Galician Timber Markets: Eucalyptus, one step forward... in 2010
Gustavo Iglesias Trabado GIT Forestry Consulting SL - Consultoría y Servicios de Ingeniería Agroforestal- www.git-forestry.com - EUCALYPTOLOGICS
Once again and thanks to the kind input from Fearmaga, the Asociación Galega Monte Industria, the Cluster de la Madera de Galicia & Feceg, we can explore the medium term aftermath of the Spanish version of the global financial crisis and its impact on sustainable timber harvests and the productivity of the Galician timber industry during 2010.
After the historical record of 2008 and the noticeable crash experienced during 2009, Galician timber harvests have recovered during 2010, growing a 12% from 6.15 million cubic metres (including the bulk of non effectively harvested Klaus stormwood) to 6.85 million cubic meters. Timber sale operations, a direct injector of liquid capital into the small rural investor economies, have reached noticeable figures once again: during 2010 up to33.000 timber sales have been performed by small individual tree growers and commonland timber management organizations, which are indeed the private owners of over 96% of Galician forestlands.
Fig. 1: Galician Timber Resource & Sustainable Roundwood Harvest 2010: hardwoods cover a 63% of total afforested area and yielded 55% of the Galician timber harvest, softwoods cover a 36% of total afforested area and yielded 45% of the Galician timber harvest in 2010. Planted forests yielded nearly the total of timber harvests in Galicia during 2010, relieving almost totally the pressure of industrial wood demand from non planted forests. [A larger version of this graphic summary is available from GIT Forestry Consultingupon request (just contact us)]
Galician timber harvest figures have followed during 2010 the main general trend of the last decades: +95% of total roundwood volume is sourced from planted forests, and of this total volume two sub-types prevail: different pine timbers, and different eucalypt timbers. During 2010 and continuing the 2009 inertia, the previously increasing trend forspecialty hardwood harvests (oak, birch, chestnut, cherry, etc), which reached up to 5% of overall volume in 2008, has crashed down due to, and excepting the case of some high grade lumbers and luxury wood uses in very small amounts, the lower performance and higher production costs of these locally produced hardwoods as material source for the dominant (most demanding volume wise) industrial lines.
Fig. 2: Sustainable timber harvest operations in one of the different Galician softwood planted forests types yielding roundwood for over 10 different industrial segments, including sawmilling, board & panels and high quality furniture making industrial processes. Galician softwood harvests roughly mean a 20% of the total annual timber output of Spain. (Click image to enlarge)
The still existent paralysis of the building sector in Spain has also kept the demand of those processed timbers and technical timber products necessary in times of normal levels of activity in lower than usual levels, and, consequently, industrial production in these market segments has adjusted. Backwards in the supply chain, this factor, combined with others, has meant that one of the main primary sources for these organic and renewable materials, timber harvests from softwood planted forests, have not experienced a major change in harvested volume terms compared to 2009, recovering a 9% compared to 2009 levels but still remaining at an equivalent of 80% of the harvest peak in 2008 even with that increase.
Fig. 3: Galician Timber Industry Results 2010, a report by the Galician Timber Contractors & Sawmillers Association, the Galician Forest Industry Association, the Galician Cluster for Wood & the Galician Federation of Carpentry & Cabinet Making Professionals. Download the full report [PDF 813 KB]
In other words, the only timber fraction significantly impacting positively in the whole sector during 2010, from small timber selling individual tree growers to end of industrial line, has been eucalypt hardwood. Only set back in 2009 due to the important volumes of eucalypt stormwood caused by Hurricane Klaus, Galicia has experienced a quick recovery in eucalypt timber harvests to reach a 97% of the historical 2008 peak harvest during 2010. So, nearly another historical peak harvest for eucalypt timber after over 500 years of exotic tree growing and harvesting in Northern Spain.
Fig. 4: Eucalyptus globulus: noble wood of Galicia. For over 50 years, eucalypt planted forests have been one of the very few available timber resources in Spain able to provide raw timber as to prepare 25 meter long solidwood pieces, a traditional industry based on timber knowledge and expert handling of this Galician adopted Australian timber from tree harvest to final processing at sawmill. Some uses of this timber support the employment of up to 10.ooo Galician people in other key sectors of the economy. (Click play to watch a video depicting on site preparation of long wood beams "madera maciza" in a harvest coupe of Galicia, Northwestern Spain)
This means that, for the third time in their nearly 200 years of cultivation history, eucalypts have become the most important timber group fraction for overall timber harvests in Galicia, and by extension, as Galicia supplies roughly 50% of Spanish yearly roundwood output, for the whole nation. The versatility of these Galician adopted Aussie timbers has positively impacted once again all the main industrial lines, and a surprising trend has emerged even for industrial processing not widely associated by the average Joe to this type of timbers: for the first time in history, the main hardwood lumber type used by the Galician sawmilling industry is sustainably produced Eucalyptus wood sourced from planted forests.
