This report reviews the main events in the wood pulp market in 1952. It deals mainly with North America and Western Europe which account for about nine-tenths of world production and consumption of wood pulp, and for which the latest available statistics are more recent, It refers to events in the paper and board market which had bearing on the market for wood pulp.
Salient features of 1952
North America
Europe
Possible trends
In the world pulp market, the year 1951 was a period of rising production, unsatisfied demand, soaring prices and a high level of international trade. The year 1952, in marked contrast, was on the whole a year of lower production, lagging and hesitant demand, collapsing prices and reduced trade.
It could be said that 1952 marked the first post-war recession in the pulp and paper trade. Its impact was uneven; while board and wrapping grades of paper suffered a sharp setback, production and demand for newsprint were well-maintained. Most of Western Europe was affected, the Scandinavian countries, dependent on exports, seriously so. The effects were much less serious in Canada and the U.S.A. In Japan, the biggest producer of pulp and paper outside Europe and North America, output continued to rise.
The recession can be traced to two main causes, whose effects overlapped. The unprecedented high level of pulp prices in 1951 communicated itself, with short time lags, first to paper and board and then to paper and board products. As demand cooled, the effects were transmitted back along the demand chain to the pulp mills. This natural and perhaps inevitable reaction to the 1951 price inflation was not, however, the only operative factor. 1952 brought a slackening in the rate of increase of general economic activity and in some countries an absolute decline. These setbacks were reflected in a sharp fall in the demand for certain pulp products which in turn reacted on the demand for pulp.
TABLE 1. - INDICES OF INDUSTRIAL PRODUCTION AND OF PULP OUTPUT, 1950-52 (1948 = 100)
|
Year |
Europe |
North America |
||
|
Index of industrial production in western Europe |
Pulp output in three northern countries |
U.S.index of industrial production |
Pulp output in U.S.A and Canada |
|
|
1950 |
124 |
113 |
104 |
112 |
|
1951 |
136 |
123 |
115 |
125 |
|
1952 |
137 |
109 |
114 |
123 |
The figures in Table 1 show that, in both North America and Western Europe, industrial output rose by about 10 percent between 1950 and 1951. Over the same period pulp output rose by about the same amount in both North America and Scandinavia. From 1951 to 1952, industrial production fell slightly in, North America and was accompanied by a similar slight fall in pulp output. In Western Europe, however, industrial production rose slightly while Scandinavian pulp output fell 11 percent below the previous year's level. Because the Scandinavian pulp industry is largely directed to the export market, it was more sensitive to the recession. Moreover, the trend of economic activity in the United Kingdom, Scandinavia's most important customer, was different from that in the rest of Western Europe. The U.K. index of industrial production averaged 120 in 1951 and 116 in 1952, as against 115 in 1950 (1948 = 100); the corresponding figures for the rest of Western Europe taken together were 145 and 150, as against 129 in 1950.
DIAGRAM A - Europe
DIAGRAM A - North America
The annual indices given in Table 1 conceal important variations, as may be seen from the corresponding quarterly indices presented in Diagram A.
In the last quarter of 1952 industrial production in both North America and Western Europe markedly increased, exceeding the levels of the corresponding quarter of 1951. In both North America and Scandinavia there was a sympathetic upswing in pulp output, the significance of which is discussed below.
The demand for pulp is a function of the demand for paper and board. There are, however, many categories of paper and board, and the demand for each is influenced by a variety of factors, some common, but many special to the category concerned. The quarterly figures of U.S. production of certain grades of paper and board given in Table 2 show that output of coarse paper and container board (grades used for packaging) declined earlier and more steeply than that of fine paper, while newsprint output was well maintained.
TABLE 2. - QUARTERLY U.S. PRODUCTION OF CERTAIN GRADES OF PAPER AND BOARD
(in thousand short tons)
|
Year |
Newsprint |
Coarse paper |
Fine paper |
Container board |
|
|
1951 |
I |
270 |
874 |
328 |
1681 |
|
II |
279 |
895 |
349 |
1770 |
|
|
III |
275 |
878 |
323 |
1512 |
|
|
IV |
282 |
950 |
364 |
1384 |
|
|
1952 |
I |
281 |
920 |
373 |
1384 |
|
II |
283 |
797 |
332 |
1384 |
|
|
III |
284 |
718 |
285 |
1409 |
|
|
IVa |
274 |
799 |
295 |
1616 |
|
a Provisional
Packaging paper and board is used in almost every sector of the economy. Frequently it represents a considerable element in production costs and materials stocks. When business is expanding a higher level of packaging stocks is necessary than when business is at a stable level. If business contracts, or if the rate of expansion is reduced, stocks are cut back and this tendency is all the stronger if replacement costs are falling. The aggregate effect of these thousands of individual decisions is transmitted backwards along the chain of demand to the paper and board converters the paper and board mills, the pulp mills and, ultimately, to the pulpwood market. There is a time lag in the process of backwards transmission as inventories in the earlier stages take the shock of changes at the consumer end of the chain. To some extent there is a diminution in amplitude since, for example, cheaper wood pulp replaces waste paper and other fibrous materials in paper-making. Moreover, consumer demand was first and most markedly reduced in paper and board categories with a relatively low pulp content. A high degree of integration in the pulp and paper industry also has the effect of damping down oscillations, since it enables decisions to be taken earlier and operated more swiftly. It would be wrong to dismiss the events of 1952 as simply the downswing of an inventory cycle. There was a decided check in general economic activity, bringing a contraction in demand. Reduced normal demand, aggravated in the case of the U.S.A. by reduced defence buying, led to sharp inventory changes which were reflected back along the chain.
The events of 1952 suggest that current short-term data concerning fluctuations in the physical volume of packaging stocks held by consumers would represent a useful economic indicator to the whole pulp and paper trade. So far little or no information is available, and indeed it is not easy to collect. Another category of information, which would be of value in interpreting short-term trends, would be the relations between the physical volumes of packaging stocks in the hands of consumers and of materials for packaging in the hands of converters on the one hand, and the monthly output of the paper and board mills on the other.
That the demand for packaging paper and board is specially sensitive to changes in the economic climate is also borne out by the movements in paper and board production in the United Kingdom. The fall in the output of packaging paper and board started earlier, and was much steeper, than that of other paper grades. Again newsprint output suffered least.
Although there were some parallels in the evolution of the pulp and paper industries in North America and Europe, the situation in Europe is a good deal more complex and the market followed a more spectacular course. The North American continent is roughly self-sufficient. It imports certain qualities from Europe, but there is no large spill-over of demand save when domestic supply is inadequate to meet an exceptionally high level of domestic demand. The paper recession in the U.S.A. brought a decrease in pulp demand and imports became less urgent. Prices, still controlled, remained fairly steady on the whole, only unbleached sulphate pulp, wrapping tissue and certain grades of board showing marked drops between September 1951 and September 1952.
In Europe, too, there was a slackening in economic activity, and a consequent recession in the paper and board industry. But the pulp market became critical some months earlier.
First, it should be noted that in Europe the vast majority of pulp produced is for the market. The biggest paper producers depend largely on imported pulp. Only Austria and the three Northern countries have a considerable export of pulp. To the Scandinavian countries these exports are vital. In 1951, world demand for forest products exceeded the available supply and prices rose to unprecedentedly high levels, none more so than that of wood pulp. The course of pulp prices is exemplified by the movements in the U.K. Board of Trade wholesale price index for wood pulp for paper making, illustrated in Diagram B.
The steep rise in pulp prices, which reached their maximum in January 1952, may have been enhanced by the export taxes imposed by the Northern countries, though the avowed purpose of these taxes was to serve as equalization charges. The reaction of the chief European importers, embarrassed by renewed balance-of-payments difficulties, was to set import price ceilings. The example of Britain and France was followed, unofficially, by other importers. Buying was checked, production curbed, consumers began to live partly on stocks. Wide fluctuations in prices are anathema to consumers as to producers, and the hope prevailed that as stocks returned to a more normal level and as pipelines needed to be refilled, prices would stabilize at a level acceptable to both buyers and sellers - perhaps somewhere near the import price ceilings imposed. However, before this hoped-for development could take place, a slowing down of industrial progress brought difficulties in the paper and board industries and a genuine falling off in demand. In Britain, paper and board imports were cut; in France, previously lifted import duties on pulp products were reimposed. Demand for pulp did not revive and the pulp price fall continued unchecked.
DIAGRAM B
Not until the last quarter did prices show signs of flattening out, and by then it was generally conceded that they were well, below current production costs, many elements of which are temporarily fixed (roundwood prices, for example) or rigid (e.g. wages). In the latter half of the year output was voluntarily restricted, many mills in Scandinavia working short time and others closing down altogether. But hopeful signs, for which the Scandinavian producers sought anxiously at the turn of the year, were not altogether lacking.
The main figures of wood pulp production and trade in 1952 are compared with those of the two preceding years in Table 3.
Estimated world pulp production in 1948 and 1949 was around 29-30 million metric tons. In 1950 it rose to 33½ million tons and in the following year attained an all-time high of 37 million tons; last year it fell back to 36 million tons. The decline was most severely felt in the Scandinavian countries, where production fell by 930 thousand tons, but output was also down in the rest of Europe (by 150 thousand tons), in Canada (by 180 thousand tons) and in the U.S.A. (by 60 thousand tons). Imports also fell by a million tons as compared with 1951, the biggest drops being recorded in Europe (550 thousand tons) and the U.S.A. (390 thousand tons). The main burden of the reduced export trade was borne by the three countries of northern Europe, whose exports fell from 3,760 thousand tons in 1951 to 3,030 thousand tons in 1952, a fall of about 20 percent. Canadian exports fell, too, by 270 thousand tons, but exports from the U.S.A. rose slightly as easing demand weakened the priority hitherto given to domestic buyers.
In spite of the setback in world pulp output, it is interesting to note that production was still over 2½ million tons greater than in 1950.
