Commodity reports - Forest products: situation and outlook, 1949/50*

Sawn lumber
Plywood
Pitprops
Railway sleepers (ties)
Wood pulp and pulp products
Fiberboards

* This article was written prior to the date of announcement of the recent currency devaluations. It is not possible, at this point, to gauge exactly how the devaluations will affect the outlook for forest products.

The chief problem affecting supplies of forest products lies today in the field of international trade and is intimately tied up with maladjustments in international exchange. A shrinkage in the How of dollars abroad, due to general cuts in United States imports, has caused other countries, notably the United Kingdom, to scale down their lumber imports from Canada and the United States and to seek supplies outside the dollar area. Production in softer currency countries capable of producing export surpluses has thus been stimulated, while stocks have tended to accumulate in North America. At the same time there has been a virtual cessation of United States purchases of wood pulp from Sweden, Finland, and Norway, which have depended heavily on pulp exports to balance their dollar trade. These countries produce over 60 percent of exportable world supplies of pulp, and the closure of American markets could result in a shift, temporary or permanent, to alternate markets.

World output of roundwood in 1949 is expected to be slightly below the 1948 estimate of 1,440 million cubic meters,¹ declines in North America and the Far East² probably more than offsetting gains in the Soviet Union, Europe, and the dependent territories of European nations, plus minor increases in Australia and New Zealand.

¹ See FAO, Yearbook of Forest Products Statistics - 1949. (In press.)

² The decline in the Far East reflects disturbed political and social conditions.

The features of the 1949 situation will probably be as follows: World lumber production will fall somewhat below the 1948 level, as the North American reduction will exceed increases elsewhere. A relatively large reduction will occur in pulpwood output, because stocks at pulp mills are high. Some of this timber will be diverted to the production of pitprops, which will be slightly over the 1948 level. The output of other products such as poles, sleepers (ties), and hardwood specialties will be at approximately the 1948 level. Total output of veneers and plywood may be somewhat larger than in 1948, but the total for wood pulp will drop below 1948, although some new mills will have come into production.

Domestic stocks of primary forest products in North America, normally representing three to nine months' production, are sufficiently large in relation to likely internal consumption levels to meet any deficit in production through the remainder of 1949 and 1950. The change from a sellers' to a buyers' market has caused relatively slight declines in internal prices, but the accumulated stocks may induce a selling drive that would result in a further fall in prices. This in turn could stimulate construction activities and paper consumption.

The over-all decline in forest output, if these forecasts are accurate, is likely to be moderate. It will occur in countries that could readily raise production in keeping with an expansion in economic activity; and although there may be little change through 1950, reports of member governments to FAO show expectations of a recovery in output in 1951.

At this stage there will be a new force to reckon with - the re-emergence of both Germany and Japan as importing countries of major significance (and as exporters of manufactured products). Import requirements of Bizone Germany for 1950/51, as reported to FAO, are as follows:

	Thousand cubic meters
Sawn softwoods	366.1 (About 80,000 standards)
Sawn hardwoods	58.8
Pitprops	720.0
Pulpwood	810.0
Veneer/plywood	3.8
Poles and piling	30.3
Other industrial wood	2.4
TOTAL	about 2,000

Japanese requirements for 1950 are reported to be in the order of 240,000 cubic meters of sawlogs and veneer logs, but only about 5,000 standards of lumber. Before the war Japan imported about 300,000 standards of lumber annually. But it also drew on Korea and Manchuria for supplies, which were not classified as imports.

Looking much farther ahead, if wood consumption of the underdeveloped countries were to approach the levels current, for example, in Switzerland or New Zealand, it would be necessary to double the present volume of world output of wood.³ The forests of the world, given reasonably good forest management, could progressively supply yields of this magnitude.

³ Progress in the underdeveloped countries is tied closely to industrialization. No country has ever attained success as an industrial nation without an ample, economical, and dependable supply of fuel. Many of the underdeveloped countries depend in large measure on wood for energy production, but wood is not an efficient fuel and in many areas must be brought from increasingly greater distances each year. It is evident that steps must be taken to develop alternative sources of energy.

Canada alone, already the world's largest exporter of forest products, could in the long run more than double its present output.⁴

⁴ See Proceedings of the Third World Forestry Congress, No. 2, "Forest Resources and Human Needs for Wood."

The declared policy of most governments today is to bring about the maximum use of forest resources, and not to let them lie idle and unused. This is the objective of the United States of America, the U.S.S.R., the British Commonwealth, and Brazil, which in the aggregate hold responsibility for more than 85 percent of the world's productive forest area. There is, however, no evidence that the desired balance between consumer needs and production will come of itself; the nations must continue to bring about an expanding world supply of diverse forest products for a growing world population.