Fig. 5: During 2010, Galician organically grown Eucalyptus timber sourced from planted forests has become the most used hardwood lumber type for the Galician sawmilling industry, surpassing the processed volume of all other locally harvested hardwoods (oak, chestnut, cherry, etc.) combined. This type of local industrial segment starts in a locally grown tree and adds value for a whole local processing chain that ends up in luxury furniture exports and solidwood applications for structural uses, generating the highest amount of added value on timber products per unit of processed timber in Galicia that is fully injected in the regional economy (Click image to enlarge)
Interesting trend indeed, considering that Galician Eucalyptus harvests mean figures in the range of 25% of the total timber harvested annually in Spain, and that, besides its well recognized quality for the pulp & paper industrial segments, it is also increasingly used in board & panel segments, and also in saw-milling segments. Part of the later products, due to their quality and outstanding beauty, are consistently exported and, not being as directly dependent on the currently reduced activity of the Spanish building sector as some alternatives, have hence become a relatively safe haven in times of general contraction of the regional solidwood industry.
It is not too adventurous then to say that, after the maelstrom of the global financial crisis deeply impacted the economies of the whole world, affecting Galicia too, impacts on the timber industry were impossible to avoid, and considering the particularities of Spanish economy, the aftermath of the crisis still lingers on Spain and its Timber Reserve and will probably stay with us all for a while. However, a first tiny step, or good sign of the start of a recovery, has already happened. And one of the main drivers of such happening during 2010 has been... Galician eucalypt timber.
Fig 6: Galician forester, forest industry analyst & University of Vigo Forestry School professor Dr. Juan Picos explores the general economic situation surrounding the Global, European, and Galician timber industries during the peak and the aftermath of the Global Economic Crisis, outlining the different phenomena affecting offer & demand of timber products, and prospective trends for the medium term. (Click play to watch video)
2011 Japan Earthquake Aftermath: Tsunami Impacted Pulp & Paper Mills... Re-Building
Gustavo Iglesias Trabado GIT Forestry Consulting SL - Consultoría y Servicios de Ingeniería Agroforestal- www.git-forestry.com - EUCALYPTOLOGICS
Three weeks after Japan was hit by the Great Tohoku Earthquake & Tsunami of March 2011 the efforts to overcome the worst for those damaged infrastructures and those impacted industrial hubs have been continuous, at the same time the overwhelming situation has forced Japan to cope simultaneously with a human catastrophe, a nuclear threat, an energy crisis & a heavily impacted logistics network spreading on an significant area of Honshū island, particularly in the Northeast.
We have previously outlined how the catastrophe has impacted the Japanese Pulp & Paper industry, according to reports of the companies experiencing direct damage in their industrial complexes, and according to analysts continuously monitoring the situation from several areas of the world to try to work out what the impacts could be for the global timber industry & supply chain. The general current consensus seems to be that Japan's dense network of pulp and paper mills, spreading all over the archipelago, has only been effected temporarily and in a localized fashion, being the short term loss of production capacity in the order of 10% total effective capacity of the previous years.
Also outlined, the impact of the earthquake, but maybe more importantly, the impact of the tsunami on the Japanese network of major & special shipping ports, some of which have been nearly destroyed or will probably not be normally operating in the short or medium term, and some of which are directly involved in forest products trade, be it internal movements of supplies and products, be it international export-import operations dealing on several strategic industrial sectors, including the timber industry activity.
Fig 1: 03/2011 Great Tōhoku Earthquake & Tsunami Impact on Japanese Pulp & Paper Industry: Tsunami Affected Japanese Pulp & Paper Mills and Forest Products Ports: Case Study 02 - NPG (March 29th 08:00 CET). Larger versions are available from GIT Forestry Consultingupon request (just contact us).
Even if the general prospects are then of significant but not critical damage for the Japanese Pulp & Paper industry as a whole, the virulence of the catastrophe in localized areas of Miyagi, Fukushima & Ibaraki Prefectures has left us all with impressive images of damaged infrastructure in the immediate aftermath of the catastrophe. This now includes high detail visual outlooks at the effected pulp & paper industrial hubs, and nearby forest products ports in some of the worst damaged areas.
