Forest products industry struggling

GENEVA – Wood and paper consumption fell by 8.5 percent last year in Europe, North America and the former republics of the Soviet Union as a sharp decline in U.S. housing construction took its toll on the industry, a U.N. body said Tuesday.

The U.N. Economic Commission for Europe, which also monitors the United States, Canada and Russia, said real prices in building materials have fallen to their lowest levels since the 1940s amid a sharp fall in demand. It said government-driven demand for renewable energy from wood is offsetting some of the pain.

Production tumbled 17 percent last year in Europe and North America, and the outlook for the global industry has yet to brighten. The 56 nations covered by the U.N. body contain 42 percent of the world’s forests; they produce 60 percent of global wood and paper products.

“The Canadian industry has been devastated because 90 percent of its lumber goes to the United States,” said Ed Pepke, a U.N. specialist on the subject.

He said Europe also has been hurt, in part because of Russian export taxes on raw materials that have led the industry to limit production and close mills. Housing construction also fell by nearly 14 percent in Europe in 2008, and a similar decline is expected this year.

Wood fuel pellet markets jumped by 20 percent last year and should double by 2012, the U.N. agency said, noting that production capacity is outpacing consumption growth amid anticipation that demand will expand in the coming years.

China’s forest products output rose by 23 percent in 2008 as a result of its growing economy and the government’s multibillion-dollar investment plan to stimulate domestic demand. Most of China’s wood and paper is consumed locally, but the country has become a major exporter as well.