up production in APAC region. Which markets would those new CLT producers target?
Margules Groome’s view is that the CLT market potential in Australia is hard to define. Part of the reason is the absence of longer-term historical trends as the use of CLT for domestic consumption only started in 2012. Based on the observation that most of the decline in apartment approvals in Australia comes from the 8+ storey buildings, CLT is well placed to take advantage of the 4, 5 and 6 storey apartments sub-sector which still looks promising.
Well established products such Oriented Strand Board (OSB), Parallam (PSL) or Laminated Strand Lumber (LSL) in the European and North American markets are yet to attract the attention of the Australian wood processing sector.
Australian reconstituted wood panels producers and consumers remain consistent with their traditional products (Particleboard (PB), Medium Density Fibre (MDF) and Low-Pressure Laminates (LPM) products). Over the past 18 months we saw proposals for new capacity developments and acquisitions. Margules Groome’s view is that with new players will come more efficient production and potentially new products, new business models and improved value chains. There are also strong indications that the ANZ as well as regional market dynamics will start to change.
The global wood pellet market continues its development with volumes and prices oscillating in Europe driven by seasonality and traditional fuels cost. Over the past 5 years, total global pellet production increased by 58%, reaching 28.6 million metric tonnes.
Oceania and Africa still produce less than 1% of global demand, however there are signs that this will change.
In APAC region South Korea’s pellet imports reached 2.1 million m3 (year ending July 2017) a growth of 30% compared to the previous year, with prices on an upward trend, growing at 2%. Over the same period, Japanese wood pellet imports totaled 397 000 m3, a 13% increase compared to 2016 but with prices down by 8%.
With a keen interest in forestry investment in Africa, Margules Groome participated at the second DANA Africa Forest Industry Investment Conference that took place between 12th and 13th of September 2017 in South Africa. Presenters highlighted a number of commonalities between countries and forestry and timber processing projects in South Africa, Mozambique, Malawi, Zambia, Tanzania, Uganda, Kenya, Swaziland and Gabon.
Increasing demand on the African forest products markets are supported by stable economic and infrastructure development and population growth, a growing supply and demand gap, good bio-physical conditions for tree growth as well as good geographic location of East African countries for exports to the East.
Large areas planted with pine, eucalypt and teak are making the bulk of the current forestry greenfields projects in East Africa. Future investments will thus have to look at better linking forests to markets and products.
With a growing fibre deficit in the Asia region, Africa must be part of the global increase in wood products demand’s solution. In April this year, Margules Groome opened its first office in Africa to better service the African and international clients interested in the opportunities the continent offers.
Driven by a strong wood demand from China, Australia’s exports of softwood logs have surged by 146% to a shipped volume of 3.7 million m3 in 2016. Margules Groome considers that this trend has the potential to be a major game-changer that domestic sawmilling industry players should prepare for.
Margules Groome remote sensing and GIS analysis team has the potential to deploy the latest development of the space-based earth observation industry potential and assist in the sustainable management of forest resources, mapping of changes resulting from harvesting operations or natural disturbances, verification of net stocked area, assessment of plantation site suitability, terrain analysis, training, or other GIS support services.
In 2017 global wood pellet market continues its advancement through developments and challenges. Margules Groome sees Japan and South Korea continuing their wood pellet demand expanding. Moreover, based on the announced co-firing capacity developments, the potential for pellet price stabilisation and growth is a practical possibility. Australian bio-energy future has potential and it’s currently under discussion.
What do we know about the origins of the CLT and Glulam that currently satisfies the market in Australia? Is CLT being imported from New Zealand? How will the CLT and Glulam market develop in the future?
Margules Groome argues that a better understanding of industry movements, cost competitiveness and future log supply is needed.
In 2016, timber production along with log and wood product exports reached heights few had predicted. Looking forward, one question to be answered is “Has domestic softwood timber production reached a peak and if yes what’s next for the Australian wood industry ?”