TABLE 3. - WORLD PRODUCTION AND TRADE IN WOOD PULP, 1950-52 (in thousand metric tons)
TABLE 4. - WORLD PRODUCTION AND EXPORTS OF WOOD PULP 1950-52
|
Year |
Wood pulp production |
Wood pulp exports |
||
|
Quantity (million metric tons) |
Percentage of 1950 |
Quantity (million metric tons) |
Percentage of 1950 |
|
|
1950 |
33.5 |
100 |
5.72 |
100 |
|
1951 |
37.0 |
110 |
6.25 |
109 |
|
1952 |
36.2 |
108 |
5.20 |
91 |
Trade in wood pulp, however, fell by about a million tons - to a level half-a-million tons below that of 1950. Even when allowance is made for the exceptional fluctuation in the world's pulp trade during the last three years, it is clear that one result of the post-war efforts made to raise pulp production in all areas has been to increase regional self-sufficiency. Just as the progress of integration has diminished the relative importance of market pulp on the national level, similarly the need to secure supplies for domestic industry of this essential raw material has reduced the importance of the pulp trade in relation to world pulp output. Imports of pulp for many countries (though, of course, there are several notable exceptions) take on an increasingly marginal importance. Alongside this development, the situation of those countries whose economic life depends on pulp exports becomes increasingly vulnerable to fluctuations in world demand.
United States
The United States wood pulp industry enjoyed a good year in 1952. Although U.S. production of paper and board, at 22.1 million metric tons, was down by 6 percent as compared with the previous year, wood pulp consumption fell only from 16,8 to 16.3 million tons, i.e. by half a million tons, or less than 3 percent. Since pulp stocks increased during the year by 145 thousand tons, or about the same as in 1951, and since imports fell from 2.14 to 1.76 million tons, the level of pulp production in 1952 was a mere 55 thousand tons below that of the previous year.
Thus, in spite of the pronounced recession in the paper industry, pulp production was well maintained, for a variety of reasons. Exports of paper and pulp increased slightly as the pressure of domestic demand eased. The fall in paper production occurred chiefly in categories with a relatively low pulp content. As the price of pulp fell, paper makers used less waste paper and more wood pulp. In the first 9 months of 1952, consumption of waste fibrous materials, at 5.2 million metric tons, was 20 percent below that of the corresponding period of 1951. Less pulp was imported from overseas. The decline in pulp imports over the year was, in fact, considerably less than at one time seemed likely; in the latter half of the year the price of imported pulp fell to that of domestic pulp and imports from Scandinavia began to revive. After July, there were signs of an upturn in paper demand and production and the pulp market strengthened.
The salient figures of the American wood pulp market in 1952, with comparable figures for 1951, are given below.
TABLE 5. - WOOD PULP BALANCE, 1951-52 (in million metric tons)
|
|
1951 |
1952 |
|
Supply: |
||
|
U.S. production |
14.99 |
14.93 |
|
Imports from Canada |
1.70 |
1.43 |
|
Imports from Europe |
44 |
33 |
|
TOTAL |
17.13 |
16.69 |
|
Consumption and Exports |
||
|
Exports |
18 |
19 |
|
Consumption |
16.81 |
16.36 |
|
Additions to stock |
0.14 |
0.14 |
|
TOTAL |
17.13 |
16.69 |
No serious raw material shortages hampered the pulp and paper industries during 1952. The shortage of chlorine had disappeared in the previous year and the world shortage of sulphur was overcome in the course of the year. Paper making is the largest consumer of this mineral in its natural form, but sulphur output rose steadily and early in 1953 the International Materials Committee was able to announce the ending of allocations and the dissolution of the Sulphur Committee.
Though the rapid rise in pulp output was halted in - 1952, capacity continued to expand. Eight new wood pulp plants were put into operation in the course of the year and the construction of three others started. Most of these plants are in the Southern states. If all announced projects are completed, U.S. pulp capacity will rise to 20.3 million metric tons in 1955 as compared with 15.5 millions at the end of 1950. Over the same period, capacity for paper other than newsprint is expected to grow from 11.4 to 12.8 million tons, and that of paperboard from 10.8 to 12.4 million tons.
So far as in known, the 1952 recession has not led to any slowing down of these development projects. At the end of the year there was less fear that a tapering off of defense expenditures would bring difficulties in the latter half of 1953 and the pulp and paper industry looked forward to a year of resumed progress. In recent months, the prospects of the armistice in Korea and the possible economic consequences of a wider political détente have introduced a note of uncertainty but, at the time of writing this report, there is no evidence of diminished optimism on the part of the U.S. pulp and paper industry.
A recent U.S. Department of Commerce report on the Pulp, Paper and Board Industry gives interesting new facts on the progress of integration. Between 1929 and 1951 the volume of market pulp consumption in the U.S.A. rose only from 2.0 to 2.4 million tons, while the consumption of own manufactured pulp rose from 5.7 to 16.1 million tons. In other words, the share of integrated consumption rose from 66 to 85 percent of the total, virtually all the capacity increases in the paper and board industry over the last two decades taking place in integrated mills. As additional integrated capacity comes into operation this percentage will grow. Monthly data over the last two years suggest that non-integrated mills tend to lose their share in total output on a falling market, regaining it on the upward swing; this provides an indication of the unfavorable economic factors (higher pulp costs, freight, less efficient manufacturing and distributing processes) facing non-integrated mills, whose ability to hold their own depends largely on specialized techniques and based on pre-arranged contracts.
Most of the new projected capacity, it was mentioned above, will be located in the Southern States. This in line with a notable development of recent years. Between 1947 and 1951 the share of the Southern States in U.S. wood pulp production rose from 48.2 to 53.8 percent, while their share in total U.S. paper and board production rose from 28.3 to 34.2 percent. The comma years will see a further southward shift in the center of gravity of the U.S. pulp and paper industry.
Canada
Canada produces more than half the world's newsprint and accounts for over four-fifths of the world trade in newsprint: 85 percent of her newsprint output in 1952 went to the U.S.A., which consumes nearly three-fifths of the world's total. Thus developments in the Canadian pulp industry depend mainly on the state of the world newsprint market; in particular, they are bound up closely with the level of newsprint demand in the U.S.A.
It has already been noted that newsprint was hardly affected by the world recession in the paper and board industry. Because the Canadian pulp industry is largely devoted to newsprint it felt the impact of the recession only slightly and at second hand, in the shape of reduced pulp exports.
Industrial activity increased in the course of the year; the index of industrial production, which in December 1951 and January 1952 stood at 212 (1935-9 = 100), rose to 248, 248 and 235 in the last three months of the year, giving a yearly average of 233 as compared with 226.5 in 1951.
Newsprint output remained remarkably steady throughout the year, and the annual total, 5,161 thousand metric tons, represented an increase of about 3 percent over the 1951 figure. The check to the rise in pulp demand in the U.S.A. brought a reduction in Canada's exports to that country of about 275 thousand metric tons. With the total domestic demand for pulp remaining steady, and little aggregate change in pulp exports to other markets, pulp output for the year totalled 7,955 thousand metric tons as against 8,254 thousand tons in the previous year. The fall of 300 thousand tons, or just under 4 percent, thus corresponded very closely to the reduction in exports to the U.S.A.
Canada's share in world newsprint capacity and output in 1952 was respectively 50.4 and 53.4 percent; its share is likely to increase in the course of the next year or two. New mills, new machines and machine improvements are expected to raise production potential by 1.5 million tons by 1960, with most of this gain concentrated in the next three years. These estimates are based on an assessment of individual expansion plans undertaken at the beginning of 1952, and have been revised in the light of modifications since reported. Though it is true that investment in 1953 will fall considerably below that in 1952, on the whole this development program indicates strong confidence in a continued rise in the demand for newsprint.
As mentioned earlier, no less than 85 percent of Canadian newsprint output was shipped to the United States in 1952, 4,400 thousand metric tons against a U.S. domestic production of 1,060 thousand tons. Since newsprint consumption in the past has moved very closely with industrial activity as a whole (see Diagram C) it is plain that the Canadian newsprint and pulp industry will be very vulnerable to any setbacks in the trend of economic activity in the United States.
DIAGRAM C U.S. Newsprint Consumption and Index of Industrial Production.
(This chart is published by courtesy of the Newsprint Association of Canada)
Short-range and long-range forecasts of U.S. newsprint demand, from both private and official sources, are, however, uniformly optimistic. They envisage an annual increase in consumption of about 150 thousand short tons in the next decade, subsequently tapering off to about 100 thousand tons. It is clear that current Canadian pulp and newsprint investment plans are based on these optimistic appraisals of future trends.
For the three countries of Northern Europe which export four-fifths of their pulp output either as pulp or as pulp products, 1952 was a disappointing year. In 1951, for example, pulp exports accounted for 56 percent of their total production and exports of pulp products for 25 percent. In 1952 the export trade suffered a severe setback. In part this was the inevitable harvest of the fantastic rise in pulp prices which started in mid-1950 and continued through 1951. The measures taken by certain pulp deficit countries at the end of 1951 and the beginning of 1952 (import licensing, the imposition of import price ceilings) damped off demand. Exports to the U.S.A. fell away as a result of the wide disparity between Scandinavian export prices and domestic price-controlled U.S. pulp prices.
Prices began a headlong fall and, months passed without any sign of a halt. There was no responsive strengthening in demand. The slackening of economic activity in Europe brought a recession in the paper and board trade, especially in the United Kingdom, Scandinavia's most important customer. With demand further weakened, there was little disposition to renew buying and the fall continued. The U.K. commodity price index (wood pulp for paper-making, c.i.f. East Coast ports), which in January, 1952, stood at 229.5 (June 30, 1949 = 100), had fallen to 103 by November. Many pulp mills started short-time working and a number closed down. There was a voluntary 20 percent contraction in mechanical pulp output in the northern countries. The level to which pulp prices had fallen by the end of the year was generally regarded as being considerably below current production costs, since production has to be based on pulpwood bought at high prices and since wages and other costs had risen since mid-1951.