RISI, the leading information provider for the global forest products industry, has reported yesterday that some of the Japanese Pulp & Paper Groups have had to categorically dismiss rumours about their mills being a wreck & not going to restart operations due to catastrophic damage. It seems that market panic has not much reason to be: pulp & paper mills are not Fukushima-type reactors, and it is always too soon to put coffins on them. Nothing better to check that up if rumours are true or not than taking a peek to the situation on the mills at bird's sight (except being right there in the ongoing efforts to clean up the mess, of course).
High Detail Satellital Imagery of the aftermath of the tsunami has been recently produced & kindly provided by the Mountain View Heroes at Google Inc. after the flyover of some interesting robotic birds of NASA, allowing the preparation of reasonably updated damage reports for the main impacted pulp & paper mills and their associated port infrastructures.
Fig 2: 03/2011 Great Tōhoku Earthquake & Tsunami Impact on Japanese Pulp & Paper Industry: Tsunami Affected Japanese Pulp & Paper Mills and Forest Products Ports: Case Study 02 - NPG (March 29th 08:00 CET). A Giant Size High Detail version able to be printed in sizes up to 400 x 200 cm is available from GIT Forestry Consultingupon request (just contact us).
Even if the general outlook equates a total mess, which is not surprising when waves of 10 meters height run over sea defenses and flood your factory with unprecedented force, mooring ships inland and moving impressive volumes of logs, chips, some building, and noticeable amounts of pulp & paper bales first towards the hinterland and later back offshore... it is maybe illustrative to think of any Japanese industrial complex as a Shogun Castle: if the outer gates are overwhelmed, the walls are breached, the stables burnt... and a wave of madness surrounds you... no total disaster happens if the storm does not reach the keep.
Still, even if the cores of such daily ballet-dancing complex industrial activity in each pulp & paper mill that was interrupted because of the shake & wave would last because of heavy damage to some of its parts... it is also maybe illustrative to keep in mind that current engineering features allow the build up of a brand new world class mill in less than 18 months from scratch, something that seems unlikely to be necessary for at least several of the Japanese cases, in which cleaning up and repairing seem to be the most likely actions taking place.
In addition, it has been confirmed to Eucalyptologics that expert task forces of pulp & paper engineers have been assembled after arrivals from overseas, and that these teams are now operating in joint efforts with Japanese engineers to repair damage and start the re-building process in several of the worst affected mills. The complexity of the task is no doubt impressive, but Japanese pulp & paper mill operators were stoically proceeding to the clean up of the big mess since the very moment the wave finally retreated, and have not stopped since then.
So, maybe the key question is not anymore "will the mills restart operations or not"... but "when will they restart operations". A time factor. Only time can answer that question at the moment. But, even if you have reasonable doubts on the implications of each possibility, it is maybe important to remember that "rebuilding" is probably a term at least as common and embeded in Japanese minds as "building". Lads, it is not Sparta. It is Japan, Land of Shoguns... and Zaibatsu.
2011 Japan Earthquake Aftermath: significant impacts on Japanese Timber Industry & Logistics... but not critical
Gustavo Iglesias Trabado GIT Forestry Consulting SL - Consultoría y Servicios de Ingeniería Agroforestal- www.git-forestry.com - EUCALYPTOLOGICS
The devastation caused by the Great Tohoku Earthquake of March 2011 and the subsequent tsunami has impacted both directly and indirectly on many strategic industrial sectors for Japanese economy. Direct impacts have effected the energy sector (up to 30% of total electric power capacity was temporarily limited for security reasons in Japanese nuclear plants and due to damaged infrastructure), which in turn impacts all the other energy dependent sectors. Directly effected also, electronics, technological, siderurgic and automotive industries, which in turn creates impacts on the global distribution chains.
Indirectly impacted, agro-businesses and food supply industries, including fisheries, and their associated industrial transformation chains due to direct damage to their hardware and infrastructures, but indirectly also for food security reasons.
In what has to do with Japanese forestry related industries, significant impacts have been reported for the majority of sub-sectors, albeit with variable degree and non critical condition for several, or without significant global scale implications in all cases.
Woodchips, Pulp & Paper... and the Rebuilding of Japan
Considering for a moment the case of woodchip, pulp and paper export-imports for the Japanese P&P industry, it is important to take in account that some basic macro-magnitudes, as that Japan imports circa 65% of its yearly annual woodchip consumption, but only a 15% of its yearly consumption of cellulosic pulp is market pulp, and only a 7% of yearly paper consumption is sourced from imports. A quite important amount of these imported woodchips starting the P&P manufacture chain is sourced from countries with significant planted forest resources, especially Eucalyptus planted forests.