Sawn lumber

During most of 1948 world output of softwood and hardwood lumber continued to show the upward trend characteristic of the postwar years. Production increased from some 30.8 million standards in 1946 to about 39.4 million standards in 1947 and 41.3 million standards in 1948, a level above the prewar average. Roughly 75 percent of the world lumber output is represented by softwoods.

In Europe, during the latter part of 1948, the lumber markets were comparatively easy except for imports from hard-currency areas. Developments during the first half of 1949 indicate that supplies, at least of the higher grades, are again short. Evidence for this statement is the exceptionally early closing of export sales. By 1 July the Scandinavian countries had contracted for 90 percent of their proposed exports. Strong efforts have also been made by importers to conclude contracts with the U.S.S.R.

In North America, available supplies of both softwood and hardwood lumber appear to have exceeded effective demand in 1948 and the first half of 1949, a situation attributed mainly to the recession in economic activity.

On the whole, effective demand has been influenced in international trade by currency difficulties and in domestic business by a general reluctance to buy in anticipation of a decline of prices. The downward price trend in the lumber industry has been consider ably smaller than in the wood pulp and paper industries, and has so far resulted in a weakening of prices for lower grades only.

TABLE 1. - INDICES OF LUMBER PRICES, 1946-49

Country and item	1946	1947	1948	May 1949
	Base 1938 = 100
United States (domestic)1	204	318	356	326
United Kingdom (imports)2	318	405	411	3 397
Canada (exports)3	316	366	377	...

¹ All lumber.
² Sawn softwood
³ Average, Jan.-May.

The following percentages, based on figures reported to FAO, indicate anticipated levels of lumber production for 1950 in countries covering about 80 percent of world output:

	Production in 1950 as percentage of 1948
Europe	103
U.S.S.R.	180
United States and Canada	94
Australia and New Zealand	109
Japan	85
Weighted average	112

Europe

Output of softwood lumber in Europe (excluding U.S.S.R.) in 1948 was about 33.9 million m³ (s)⁵ or 7.25 million standards, an increase of about 5 percent over the previous year. Output of sawn hardwood totaled 8 million m³ (s), an increase of almost 10 percent.

⁵ m³ (s) = cubic meters (sawn), as distinguished from m³ ® - cubic meters (round).

At the beginning of 1948, urgent postwar needs for timber having already been met, the effective import demand for softwood lumber (including sawnwood equivalent of sawlogs) of the main deficit countries in Europe was set at 2.1 million standards, in the light of shortages of appropriate foreign currencies and other financial considerations. "Essential needs," defined by countries participating in the work of the Timber Committee of the Economic Commission for Europe as potential requirements, were estimated at a much higher figure - 3.6 million standards.

By the end of the year Europe's gross softwood imports totaled 2.3 million standards, of which 1.8 million came from within Europe and 0.4 million (as compared with 0.8 million in 1947) from Canada and the United States. Thus the wide gap between supply and demand in the European timber situation, which seemed evident from the end of the war, changed into a temporary equilibrium in 1948. Because of the general easiness, the ECE Timber Committee recommended that no "buying limits" be set up for the importing countries in 1949.

But this equilibrium is an unstable one. "Essential needs" have not yet been met. In many countries, such as Belgium, the Netherlands, France, Italy, and Greece, building activity in early 1949 suffered a definite setback or came almost to a standstill. All European governments have still to cope with serious housing shortages.

Moreover, there is a major change in respect to Germany. Cessation of German exports of lumber and sawlogs after 1949 will decrease European export supplies by perhaps half a million standards, and Germany's urgent import demands for 1949 have already been estimated at well over 200,000 standards. A first step towards reopening the German markets for timber imports was taken in June 1949, when US$11.25 million was reserved for one year's purchases by western Germany of sawn and planed wood, equivalent to some 65,000 standards, from Sweden. This has been followed by purchases from Finland, and is scheduled to be followed by imports from Austria (which has already made several attempts to regain a traditional German market) and perhaps from Czechoslovakia.

The supply situation may improve as a result of the special credit arrangements now being negotiated for purchases of forestry equipment by certain countries against commitments to increase timber production and exports.⁶ These negotiations are being conducted, on the one hand, by the International Bank for Reconstruction and Development in close consultation with the secretariats of FAO and ECEI, and, on the other hand, by a number of European timber exporting and importing countries.