In the closing months of the year renewed activity in the European paper and board industry, and increased exports to the U.S.A. as lower prices once again made Scandinavian pulp competitive on the U.S. market, seemed to indicate a pending revival. Nevertheless, the Scandinavian producers, in spite of the upward turn in the paper market, were by no means confident of the future and in the early months of 1953 a proposal to limit cellulose production in 1953 to 90 percent of the 1951 output was actively canvassed. By the end of March the plan had been dropped; there were economic and technical difficulties in the way of enforcing an all-round cut, and stocks, though high, (estimated at some 350,000 tons above normal) were not considered disturbingly so. Of more importance, perhaps, was the fact that during these months the economic outlook was gradually changing for the better. An indication of this change was that, in April, sellers were becoming disinclined to make definite price agreements for deliveries in the second half of the year; Even at this date, however, embarrassed by excessive stocks and low order books, a number of mills remained closed.
Meanwhile, the problem of costs remains. Though pulpwood costs have fallen by about 40 percent compared with last year, labour costs are likely to continue unchanged.
Sweden
Swedish deliveries of paper and board in 1952 fell 20 percent below the 1951 total. While deliveries to the home market remained fairly steady and exports of newsprint slightly exceeded those of the previous year, exports of other categories of paper and board fell by 190 thousand tons, or 35 percent. The most serious reductions were in exports to Britain and France, two of Sweden's most important customers, where import restrictions were imposed at the beginning of the year. But even in European markets where no restrictions were in force, falling demand led to reduced trade. Exports to the rest of the world were fairly well maintained with certain exceptions; Australia, the Union of South Africa and Argentina all took much less as a result.
TABLE 6. - SWEDISH EXPORTS OF PAPER AND BOARD, 1951-52
|
|
1951 |
1952 |
1951 |
1952 |
|
1,000 metric tons |
Average value per ton f.o.b. SW. kroner |
|||
|
Newsprint |
198.7 |
208.4 |
1091 |
857 |
|
Kraft papers |
252.5 |
187.1 |
1531 |
1336 |
|
Sulphite wrappings |
77.3 |
43.0 |
1751 |
1535 |
|
Other papers |
167.0 |
97.6 |
... |
... |
|
Paperboard |
46.7 |
25.8 |
1362 |
1229 |
|
TOTAL |
742.2 |
561.9 |
|
|
Along with this 25 percent decline in total paper and board exports, and consequent reduction in domestic demand for pulp, went a 19 percent drop in pulp exports, which fell from 2,011 to 1,628 thousand tons. Details of Swedish pulp exports in 1952, with comparable figures for 1951, are given in Table 7.
TABLE 7. - SWEDISH PULP EXPORTS, 1951 AND 1952 (in thousand metric tons)
|
|
1951 |
1952 |
|
By Grades | ||
|
Mechanical |
296 |
268 |
|
Sulphite: |
|
|
|
Dissolving |
381 |
267 |
|
Other |
672 |
547 |
|
Sulphate |
662 |
546 |
|
By Destination: | ||
|
United Kingdom |
588 |
509 |
|
France |
244 |
219 |
|
Belgium |
88 |
68 |
|
Netherlands |
101 |
87 |
|
Germany |
174 |
130 |
|
Other European |
322 |
258 |
|
U.S.A |
200 |
198 |
|
Latin America |
226 |
120 |
|
All others |
68 |
39 |
|
TOTAL |
2011 |
1628 |
While exports of mechanical pulp fell by less than 10 percent, cellulose exports fell by 12 percent. Resumed shipments at the end of the year to the U.S. brought total shipments to that country close to the previous year's level, but all other markets took considerably less than in 1951, especially the United Kingdom and Latin America.
In the early months of this year prospects were a little brighter, but there is no likelihood of exports reaching the high 1951 level. British requirements are not yet clear and France's increasing indebtedness to E.P.U. is likely to lead her further to restrict her imports during the coming period. But, in spite of these uncertainties, the pulp and paper market is definitely brisker than it has been for many months past, and though hopes for 1953 are not set too high, there is a general feeling that the low point has been passed.
Finland
As in Sweden, exports of newsprint increased in 1952 while exports of other paper and board declined. Total exports of newsprint for the year reached 392 thousand tons in 1951. The biggest customer was again the U.S.A., which took 144 thousand tons, a slight increase over the previous year. Exports to the United Kingdom rose from 64 to 75 thousand tons; those to Argentina from 5 to 38 thousand tons; while Mexico and China, which did not import from Finland in 1951, each took 10 thousand tons. Exports of other paper, however, fell from 223 thousand tons to 177 thousand tons, in spite of a 23 thousand ton increase in exports to the Soviet Union. A similar fall occurred in exports of paperboard, from 97 to 65 thousand tons.
Demand remains strong for newsprint and, because of this, it figures more largely in Finland's export trade, the decline in total paper and board exports being only 10 percent in Finland, as against 25 percent in Sweden.
Exports of pulp, however, fell by 27 percent. Mechanical pulp exports, which in 1951 had totalled 210 thousand tons, fell by 32 percent to 143 thousand tons, the main reductions being in exports to the U.K. (72 against 120 thousand tons) and France (18 against 33 thousand tons). Chemical pulp exports fell from 982 thousand tons to 722 thousand tons, a drop of 26 percent. The U.K. (288 against 423 thousand tons) and France (67 against 104 thousand tons) were again the markets most affected. The only grade to show an improvement over 1951 was dissolving sulphite, exports of which rose from 52 to 68 thousand tons, thanks to shipments to Poland totalling 24 thousand tons. A notable new customer was China, which imported 16 thousand tons of sulphite pulp.
Thus total pulp production in Finland fell 300 thousand tons below the high level reached in 1951, a fall of 14 percent. Whereas, in 1951, chemical pulp mills worked at 96-97 percent of capacity, in 1952 little over 80 percent of sulphite capacity and only 70 percent of sulphate capacity was used. In common with other northern countries, Finland voluntarily contracted its mechanical pulp output by 20 percent in 1952.
During the past year, Finland shared the apprehensions of the other northern countries at the course of events in the pulp and paper market; with them it took comfort in the more encouraging signs manifest in recent months. It is worth noting, too, that in recent months Finland has signed a number of new or supplementary trade agreements with China, the Soviet Union and Eastern European countries which will lead to an expansion of pulp and paper exports to those destinations over the next few years. Agreements recently signed provide for the following deliveries in 1953:
TABLE 8. - DELIVERIES CONTRACTED FOR IN 1953
|
Country |
Pulpwood |
Wood pulp |
Newsprint |
Paper and board |
|
1,000 m.3 |
1,000 metric tons |
|||
|
U.S.S.R. |
400 |
28 |
10 |
52 |
|
China |
|
20 |
5 |
11 |
|
E. Germany |
|
5½ |
|
2 |
|
Poland |
|
43 |
|
some |
|
Czechoslovakia |
|
1 |
|
some |
Deliveries of pulp, paper or board are also provided for in agreements signed with Bulgaria and Hungary. In several instances the deliveries will take place under triangular trade agreements.
Since nine-tenths of Finland's exports consist of forest products and since Finland depends on imports for a third of its bread cereals, most of its iron, steel, industrial chemicals and textile raw materials, and all its coal and liquid fuel, the present level of world prices for forest products is giving rise to considerable concern. Unless manufacturing costs can be brought down, the advocates of devaluation are likely to multiply and become more vociferous.
The timber, pulp and paper price movements of the last three years have had a more-significant effect or, the Finnish economy than on that of any other country.
Norway
In Norway the economy is less dominated by the forest products industries than in Finland and Sweden. Nevertheless, it was seriously affected in 1952 by the turn in the market. Total Norwegian exports fell from 4,428 million kroner in 1951 to 4,039 in 1952, a drop of nearly 390 million kroner. This was mainly occasioned by a fall of 293 million kroner in the pulp and paper sector. The share of all forest products in total exports dropped from 31 to 26 percent; the share of paper and board fell from over 15 to under 11 percent, while that of pulp about the same as in the previous year - just over 14 percent.
Though newsprint exports fell only slightly, there was a sharp decline in exports of other categories of paper and board, so that for the year exports of all types reached only 261 thousand tons against 332 thousand tons in 1951. Consequently total production of paper and board in Norway fell by 8¼ percent, from 511 to 467 thousand tons. The volume of pulp exports was less affected than in other exporting countries; it was less than 5 percent below the previous year's total. Once again three-fifths of the pulp exported was mechanical pulp, and since Norwegian contracts are customarily longer term than those in Finland and Sweden, in the rapidly falling market of 1952 this brought some difficulties between Norwegian sellers and certain of their customers, notably France.
TABLE 9. - NORWEGIAN PRODUCTION AND EXPORTS, 1951 AND 1952 (in thousand metric tons)
|
|
Production |
Exports |
||
|
1951 |
1952 |
1951 |
1952 |
|
|
Mechanical pulp |
554 |
515 |
335 |
319 |
|
Chemical pulp |
529 |
496 |
230 |
214 |
|
Paper and board |
511 |
467 |
332 |
261 |
In spite of decreased exports of pulp and paper, pulp production, at 1,010 thousand tons, was only 70 thousand tons less than in 1951. Consequently, stocks were high at the end of the year and, though some mills were closed, others kept their workers employed by turning them from production to maintenance work.
United Kingdom
The steady rise in United Kingdom paper production, which had taken place since the war, continued in the early months of 1952. In March, however, there was a sudden fall in output of packaging paper and board, and this was followed in succeeding months by a steady decline in output of all grades of paper and board. By the third quarter, the rate of paper production was the lowest recorded since 1948 and that of board the lowest since 1947. Import restrictions in U.K. export markets led to falling exports, but the main cause of the serious recession in the paper trade was a falling-off of activity in the many industries, both home and overseas, which use paper and its products.
From the beginning of the year pulp prices fell sharply as a result of the import price ceilings imposed by Britain, Europe's biggest paper-maker and pulp buyer, and other countries. With stocks high and consumption falling as a result of reduced paper production, there was no incentive to resume buying. The lower prices failed to act as a stimulus, buyers holding off in the expectation of further falls. Prices thus continued their downward swoop and not until the last quarter of the year, when some mills felt the need to replace stocks and when the demand for and production of paper and its products began to pick up, did-prices begin to steady.