Woodchips, even if important when considered as overall import-export volumes, are not the main fiber source for cellulosic pulp and further paper manufacture in Japan, which normally takes place in integrated mill complexes, some of which have been directly affected by the 2011 Tōhoku earthquake and tsunami 2011. Japan is one of the countries with a highest rate of paper recycling in the world, which a rapidly advancing paper recovery ratio that has increased from 50% to nearly 80% in just one decade. Recovered paper is the main source instead, supplying beyond 60% of the total brute volume of fiber used in these industrial processes.
Fig 3: 03/2011 Earthquake Impact on Japanese Pulp & Paper Industry: Effected Woodchip Import Flows Map, a preliminary outlook to import-export markets potentially affected (March 21th 21:00 CET). A larger version is available from GIT Forestry Consultingupon request (just contact us).
Given the reported earthquake & tsunami impact to Japanese pulp and paper industry, the temporary cease of operations for some industrial complexes means barely a 10% of the total effective capacity for paper production during the last trienium, which was already not the maximum potential capacity. In addition, damage is not spatially widespread, being restricted just to the most damaged areas in the Northeast of Japan, and it is not either concentrated in a single type of paper production, but spread across several market segments. The strong industry in other areas of the country can reabsorb the temporarily lost productive capacity and is expected to be able to sustain an internal offer enough to appease the normal demand of Japanese citizens.
Other timber industry market segments are expected to be more affected in increased import-export value generation term, especially those associated with rebuilding efforts: softwood & hardwood lumber grade logs, crude sawntimber, finished sawntimber & solidwood, and also board, panels & plywood demand is expected to grow steadily in the medium term, especially for those segments in which Japan has increasingly become dependent of external supply even in normal conditions.
Tsunami Damage to Japanese Ports & Impact on Timber Products Logistics
Differently to what was experienced after the 2010 Chilean Earthquake and subsequent tsunami, which hit the core of its pulp and paper industry and paralyzed primary resource and strategic semi-elaborated product exports in the country, including woodchips and market cellulosic pulp for months, damage levels to port infrastructures in Japan do not reach critical thresholds capable of stopping its industrial or economic machinery in the medium term, but yes able to slow its normal production rhythm for several sectors, at least for a time. This different impact is related to the abundance and dispersal of port infrastructures along the Japanese coast, including large industrial and commercial hubs well away of the most effected area.
Majority of Southwestern ports, including the largest ones in the country, can already operate normally, and so can the strategic port complexes in the bays of Tokyo and Chiba. Their temporary cease of activity was cautionary in front of the possibility of further tsunamis caused by major aftershocks, and the levels of damage, albeit significant, are not severe.
Fig 5: 03/2011 Earthquake Impact on Japanese Pulp & Paper Industry: Tsunami Affected Japanese Forest Products Ports & Timber Industry Logistics Map, a preliminary outlook to import-export infrastructures affected (March 21th 21:00 CET). A larger version is available from GIT Forestry Consultingupon request (just contact us).
A different case in Northeastern Japan: one of the large ports most heavily impacted by the 2011 Tsunami is Hachinohe, probably non operative for months. Its major activity range is related to fisheries, oil and petrochemical industries, but a small percent of forestry related input supply has been reported as effected.
Fig 6: 03/2011 Earthquake Impact on Japanese Pulp & Paper Industry: Tsunami Affected Japanese Forest Products Ports: Case Study 03 (March 21th 21:00 CET). A larger version is available from GIT Forestry Consultingupon request (just contact us).
The ports of Sendai, Onahama & Ishinomaki, where tsunami wave height reached ranges within 5 to 10 meters, have been almost totally destroyed after their oceanic defenses were overwhelmed and it is possible they will not manage to operate normally for years. In these ports there is a significant activity associated to timber industries, and among other impacts, besides the destruction of port infrastructures, primary resource and finished product stocks have been reported as lost or heavily damaged, including newspaper, printing paper, cardboard and specialty paper stocks.
A dozen of other ports in this region of Japan, some of which also operate with forestry related products, have also been severely damaged, are no longer operating, will not be operating in the short term and probably will not be operating either in the medium term.
We will try to keep you updated with any available information as soon as possible in GIT Forestry's blog, but you can also reach Eucalyptologics updates via Twitter and Facebook.
UPDATE: DAMAGE REPORT TO JAPANESE PULP & PAPER MILL INDUSTRIAL COMPLEXES AND FOREST PRODUCT PORTS: CASE STUDY 02
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Welcome to the blog space of GIT Forestry Consulting. Here you can find regular comments on a wide range of topics concerning practical knowledge onEucalyptus cultivation, be it at nursery stage, at your gardens or at wider scale forestry plantations in cold temperate climates. Our main objective is trying to help growers worldwide with their doubts or comments in a more interactive way. In addition to the material here you are also welcome to visit our main website or contact us.