1. European Wood-Based Panels Market Prospects UNECE Timber Committee Market Discussions 24-25 th September 2002 Geneva, Switzerland By Mr. Olli Koskiranta Vice-President, Business Development Finnforest Corporation

2. 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. 3 European woodworking industry excluding furniture Production: 60 billion EUR/year Workforce: 540 000 workers Over 100 000 companies Typical SME-sector, with many sub-sectors

4. 4 Major Wood Working Industry Companies in Europe 020040060080010001200140016001800 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. 5 Wood-based panels Consumption Structure in Europe 1990 - 2002 Plywood Particle board OSB MDF Other fiberboard 0 10 20 30 40 50 60 1990199119921993199419951996199719981999200020012002 Million m 3 Source: FF, FAO,UNECE, WPI

6. 6 European Plywood Production & Consumption 1998-2003 Sources: FF, FAO,UNECE, WPI, 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 1997199819992000200120022003 SW Ply Prod.HW Ply Prod.SW Ply Cons.HW Ply Cons. *HW plywood includes tropical,birch and other temperate plywood

7. 7 Finnish Softwood & Birch Plywood Price Development 1990-2002 2001 '1-5 2002 €/m3 FIN Birch PlyFIN SW Ply Source: Finnish Customs

8. 8 European OSB Production, Price & Consumption 1998-2003 0 500 1 000 1 500 2 000 2 500 199819992000200120022003 1000m3 0 50 100 150 200 250 300 EUR/m3 ProductionConsumption Est. Price av.* Sources: FF, FAO,UNECE, WPI

9. 9 European Particleboard Production, Price & Consumption 1998 - 2003 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 199819992000200120022003 1000m3 0 20 40 60 80 100 120 EUR/m3 ProductionConsumptionGER Price av.* Sources: FF, EPF, FAO, UNECE, WBI, *EUWID

10. 10 European MDF Production, Price & Consumption 1998-2003 0 2 000 4 000 6 000 8 000 10 000 12 000 199819992000200120022003 1000m3 165 170 175 180 185 190 195 200 205 210 215 220 EUR/m3 ProductionConsumptionUK Price av.* Sources: FF, EPF, FAO, UNECE, WBI

11. 11 Engineered wood products and wood-based panels: North America vs. Western Europe North America (US+CDN) Population 300 million 1) GDP12 189 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. 12 European Plywood vs. MDF and OSB Consumption 1989-2001 Plywood Consumption 4,0 3,5 1,8 2,2 0 1 2 3 4 5 6 7 8 9 10 19892001 Million m 3 HW PlywoodSW Plywood MDF & OSB Consumption 1,6 8,4 0,2 1,7 0 1 2 3 4 5 6 7 8 9 10 19892001 Million m 3 MDFOSB Sources: FF, EPF, FAO, UNECE, WBI,

13. 13 Plywood and OSB End Use Changes by Segments in USA 1989 - 2001 Plywood Consumption 3,5 5,3 0 5 10 15 20 19892001 Million m 3 IndustryRenovation New Building OSB Consumption 5,1 13,0 0 5 10 15 20 19892001 Million m 3 IndustryRenovation New Building + 7.9 + 2.0 Source: RISI 19.6 14.4 5.5 18.6

14. 14 Biggest European wood-based panels producers by capacity in 2001 Sources: FF, EPF, WBI, 0100020003000400050006000 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. 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. 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?