The trend of pulp, paper and paper products prices in the United Kingdom (see Diagram B) gives a fair picture of the events of the last three years in Europe. Pulp prices soared continuously from mid-1950 to July 1951 and made further slight gains in the second half of 1951, when they stood at about 3½ times their early 1950 level. From January to September 1952 they fell continuously and steeply, flattening out at the end of the year to a level about 1½ times that of early 1950. Paper and board prices followed the course of pulp prices with a short time lag. The rise was not as steep and the fall less abrupt. Similarly, paper and board product prices lagged behind the prices of paper and board, on the whole, though the price of cardboard boxes, undercut by a specially marked fall in demand, started to fall earlier.
So marked was the contraction in paper and board consumption that, although imports fell by over a third (from 960 to 646 thousand metric tons) and production by 14 percent (from 2,763 to 2,376 thousand tons), mill stocks nevertheless rose in the course of the year by 120 thousand tons.
TABLE 10. - U. K., PULP AND PAPER DATA, 1950-52 (in thousand metric tons)
|
Year |
Paper and board |
Consumption of paper-making materials other than wood pulp (paper equivalent) |
Wood pulp |
||||
|
Production |
Stocks |
Imports |
Consumption |
Stocks |
Imports |
||
|
1950 |
2656 |
157 |
681 |
1134 |
1559 |
281 |
1456 |
|
1951 |
2763 |
179 |
990 |
1318 |
1549 |
398 |
1699 |
|
1952 |
2376 |
299 |
646 |
1083 |
1392 |
446 |
1460 |
It is interesting to note that, while paper production fell by 390 thousand tons or 14 percent, wood pulp consumption fell only by 160 thousand tons, or 10 percent. The effect of cheaper wood pulp was to reduce the use of other fibrous materials by 230 thousand tons paper equivalent. It is true that the biggest contraction in paper output took place in those grades for which other materials are most used. Nevertheless, price was a factor, notably in the ease of esparto. Esparto prices did not, in fact, follow the course of pulp prices. Taking advantage of the 1951 boom, the Tunisian administration added to the existing 15 percent export tax a surtax of 30 percent on the f.o.b. price. In consequence, esparto imports into the United Kingdom, the principal buyer from Tunisia and Algeria, fell from 395 thousand metric tons in 1951 to 244 thousand metric tons in 1952; and though British buyers at the beginning of this year received the necessary allocations to cover their January-June requirements, they showed themselves completely disinterested in North African esparto at the prices ruling.
Imports of wood pulp fell by nearly 240 thousand tons compared with 1952. The Scandinavian countries bore the brunt of Britain's reduced import program, receipts of pulp falling by 230 thousand tons and of paper and board by 225 thousand tons. At the same time, imports from Canada increased, for the most part these represented deliveries against contracts entered into the previous year.
Towards the end of the year industrial production began to improve, demand for paper products strengthened and activity in the paper trade increased. Early in 1953 the fixing of paper prices for several months ahead invited buyers to shed their reserve. There was an increasing impression in the paper trade that the revival would last.
France
Events in France followed much the same course as in the United Kingdom. Total production of paper and board fell from 1,561 thousand tons in 1951 to 1,230 thousand tons in 1952. Newsprint suffered least, falling by only 11 percent as against 22 percent for packing paper and 29 percent for board. By December, 1952, the average price of paper had fallen exactly one-third below its peak level in December 1951. Wood pulp production fell from 550 to 519 thousand tons. Imports of both pulp and paper were well down compared with the previous year, and no great increase in imports is expected in 1953 because of France's current exchange difficulties.
As in Britain, the market quickened at the end of the year, but French buyers took longer to persuade themselves that prices had stopped falling and not until March did confidence begin to grow.
Western Germany
Industrial production in Western Germany continued to advance during 1952, though at a slower rate than in preceding years. The general index of production, which for 1951 averaged 218 (1948 = 100), registered 220, 228, 228 and 257 in the four successive quarters of 1952. In spite of this continued rise in the level of economic activity, Western Germany also experienced a recession in the pulp and paper trade. For Western Germany is by no means insulated from the European market and the trend of prices. Though net imports account for only one-fifth of her total pulp supplies, she is heavily dependent on pulpwood imports.
Rising prices in 1952 led to a slackening in demand and a tendency on the part of consumers to reduce stocks. Though imports of paper and board rose 50 thousand tons above the previous year's level, imports were down from 91 to 28 thousand tons. Newsprint production rose by 11 thousand tons but output of other categories of paper and board fell by 121 thousand tons. The net fall in paper and board output, 6 percent, was much less than in other Western European countries.
TABLE 11. - WEST GERMAN IMPORTS AND EXPORTS, 1951-52 (in thousand metric tons)
|
Year |
Imports |
Exports |
||
|
Pulp |
Paper and board |
Pulp |
Paper and board |
|
|
1951 |
343 |
119 |
94 |
91 |
|
1952 |
265 |
169 |
45 |
28 |
Pulp imports were down by about 80 thousand tons and pulp production, at 890 thousand tons, 9 percent below the 1951 level. Most of the reduction was recorded in chemical pulp, mechanical pulp output for the year being only 16 thousand tons less than in 1951.
TABLE 12. - WEST GERMAN PULP AND PAPER PRODUCTION, 1950 - 52 (in thousand metric tons)
|
|
Paper and board |
Wood pulp |
||||
|
Newsprint |
Other |
Total |
Mechanical |
Chemical |
Total |
|
|
1950 |
170 |
1395 |
1565 |
355 |
498 |
853 |
|
1951 |
162 |
1643 |
1805 |
414 |
568 |
982 |
|
1952 |
173 |
1522 |
1695 |
398 |
492 |
890 |
|
Percentage change, 1951 to 1952 |
+7 |
-7 |
-6 |
-4 |
-13 |
-9 |
The market recovered earlier in Western Germany than in other European countries. Though output of both pulp Sand paper was low in the third quarter of the year a marked improvement began in October, and in January 1953 the output of paper and of chemical pulp exceeded even the 1951 average.
Austria
Paper and board output in 1952 totalled 325 thousand tons, a fall of only 4 percent from the 1951 level. The grade most affected was wrapping paper, for which a fall of 14 percent was registered. Thus domestic pulp needs were not seriously reduced and, since exports fell by a mere 10 thousand tons, the reduction in pulp output was less serious than in the northern exporting countries. The total for the year, 356 thousand tons, was but 6 percent below that of 1951.
Italy
In Italy, production of paper and board was well Maintained in spite of a sharp fall in exports, and output for the first ten months of 1952 was slightly above that in the corresponding period of 1951. Imports of pulp for the year totalled 198 thousand tons, 32 thousand tons less than in the preceding year. Production of all categories of wood pulp is provisionally estimated at 290 thousand tons as against 313 in 1951. One effect of the difficult conditions in the international market was to reduce Italy's favourable balance of trade in paper and its products, which in 1951 represented a substantial offset to the country's heavy import hill for wood pulp, from 10.7 to 1.1 thousand million fire.
Reappearance of short-time working and a closing-down of plants characterized 1952. Some pulp and paper investment programs threatened to be slowed down. For the first time for several years the supply of newsprint was adequate to meet effective demand.
On the face of things these events seem to suggest that the pulp and paper shortage, which has been with us for several years and was regarded as likely to last well into the future, was a passing one and that the apprehensions of 1949-51 were unjustified. This, however, would be taking only a short-term view. It would be more accurate to regard the phenomena of 1952 as the inevitable harvest of the Korean war inflation and of the slowing down of industrial progress.
Recent output figures suggest that the check in economic progress was only temporary. Moreover, there are many factors making for a steady long-term rise in the demand for pulp and paper - increasing industrialization in the less developed countries and the rapid liquidation of illiteracy, to name only two. Per capita consumption in parts of Europe is still below that of pre-war. All observers agree that consumption will continue to increase in the U.S.A., though at a rate a good deal less spectacular than that of recent years. And if optimism is a good deal more restrained in Scandinavia than across the Atlantic, this can be accounted for by the fact that the three northern countries, dependent on pulp and paper exports and less well insulated from fluctuations in world demand, are pardonably hesitant, in the light of recent events, in deriving overmuch comfort from favorable omens.
Moreover, one great uncertainty remains. Should the recent signs of a political détente multiply and bring concrete results, will the transition from war-preparedness to tacit truce have serious repercussions on the general level of economic activity? The pulp and paper trade as we have seen, is very sensitive to changes in the economic climate. The theory that "peace is always bullish" is not universally shared. The New York stock market at the beginning of May had not yet recovered from its end-March "peace scare" downward plunge.
True, it is that apprehension centers on the prospect of uncomfortable short-run adjustments rather than on the long-run effects of a real détente And since economic experts and share operators continue to differ loudly, a small element of doubt inevitably intrudes into the prospects for the pulp and paper market.
World Market since 1951
North America
Europe
Exporting countries
Importing countries
Importing and exporting countries
Eastern European Countries and the U.S.S.R.
Brief survey of other areas
Prices
The year 1951 held the postwar record for world trade in sawn softwood: on the other hand, 1952 was characterized by a general decline in the market, which in Europe, reached almost to the point of stagnation during the first six months. Trends varied, however in different parts of the world, particularly in North America compared with Europe, Australia and Africa.
In North America demand declined rather steeply during 1951, notably in the United States, whereas in Europe this was a boom period with trade figures approaching pre-war levels. In regions such as Australia and North and South Africa, which largely depend on imported supplies, a remarkable boom was experienced in sawn softwood imports during that year. In 1952, however, these trends were reversed. In North America, there was a marked increase in demand, particularly during the latter half of the year, and consequently also a larger output of sawn softwood. In Europe and the other regions demand fell generally, and output in the exporting countries dropped.
The great demand for sawn softwood in the main importing countries during 1951 had been created chiefly by fears of a shortage caused by the Korean war, which led to the accumulation of stocks and at the same time to an unprecedented rise in prices. Consumers' resistance to these excessive prices, already apparent around the summer of 1951, had resulted in almost complete stagnation on export markets towards the end of that year, and this situation persisted until the summer of 1952. By that time export prices had fallen sharply, and fresh interest was being shown in business. Even so in Europe, Australia and other regions during the latter half of 1952 export demand did not pick up to the extent that might have been expected. In general, consumption had shown a downward trend since the summer of 1951, and, with the arrival of earlier contracted goods, stocks were kept at a fairly high level.
The excessive 1951 prices of sawn softwood led to the growing use of substitute materials, particularly in those countries largely dependent on imports, a trend which it was difficult to reverse even when prices of sawnwood fell. Moreover, the reduced pace of Europe's industrial growth, which in some cases even took the form of a slight recession, added weight to the fall in demand.
The development of demand for sawn softwood seems in general to have followed that of consumer goods, although, notably in Europe, fluctuations, both in demand and prices, were much more violent with regard to timber than to other materials and goods. Trends in.1951 and 1952, as well as in the early part of 1953, also indicate that the European market is much more sensitive to variations in demand than other markets, and that changes affecting relatively small quantities may lead to noticeable price fluctuations on the market as a whole (see Prices).
Demand in the extra-European importing regions more or less shadowed the changes in European demand while such fluctuations in North America, a region self-sufficient in sawn softwood, had no major effect on demand in other regions.
Variations in the international, and especially the extra-regional, sawn softwood trade were due partly to the growing shortage of dollars in the sterling group (which seems to have forced most countries to curtail their purchases from North America during 1952) and partly to the fairly satisfactory stock position in those countries. At the same time, general difficulties concerning the balance of payments in many importing countries led them to reduce their imports from other sources.
These then were the events contributing to the substantial fall in the volume of international sawn softwood trade in 1952, and leading to a decline in the world output of sawn softwood during that year, in comparison with both 1950 and 1951. World trade in sawn softwood which had reached post-war record, figures in 1951, fell rather sharply in 1952 mainly because of a decline in the volume of European exports and imports (Table 1). In 1950, world output (excluding the U.S.S.R., Eastern Germany and China) was about 31,290,000 standards in 1951 it fell to some 31,100,000 standards; and in 1952 it was estimated to be around 30,610,000 standards. This steady, though relatively small, decline was primarily caused by the heavy drop (of some 80,000 standards) in European output which was however, partly offset by the rise in U.S. production.
United States of America
North America occupies a predominant position with regard to world supplies of sawn softwood, with a share of recorded world production and consumption equal to about 65 percent. Thus even relatively small fluctuations on the North American sawn softwood market may have determining effects on world consumption and output as a whole, without, however, affecting world trade.
In 1951, the index of sawn softwood demand had fallen sharply from its exceptionally high level of 1950, but rose again in 1952, notably during the latter half of the year. AB the course of the North American market is almost entirely determined by demand in the United States, the fall in United States demand in 1951 caused a decline in the total North American output of sawn softwood in that year. The rise in Canadian output from 3,436,000 standards in 1950 to 3,687,000 in 1951 was insufficient to offset the decline in United States production, which fell from 15,470,000 standards in 1950 to 14,681,000 in 1951. In 1952, however, the increased demand and consequent rise in production in the United States were sufficient to bring about a rise in the total output of North America, despite a slight fall in Canadian production.
TABLE. 1 - PRODUCTION, EXPORT AND IMPORTS OF SAWN SOFTWOOD (in thousand standards)
|
|
Production |
Exports |
Imports |
|||
|
1951 |
1952 |
1951 |
1952 |
1951 |
1952 |
|
|
Europe of which: |
(b)8600 |
(b)7800 |
2860 |
2210 |
2990 |
2540 |
|
Austria |
694 |
629 |
516 |
522 |
* |
* |
|
Belgium-Luxembourg |
59 |
54 |
2 |
1 |
118 |
106 |
|
Czechoslovakia |
|
|
(c)26 |
(c)47 |
|
|
|
Denmark |
60 |
60 |
* |
* |
163 |
124 |
|
Finland |
1055 |
750 |
838 |
592 |
- |
- |
|
France |
749 |
685 |
186 |
70 |
52 |
84 |
|
Germany, Western |
1598 |
1380 |
24 |
2 |
172 |
396 |
|
Greece |
15 |
15 |
- |
- |
60 |
45 |
|
Ireland |
4 |
2 |
* |
* |
72 |
47 |
|
Italy |
217 |
186 |
8 |
2 |
198 |
236 |
|
Netherlands |
28 |
14 |
1 |
2 |
378 |
274 |
|
Norway |
310 |
400 |
26 |
8 |
30 |
31 |
|
Poland |
|
|
(c)18 |
(c)24 |
72 |
|
|
Sweden |
1300 |
1070 |
908 |
686 |
16 |
20 |
|
Switzerland |
173 |
201 |
7 |
1 |
19 |
13 |
|
United Kingdom |
65 |
56 |
* |
* |
1640 |
1031 |
|
U.S.S.R. |
|
|
(c)133 |
(c)126 |
(d)62 |
(d)123 |
|
Yugoslavia |
363 |
345 |
139 |
104 |
- |
- |
|
North and Central America of which: |
18570 |
18970 |
2240 |
2020 |
1210 |
1230 |
|
Canada |
3687 |
3582 |
1799 |
1726 |
39 |
47 |
|
United States |
14681 |
15186 |
413 |
276 |
1143 |
1153 |
|
South America of which: |
820 |
(800) |
240 |
(190) |
210 |
(170) |
|
Argentina |
.. |
.. |
.. |
.. |
190 |
(150) |
|
Brazil |
745 |
(700) |
230 |
(175) |
- |
- |
|
Chile |
38 |
(40) |
13 |
(10) |
2 |
* |
|
Africa of which: |
190 |
(200) |
10 |
(10) |
370 |
(250) |
|
Algeria |
10 |
(10) |
* |
* |
47 |
(40) |
|
Egypt |
.. |
.. |
- |
- |
132 |
60 |
|
Union of South Africa |
(135) |
(140) |
(2) |
(2) |
125 |
(85) |
|
Asia of which: |
2580 |
(2500) |
(a) |
(a) |
90 |
(100) |
|
Israel |
.. |
.. |
- |
- |
47 |
(30) |
|
Japan |
2500 |
(2400) |
.. |
.. |
6 |
.. |
|
Turkey |
24 |
32 |
3 |
1 |
11 |
36 |
|
Pacific Area of which: |
340 |
(340) |
10 |
(10) |
|
(150) |
|
Australia |
65 |
(60) |
* |
* |
202 |
(130) |
|
New Zealand |
270 |
(270) |
9 |
(7) |
7 |
(7) |
|
ESTIMATED TOTAL |
31100 |
30610 |
5360 |
4440 |
5080 |
4440 |
(a) Reporting countries only.
(b) Includes estimates for countries of Eastern Europe. Excludes Eastern Germany and U.S.S.R.
(c) Exports to countries of Western Europe only. Figures taken from importing countries
(d) Imports from countries of Western Europe only. Figures taken from exporting countries.
Building activity in the United States had been very great in 1950, construction of as many as 1,396,000 non-farm dwelling being started, and this was a primary factor affecting the demand for sawn softwood. In 1951, the rearmament program had led to restrictions being imposed on private building, causing a gradual fall, to 1,091,300 for the whole year, in the number of dwellings which were started. Industrial and public construction, however, continued at a high rate even in 1951 but, since they relied chiefly on other materials, did not generally have any effect on the consumption of sawn softwood. In 1952, the relaxation of some restrictions caused a certain rise in the number of non-farm dwellings under construction, particularly towards the end of the year, by which time 1,131,400 units had been started. At the same time, the upward trend of industrial and public construction continued, and 1952 was generally considered the record year for total value of construction (estimated at some 32.3 billion dollars). This increased building activity also brought about a growing demand for sawnwood from furniture industries. In consequence, there was a noticeable rise in the consumption of sawn softwood, from 15.2 million standards in 1961 to some 15.9 million in 1952.
Imports by the United States, chiefly from Canada, remained practically unchanged during 1952, amounting to 1,153,000 standards as against 1,143,000 in 1951. Exports, on the other hand, which had risen to some 413,200 standards in 1951 as a result of declining demand on the home market and attractive prices paid by overseas countries, fell to about 272,000 standards.
Sawn softwood prices in the United States had on the whole changed little during the period 1950 to 1952, in striking contrast to the violent price fluctuations in Europe and other parts of the world (Table 2).
Canada
With regard to Canada, in 1951 when United States demand had been weaker, the sawmilling industries had found an outlet for their export production in Europe and other overseas markets, where demand was heavy and attractive prices could be obtained. This, together with a rather strong domestic demand for building purposes, had led to an increase in Canadian output of sawn softwood, as well as in exports.
In 1952, domestic demand fell off somewhat, and an overall decline in sawnwood consumption of some 5 percent was registered. This was the result of a decline in building activity, together with a noticeable drop in purchases by the Commonwealth and other overseas countries, for which the dollar shortage was chiefly blamed. Sawmills were therefore forced to reduce their output, and total consumption of sawnwood of all categories, which in 1951 had been around 1,650,000 standards, fell to some 1,570,000 in 1952. The increased United States demand was only felt towards the end of the year, and it was not sufficient to raise Canadian exports to the United States much above the level of 1951; in fact, they remained almost the same, namely, 1,179,000 standards in 1952 as against 1,154,000 in 1951. Exports to other countries, however, dropped from 645,000 in 1951 to 547,000 standards in 1952, mainly due to a fall in exports to Commonwealth countries other than the United Kingdom. Exports to the latter country fell only slightly.
The extraordinary boom on the European sawn softwood market had continued from the last months of 1950 to the autumn of 1951. Due primarily to heavy purchasing by the United Kingdom towards the end of 1950, the boom had gathered strength since other importing countries, both in Europe and overseas, fearing a depletion of sawnwood availabilities in the exporting countries, a general shortage of sawnwood caused by the Korean war and above all a rise in prices, joined in the purchasing. There was no depletion of availability in the exporting countries, a proof of their amazing flexibility in production. European production thus rose markedly in 1951, and reached (excluding the U.S.S.R. and Eastern Germany) 8,600,000 standards compared with 8,400,000 in 1950.
TABLE 2. - INDEX OF SAWN SOFTWOOD PRICES (January 1950 = 100)
|
Country |
Jan. |
Mar. |
June |
Sept. |
Dec. |
Mar. |
June |
Sept. |
Dec. |
Mar. |
June |
Sept. |
Dec. |
|
|
1950 |
1951 |
1952 |
||||||||||||
|
Canada |
100 |
101 |
110 |
113 |
116 |
134 |
134 |
134 |
133 |
130 |
124 |
124 |
124 |
Wholesale price index for sawn fir. |
|
Belgium |
100 |
101 |
104 |
109 |
145 |
169 |
176 |
187 |
196 |
185 |
128 |
142 |
155 |
Average price c.i.f. for Swedish and Finnish sawn softwood |
|
Belgium |
100 |
104 |
98 |
100 |
114 |
125 |
132 |
135 |
148 |
146 |
129 |
113 |
128 |
Average wholesale price from importer to wholesaler |
|
France |
100 |
100 |
103 |
110 |
120 |
183 |
269 |
282 |
316 |
329 |
308 |
267 |
267 |
Unedged spruce boards, 26 mm. Thick, for construction. |
Despite the large quantities of sawn softwood on the European market in 1951, European consumption did not increase, and in some countries it even showed signs of decline, chiefly the effect of the great rise in import prices. In fact, increases in sawn softwood wholesale - prices in most of the European countries were relatively much less marked than those of import prices. Consumers' growing resistance to high prices had already made itself felt in the summer of 1951, and by the winter import prices of sawn softwood shipped during the second half of the year were, in general, considerably above the prevailing (and obtainable) wholesale prices. In the face of this strong consumers' resistance and with heavy stocks of imported sawn softwood, importers and retail merchants were experiencing growing financial difficulties.
On the declaration of the United Kingdom, towards the end of 1951, that it would substantially reduce its imports in 1952, the importers of the other European countries considered that the moment had come to join in a common stand against the high export prices. The result was that almost-all the buyers went on strike during the last months of 1951 and the early months of 1952, while exporting countries made efforts to maintain the level of prices, because the high cost of sawlogs at the end of 1951 had made it difficult to reduce them. The first five months of 1952 were thus characterized by general stagnation on the market, and by a price war between exporters and importers. However, growing financial difficulties of sawmills in the exporting countries finally led them to yield, and a heavy drop of some 30 percent in export prices occurred in May.
Immediate demand responded less favorably to this fall in prices than had been anticipated. Most countries still had large and expensive stocks of sawn softwood, and felt no immediate need to replenish. On the contrary, importers preferred to dispose of their existing stocks to the greatest possible extent before contracting for new supplies. Furthermore, the trend in consumption in most countries had weakened since the autumn of 1951, primarily due to high prices, and the volume of wholesale business in the importing countries had been steadily falling. Again, the high prices of sawn softwood had greatly strengthened the position of substitute materials between the summers of 1951 and 1952, and it was proving difficult to bring about a reversal of this trend, since consumers did not seem to show confidence in the future development of prices.
Towards the middle of the summer of 1952, however, importers started placing contracts on a larger scale in the exporting countries, in order to replenish their stocks for the winter of 1952/53. Prices were thus stabilized at a level about 30 percent below the previous top prices, and towards the end of the summer they even showed some signs of strengthening. In September, a sudden heavy demand by the United Kingdom drove prices up again. In November, when the British demand weakened, the market calmed down and prices stabilized at a level some 15 percent above the low prices of the summer of 1952, and some 20 percent below the 1951 top prices. Importers in the Continental countries remained rather inactive until the end of the year in negotiating purchases for delivery in 1953. They only entered the market seriously at the beginning of 1953, at which time British buyers also showed increased interest in contracting for 1953.
The volume of business concluded by the end of April 1953 was substantially larger than that of the corresponding period in 1952, when practically none had been contracted, but it was still distinctly less than that of the buying boom of 1951/52. The Northern European exporting countries were reported to have sold slightly more than 90 percent of their total estimated 1953 export availabilities by the end of April, while the importing countries had covered some 60-80 percent of their normal import requirements, with the exception of the United Kingdom which was estimated to have purchased almost its total requirements. Purchases by overseas countries from Europe, which fell sharply in 1952, remained at an unusually low level and very little business had been done by the end of April, 1953, for shipment the same year.
As a result of the fall on the European sawn softwood market in 1952, European output (excluding that of the U.S.S.R. and Eastern Germany) dropped noticeably, being only 7,800,000 standards, which was chiefly due to the decline in the production of Sweden and Finland. European trade in sawn softwood also fell markedly (by some 20 percent in value). Exports by European countries were only 2,210,000 standards, as against 2,860,000 in 1951 and 2,620,000 in 1950. There was a sharp drop in European exports to overseas markets - 218,000 standards in 1952 as against 395,000 in 1951 and 375,000 in 1950. On the other hand, imports of sawn softwood by European countries fell from 2,990,000 standards in 1951 to 2,540,000 in 1952, chiefly owing to a decline in imports by the United Kingdom. Imports for 1950 had been 2,270,000 standards. With regard to European imports from overseas, mainly from North America, these totalled 569,000 standards in 1952 (a large part of which, however, had been purchased already in 1950), compared with 608,000 in 1951 and 211,000 in 1950. The relatively greater decrease in exports (23 percent compared with 15 percent imports) was a result of the fall in European exports to overseas markets, the fall in imports from overseas being small.
Trade between western and eastern European countries expanded in both directions. Exports by eastern to western Europe rose from 177,000 standards in 1951 to 199,000 in 1952, and imports by the eastern European countries from western Europe, chiefly by the U.S.S.R. from Finland, rose from 63,000 standards in 1951 to 130,000 in 1952.
Northern Europe
The fluctuations on the sawn softwood market between 1950 and 1953 primarily affected the timber industries in the two principal northern exporting countries, Sweden and Finland. Sawn softwood and other forest products being their main exports, the foreign trade of these two countries had been booming in 1951, both in value and volume. The output of sawn softwood in Sweden and Finland together had risen during 1951 to 2,355,000 standards, as against 2,015,000 in 1950, and exports had reached 1,746,000 standards as against 1,462,000 in 1950. As demand slackened at the end of 1951, these countries decided to curtail their production in order to strengthen their position in the face of growing buyers resistance to high prices.
The main reason for these efforts to maintain the level of prices had been the extraordinary rise in the prices of sawlogs during the autumn of 1951. The cost of sawlogs for one standard of sawnwood was in some cases reported to have reached the equivalent of the prevailing prices for sawnwood. Buyers' resistance, however, had for some time been aggravated by the introduction of export charges on sawn softwood, which was considered by importing countries to have increased prices disproportionately. These export charges had already been partially introduced into Sweden in June 1945 in the shape of payments to price equalization funds, and had increased in 1951, the basic prices being those of the last quarter of 1950. They were intended to prevent any unfavorable effect of export price rises on the home market, and on the national economy in general. In Finland, the export charges were introduced rather late, in October 1951, the basic prices being those of the second quarter of 1951.
As buyers' resistance continued, both Sweden and Finland were forced to abrogate these charges, but the price fall in May 1952 was not simply the result of the lifting of export duties, and serious difficulties were anticipated by the sawmills. Despite these fears, the situation turned out to be less unsatisfactory than had been expected. In Sweden, where export duties had been levied well before the record year of 1951, the sawmills found themselves in a situation corresponding more or less to that which existed before the boom. The much-criticized duties had prevented any disproportionate rises in production costs, and sawmills had no unsurmountable difficulty in adapting their sales prices to the new level of export prices. In Finland, however, the situation at first appeared to be more dangerous. The late introduction of export duties had not prevented the extraordinary rise of production costs, and sawmills found it extremely difficult to keep in line with the new development. At the beginning of 1952, when the rest of the market was almost dead, the large sales to the U.S.S.R., at amounts corresponding to previous top prices, considerably helped sawmills to surmount their immediate difficulties. To some extent these sales also compensated for the low prices obtained elsewhere in the summer of that year. By the latter half of 1952 most of the sawmills in the northern countries had been able to adjust their raw material prices to those obtainable for sawn softwood on foreign markets, and they were thus able to offer their goods at acceptable prices. The decline on the market- in 1952 nevertheless led to a heavy fall in output, as well as reduced exports of sawn softwood, which totalled 1,820,000 and 1,278,000 standards respectively.
TABLE 3. - SWEDISH WHOLESALE SAWN SOFTWOOD PRICES (Kroner per standard f.o.b., Härnösand district)
|
|
March |
June |
Sept. |
Dec. |
|
2½ in. × 7 in. redwood battens u/s: | ||||
|
1950 |
700 |
750 |
775 |
1050 |
|
1951 |
1180 |
1235 |
1260 |
1325 |
|
1952 |
1285 |
930 |
985 |
1070 |
|
1953 |
1095 |
... |
... |
... |
Exports to overseas countries fell markedly, being only 109,000 standards in 1952 as against 227,000 in 1951 and 222,000 in 1950. By the end of April both Sweden and Finland were estimated to have sold most of their sawnwood available for export in 1952.
Austria
Austria, the most important exporter of sawn softwood in Central Europe, had also been affected by the boom of 1950/51 and had greatly increased output and exports in 1951. It faced similar difficulties to the price equalization charges for export of the northern countries and the high level of prices of sawlogs after the fall-in the value of sawnwood. In 1952, however, when the European market generally was in an unsatisfactory condition, Austrian sawmills succeeded in increasing their sales to Italy and, particularly, to Western Germany, where import requirements in that year, were considerably larger than in the previous postwar years. Austria's success on these markets was mainly due to its sawn softwood prices being low in relation to those of the northern European countries, which had a less favorable position. Consequently, Austrian exports of sawn softwood rose in 1952 to 522,000 standards as against 516,000 in 1951, and 483,000 in 1950. The production of sawn softwood, on the other hand, fell from 694,000 standards in 1951 to 629,000 in 1952, although it was higher than in 1950 (568,000 standards). Large unsold stocks had accumulated towards the end of 1951 and the beginning of 1952, with a consequent slowing-down of activity in sawmills during the first months of 1952, and this resulted in the decline in the output of sawn softwood.
With regard to sales for 1953, the dominant position of Austria in relation to Western Germany and Italy during 1952 seems to remain unchallenged: the other main exporting countries had placed only minor quantities by the end of April 1953, whereas Austria's contracts were for substantial amounts.
Yugoslavia
Although the production and export of Yugoslavian sawn softwood also declined, they were less affected by the fall on the market in 1952 than those of the Northern European countries. Exports were 104,000 standards in 1952 as against 139,000 in 1951 and 158,000 in 1950. Output fell from 503,000 standards in 1950 and 363,000 in 1951 to 345,000 in 1952. Factors other than reduced foreign demand contributed largely to this continuous decline, such as efforts made towards a gradual restriction of the heavy fellings of the post-war period. Domestic consumption remained fairly stable, and thus export availabilities were automatically being reduced. However, despite the generally falling market of 1952, Yugoslavia succeeded in increasing its exports to Western Germany and Italy; those to the United Kingdom on the other hand fell sharply.
United Kingdom
As during the past three years the fluctuations on the European sawn softwood market have been primarily the result of the purchasing policy of this country, changes in United Kingdom demand are particularly interesting.
Purchases by the United Kingdom during the period 1950 to 1952 have in fact varied yearly between 600,000 and 700,000 standards. Such variations in demand, when the European output of sawn softwood was normally considered to be fairly stable, were bound to create a feeling of instability on the market as a whole. The United Kingdom had greatly restricted its total purchases for 1950, particularly from the northern European countries, which are traditionally its main suppliers, thus forcing them to seek other markets. But in 1951 the United Kingdom increased its total purchases, chiefly from the northern European countries and Canada, a fact which was bound to affect the whole European market severely. Consequently, purchases from Canada by other European countries were made largely on their dollar resources, and, since, these remained weak, no major increase in imports from Canada could be foreseen. As a result the big increase in United Kingdom demand, coupled with rising post-Korean demand from other countries, weighed almost entirely on European export availabilities, and led to the 1951 boom.
With regard to purchases for 1952, the situation was again reversed. As has been seen, the declaration by the United Kingdom to curtail its imports for that year was the main cause of the falling market. As this country already had large unfulfilled contracts with Canada, and since demand was also declining in most of the other European importing countries, the European export market was even more affected. Although in May prices had fallen to a level generally considered to be reasonable by the importing countries, in September (a period when there was general uncertainty as to further quotas) the release of 500,000 standards for free buying brought about a new increase in prices. Had buying been spread over a longer period, its effects might have been less significant; but purchasing was done within a short period, an outcome perhaps of the fear of being left without any sawnwood. This argument is proved by the fact that when the authorities announced further quotas, up to at least one million standards, to be released later, the market calmed down immediately, and purchasing for 1952 progressed at a much slower rate during the last months of 1952.
At the turn of the year the sawn softwood import trade was completely liberated, and importers were free to purchase whatever amounts they considered they would be able to sell or store in view of consumption control and their limited financial resources. But importers grew more cautious in their contracting, and there was a decline in activity. By the end of April, 1953, almost the whole of the United Kingdom's import requirements for the year - some 1,100,000-1,200,000 standards - were reported to have been covered.
Western Germany
Western Germany, Europe's largest producer and consumer of sawn softwood, is self-sufficient up to 85-90 percent of its total requirements although, in an effort to avoid the over-exploitation of its forests, production has been reduced gradually from the high level of the immediate post-war years. Its domestic requirements, on the other hand, have increased as the result of a big rise in general industrial production and construction, with a consequent gradual expansion of import requirements.
This development was illustrated by the rise in imports of sawn softwood from 1950 to 1952, during which period they more than doubled, reaching 396,000 standards in 1952 as against 172,000 in 1951 and 153,000 in 1950. Output during the same period had fallen from 1,679,000 standards in 1950 and 1,598,000 in 1951 to 1,380,000 in 1952. High export prices, particularly in the northern European countries, led importers to place their purchases for 1952 chiefly in Austria, where both prices and transport costs were lower
Purchases effected by Western Germany for 1953 seem to indicate that imports this year will be more or less at the 1952 level, and that Austria will once more become the largest individual supplier of sawn softwood to Western Germany. The position of the northern European countries continues to be rather weak, chiefly because of the higher prices asked by them.
Italy
This country normally covers about one-half of its total requirements by domestic production, in which there were no marked changes during 1950-1952. Imports had fallen from 218,000 standards in 1950 to 198,000 in 1951, partly because of the high prices and partly because of slackening in demand due to general economic factors. In spite of this, imports rose to 236,000 standards in 1952, owing on the one hand to the necessity of replenishing stocks, and on the other to ample quantities of Austrian sawn softwood being available at acceptable prices for delivery in 1952. The general improvement in economic conditions towards the end of 1952 also led to a somewhat higher activity in the Italian timber trade. Purchasing for 1953 was therefore started under fairly favorable conditions.
Other countries
The most important group of importing countries in Europe is composed of Belgium, Denmark and the Netherlands, which depend almost entirely on imported supplies of sawn softwood. The total sawn softwood output of this group has not changed greatly during the period 1950-1952, being 139,000 standards in 1950, 139,000 in 1951 and 125,000 in 1952. Imports, on the other hand, have shown a marked downward trend, viz., 818,000 standards in 1950 (the postwar record year), 659,000 in 1951 and only 504,000 in 1952.
There were several reasons for this development one, affecting the 1950 imports, was the decline in British purchases from Europe, which led the main European exporting countries (notably the northern ones) to try to increase their exports to this group.
As stocks in Belgium, Denmark and the Netherlands had reached a somewhat low level by the end of 1949, their purchases were aimed both at covering current requirements and at increasing the stock level. Consumption, however, remained rather lower than had been envisaged by the importers, and by the end of 1950 they were left with substantial unsold stocks. The lower volume of imports in 1951 was a direct result of these high stocks, and purchases were made more or less to cover the current turnover. In the course of 1951 consumers' resistance reduced demand still further, and importers' and wholesale stocks at the end of 1951 were almost equal to those of a year before. Large and expensive stocks during a period of generally falling demand naturally led to financial difficulties, and purchasing for 1952 on a larger scale was started cautiously and late towards, and particularly during, the summer of that year.
The effects of the 1951 rise in sawn softwood prices were still being felt quite severely even during the first half of 1952, and consumption continued its downward trend. It picked up but slightly after the summer, and therefore the stocks in these countries at the end of that year remained rather close to the level of the end of 1951. Importers have been rendered rather cautious by these developments of 1950-1952, and purchases for 1953 were only commenced about the beginning of the year, and at a slow rate. By the end of April this group of countries had covered some 70 to 80 percent of their previously estimated total import requirements for 1953.
France
This country, being practically self-supporting with regard to sawn softwood, has normally both exported and imported. Imports have been limited to special specifications and qualities, chiefly from Northern Europe and Austria, while exports of certain categories have a traditional market in the United Kingdom.
Output has to some extent been influenced by developments on the international sawn softwood market, although these have chiefly affected internal price levels. The output of sawn softwood in 1950 was 620,000 standards; it rose to 749,000 standards in 1951 and declined again in 1952 to 685,000 standards. Imports remained at about the same level during 1950 and 1951 being 59,000 standards and 52,000 standards respectively, but rose to 84,000 standards in 1952. Exports, on the other hand, fluctuated more with 130,000 standards in 1950, 186,000 in 1951 and 70,000 in 1952. The 1951 rise in exports was caused chiefly by the high prices paid abroad for sawn softwood, which at the same time increased domestic price levels. As these excessive exports threatened to endanger the country's supply situation and to drive domestic prices up to an unreasonable level, the government was forced to impose restrictions in the autumn, limiting exports almost entirely to quantities included in the trade agreements of 1951.
The increase in imports and decline in exports in 1952 were thus a direct result of developments during 1951. Greater imports were needed to cover the country's requirements, and export restrictions, together with falling prices abroad, automatically reduced the volume, of export. For 1953, the estimated French import i requirements show some increase over those for 1952. As a result of the lifting in 1952 of some of the restrictions introduced, export are also expected to increase slightly.
As mentioned in the section on Europe above, exports by this country group to Western Europe, as well as imports therefrom, rose in 1952. The prospects for 1953 indicate further rises in both directions. Sales by these countries to the United Kingdom, for example, had already reached about twice the amount of total 1952 exports by the end of April 1953. Contracts negotiated with other Western European countries are also believed to be at more or less the 1952 level. Purchases by the eastern countries, notably the U.S.S.R., from Finland, seem equally to indicate a rise in their imports from Western Europe. To sales of sawn softwood should be added sales of pre-fabricated timber houses from Finland to the Eastern European countries, and particularly to the U.S.S.R., which are estimated at approximately 100,000 standards of sawnwood.
Latin America
The boom of 1951 also had its effect on the Latin American sawn softwood-market, because the high prices paid for sawnwood in Europe had bolstered up exports from Latin America (in particular, Brazil) to Europe and to other overseas countries. At the same time, demand increased in the importing countries (notably Argentina) and interregional trade also rose somewhat. As a result, output rose from about 650,000 standards in 1950 to some 820,000 in 1951. In 1952, however, in the face of reduced demand for sawnwood on the main overseas markets, and of declining world prices, the Brazilian producers were threatened with a serious reduction in foreign business, with particular regard to extra-regional trade. They seem to have been unable to bring their prices into line with the prevailing world prices, and consequently the volume of exports showed a marked fall in 1952. This appears to have led to some reduction in Brazilian output, and consequently in the total Latin American output of sawn softwood as well.
Africa
Africa is almost entirely a sawn softwood-importing region, which obtains its supplies regularly from North America, South America and Europe, imports from the latter being largest. Imports, already fairly high in 1950 at 340,000 standards, rose to 370,000 standards in the boom year in 1951. In 1952 they fell noticeably, being only 250,000 standards.
The largest individual importing country during 1950 and 1951 was Egypt, importing 133,000 standards and 132,000 standards respectively. In 1952 Egypt's imports dropped sharply to only 60,000 standards, as the result of rather heavy over-buying in 1950 and
1951, which left the country with substantial stocks. The political events of 1952, coupled with serious-financial and- foreign currency difficulties, forced the country to curtail heavily its imports from all sources, in spite of the reduction in stocks during the course of the year. The outlook for 1953 indicates that there will be no major change in Egyptian imports of sawn softwood, unless the balance-of-payments situation and general financial position improve, depending on the cotton crop, Egypt's main product, and on overseas demand.
The other large single market for sawn softwood in Africa is that of the Union of South Africa. Imports by this country had reached a post-war high in 1951, with about 125,000 standards as against 105,000 standards in 1950. The unprecedented rise in prices in 1951 brought about consumers' resistance, and consumption apparently fell slightly towards the end of the year. Faced with an uncertain market importers were cautious in their purchasing, and contracted more or less for immediate needs and- prompt delivery only, leaving the risk of expected price falls with the last-minute sellers. The usual contracting for arrivals 6 to 7 months ahead was consequently almost non-existent. To the uncertain market conditions during these early months of 1952 was added the Government's currency restriction policy. In fact, the currency quota system previously applied to dollars was extended to pounds sterling as well, with the aim of reducing imports, which fell in 1952 to 85,000 standards, the largest declines taking place in imports of sawn softwood from North America and Europe, both of which fell by some 20,000 standards. For 1953, importers expect the authorities to allow them to buy up to the 1952 quota.
Asia
Before World War II, Japan had been a big importer of timber, but by 1942 its imports had been practically eliminated, - and were resumed only in 1948 and on a smaller scale. Japanese timber imports have, however, expanded rather slowly because of the lack of trade credits and of the rather high prices of imported timber. At the end of 1949, the Japanese authorities, alarmed by the growing timber shortage, issued an embargo on the export of most categories of wood, and notably of sawn softwood. This embargo was extended at the end of 1950, and in 1951 the main exports went to the United Nations forces in Korea.
The shortage of sawlogs in 1950 had led to the closing down of about 10,000 sawmills, or one-third of the active sawmills in Japan. Stocks of sawlogs had also dropped from 130 million cubic feet to some 70 million cubic feet (3.68 million to 1.98 million m.3) in the course of the year. This latter figure is less than six weeks' operating supply. The total output of sawlogs in 1950 had been some 100 million cubic feet (2.83 million m.3) short of demand.
The total production of, sawn softwood (including boxboards) in Japan in 1950 had been 2,410,000 standards, and it rose only slightly in 1951 to 2,500,000 standards. At the beginning of 1952 the Japanese Government imposed cutting restrictions on softwood, which reduced stocks, and prices fell by some 30 percent from those of 1951. The market calmed down towards the end of 1952, both as regards domestic and imported sawn softwood, because of the economic stringency. Although there is a large potential demand for sawn softwood for housing, prices largely determine the extent to which housing needs can be met. Because of its substantial sawmilling capacity, emphasis seems to be laid more on Japanese imports of logs than on sawnwood. Prices of domestic sawn softwood for building purposes were slightly higher at the end of 1952 than the prevailing rate of imported sawn softwood. But, as mentioned above, the lack of foreign currencies is the principal restricting factor. Despite Japan's growing needs of sawn softwood, consumption seems to have moved slightly downwards, and is estimated to have been 2,450,000 standards in 1950, 2,440,000 in 1951 and around 2,400,000 in 1952.
All the other Asian countries for which data are available have limited trade in sawn softwood, although most of them are far from self-sufficient. Two of the most important countries in the Middle East, Turkey and Israel, together import some 50,000 to 60,000 standards yearly. Both have been facing growing difficulties with regard to balance of payments and foreign currency. In 1950 and 1951 Turkey, which normally covers about 60 to 70 percent of its needs by domestic production, had imported fairly small quantities, which were nevertheless reported to be adequate. But in 1952, Turkey succeeded in more than doubling its imports, chiefly from Austria. Its purchases for 1953 seem to be hampered by an increasing balance-of-payments deficit, and the shortage of most foreign currencies has led to purchases being limited to a great extent to countries which have direct clearing arrangements with - Turkey. Israel, on the other hand, which depends practically entirely on imports, had increased them from 41,000 standards in 1950 to 47,000 in 1951. Financial difficulties caused a drop in its imports in 1952, estimated to be roughly some 30,000 standards.
Australia
The extraordinarily high volume of Australian imports in 1951 had led to a considerable accumulation of stocks. Therefore the quantity of sawnwood available for consumption was considerably in excess of that of 1950, and towards the end of 1951 supply exceeded demand for the first time since the end of the war. This increase resulted from efforts to overcome the general shortage which had existed in 1950, and it was assisted by some relaxation of tariffs and import controls.
Demand in 1951 was heavy and led to an increase in the Australian output of sawn softwood, which rose from 46,000 standards in 1950 to 65,000 standards in 1951, the highest figure ever recorded. Considerable improvement in weather conditions in the eastern states and in the availability of labour for sawmills in western Australia also contributed greatly to this increased production. However, during the latter half of 1951 the position was reversed, since the import licensing procedure was relaxed, and importers could purchase wherever they wanted more freely. This led to rather heavy over-buying from the most important regions of supply, and to a large influx of Baltic sawnwood. The difficulties of the trade in disposing of the large stocks accumulated by the end of 1951 were further increased by an almost complete halt in building activity, caused by the credit restrictions policy of the government. Although building and price controls were relaxed in 1952 and there were signs of a recovery in the building industry, new purchases were -much lower than in the previous year.
TABLE 4. - UNITED KINGDOM IMPORTS FROM VARIOUS SOURCES (in pounds sterling per standard)
|
Country |
1950 |
1951 |
1952 |
1953 |
|||
|
June |
Dec. |
June |
Dec. |
June |
Dec. |
Feb. |
|
|
Canada |
67.10. 7. |
62.14. 7. |
88.11.11. |
93.15.11. |
100.18. 4. |
96.18. 4. |
78.15.10. |
|
U.S.S.R |
48. 6. 9. |
58. 4. 7. |
58. 16. 1. |
104.14.10. |
80. 7. 0. |
68. 7. 1. |
81. 0. 0. |
|
Finland |
46. 3. 3. |
49. 0. 6. |
72. 1. 6. |
86.11. 5. |
92. 1. 4. |
74.10.11 |
71. 7. 6. |
|
Brazil |
67.19. 2. |
72.13. 0. |
80. 1.10. |
90.18. 8. |
104. 0. 7. |
103. 3. 7. |
97. 9.10. |
High prices and credit restrictions seem to have been the main factors hampering demand. Figures for Australian imports of sawn softwood in 1952 are not available, but they are estimated to have been about two-thirds of the volume and about half the value of those of 1951, because of the drop in prices. The apparent consumption of sawnwood, broadleaved and coniferous, seems to have risen in 1951, when it was estimated to be some 800,000 standards as against about 720,000 in 1950. In 1952, however, it showed some decline, owing to the difficulties mentioned above.
The prospects for 1953 are not easy to forecast, but there appears to be a possibility of a gradual recovery. Somewhat greater demand is indicated, and the ability to purchase foreign sawnwood, particularly from the dollar area, will depend on the foreign exchange situation.
As has been seen, the development of the sawn softwood market from 1950 to 1953 has been marked by extraordinary fluctuations in prices which varied greatly according to region. The most noticeable contrasts have been found between North America on the one hand and Europe and other regions on the other. Prices in North America increased by some 30 to 35 percent, while ranging between as much as 200 percent upwards and 30 percent downwards in European prices. Generally speaking, the greatest fluctuations were experienced in European export and import prices, the latter being further accentuated by changes in freight rates, both European and ocean.
On the other hand, the wholesale prices of sawn softwood in most of the European importing countries rose less and their changes were smaller. Table 2 shows price changes in selected countries. The price index of sawn softwood in Belgium, a typical importing country, indicates the relatively smaller increase in wholesale and retail prices compared with that in import prices. The figures also reflect the determining effect of consumers' resistance on high prices in general.
The most striking aspect of price development is the rise of prices in France, which is completely out of line with the general run and where prices had apparently been at a fairly low level, but started rising when French exporters obtained attractive prices abroad during the general 1951 boom and consequently increased their exports. The disproportionate relations between prices on the French domestic market and those obtained from exports drove the former up to a level more or less corresponding to export prices, and had a most harmful effect on the French market. The market was disorganized, and at the same time high prices caused strong consumers' resistance and falling consumption.
In Austria, the level of domestic prices was maintained by the authorities below the prevailing export prices. When internal price restrictions were lifted, the rise was consequently greater than on the European market in general. Another interesting phenomenon is the relatively greater increase in the prices of lower-quality sawnwood, which at their highest are considered to be out of proportion, a typical aspect of a sellers' market.
The development of c.i.f. prices of sawn softwood on a cumulative basis is given in Table 4 below.
The period considered also presents some aspects of general interest. Despite its vast area, the North American market seems to have all the characteristics of a self-sufficient national market, with production following demand flexibly and without any major effects on prices. Europe, on the other hand, although much smaller in area, has all the complications of an international market, despite the remarkable ease with which European timber industries as a whole followed the changes in demand. The main reason for this seems to be the almost complete dependence of the European importing countries on supplies available in the chief exporting countries, and the resultant competition between the importing countries for these goods.
Developments after the heavy fall in export prices in May 1952 have been followed with growing anxiety by European timber trade circles. After the rise in the autumn of 1952, prices again reached the level at which consumers' resistance in the summer of 1951 had first been noticed. The course of events over the past three years indicates clearly the dependence of the consumption level on that of prices, and also a greater sensitivity of demand and consumption to price fluctuations than had been anticipated. The growing substitution of other materials for sawnwood during the period under review also shows the danger of further price increases to the timber trade in general, and to the future of sawn softwood in particular.