⁶ The International Bank granted loans of $2.3 million to Finland and $2.7 million to Yugoslavia on 17 October to finance the purchase of timber-producing equipment. These are two of the series of loans considered in connection with the so-called timber equipment project developed by FAO, the ECE Timber Committee and the International Bank. Negotiations with Czechoslovakia for a loan for a similar purpose are under way, and Austria has indicated a desire to participate in the project. Poland has been able to satisfy its timber equipment needs without bank financing.

The latest estimates of production and exports within the continent during 1949 and 1950 promise a definite improvement in Europe's timber balance. Production may increase by half a million standards in 1949 and by another half million or more in 1950. would be small enough to be filled by exports from North America. But this is where the main problem lies.

The United Kingdom, where the gap between supplies and potential demand is greatest and where the current rate of softwood consumption is down to about 45 percent of the 1934-38 average, was forced in mid-1949 to cut purchases from the dollar area by one-quarter. This new austerity program, therefore, seems to rule out greater supplies from North America, unless special arrangements are made. It does mean, however, that market prospects for European

IMPORTANT TIMBER AREAS OF THE WORLD

Map by courtesy of Pulp and Paper, Vol. 23, No. 5, April 30, 1949.

A slight increase could occur in the Scandinavian and Finnish exports shipments. The Swedish housing program provides for a progressive reduction of timber in the construction of dwellings from the present rate of about 5.8 standards per dwelling unit to 4.8 standards in 1951, and is thus expected to release additional quantities of timber for export. Additional lumber may be available from Finland as a result of a shift from pulp to lumber production.

In view, also, of a probable increase in exports from the U.S.S.R. and possible exports from Brazil, any gap between supply and demand in Europe export lumber remain good.

The United Kingdom price lists for Swedish and Finnish goods, agreed upon in April 1949, confirmed the trend toward restoring the spread between prices for higher-grade and lower-grade lumber. On the average, prices went down some 4 to 5 percent from the 1948 level, the drop of some lower-grade prices being 7 to 15 percent. As usual, United Kingdom prices have also influenced prices on other timber markets.

The relatively slight price decline on the lumber market has been strongly felt by the sawmill industries of several countries, where any further downward trend in export prices would reduce forest-workers' wages.

U.S.S.R.

During the period 1935-38 the U.S.S.R. exported an annual average of 1.1 million standards of softwood lumber. Since the war, exports have been almost negligible, Soviet supplies of sawn softwood to

European markets in 1948 being only about 56,000 standards. The position of the Soviet Union is, of course, dependent on the huge reconstruction and housing needs with which the government has still to cope. According to Soviet estimates,⁷ the country's losses in output capacity (in terms of current output) during the last war corresponded to 64 million cubic meters of felled timber, or 27 percent of the total capacity in 1940. On the same basis of calculation the losses in sawmill capacity amounted to 2.57 million standards, equaling 34 percent of the 1940 capacity.

⁷ Quoted in "The Soviet Union Since World War II," The Annals of the American Academy of Political and Social Science, May 1949.

The current five-year plan provided for a production of about 4.6 million standards of sawn lumber in 1948, and, according to official statistics, this target was exceeded, Production is scheduled to attain 8.3 million standards by 1950, or 109 percent of the 1940 output.

Domestic supplies of sawn lumber have been supplemented by considerable quantities imported from Finland, and probably by other quantities drawn from the Soviet Zone of Germany and elsewhere. Since 1945, up to 30 June 1948, when war reparations deliveries of timber were stopped, Finland had shipped 350,000 standards of sawn softwood and 1.22 million cubic meters of roundwood to the U.S.S.R. as reparation and restitution deliveries. In addition, Finnish exports under normal trade agreements with the U.S.S.R. included nearly 52,000 standards of sawn softwoods in 1947 and over 72,000 standards in 1948.

The re-equipment of the Russian sawmill industry has advanced favorably, and reorganization of transport has made possible the exploitation of forests previously inaccessible. A large proportion of domestic lumber needs has apparently been met, and the increasing lumber production has reportedly allowed the building of substantial reserves. Although the resumption of exports on the prewar scale will probably occur only gradually, there is always the possibility that the Soviet Union might in the near future increase its exports very considerably.

United States and Canada

Combined output of softwood and hardwood lumber in the United States in 1948 reached 18.2 million standards, compared with 17.9 million standards in 1947. Of this total, softwood contributed 14.30 million standards, according to industry estimates, as against 14.11 million standards in 1947.

The value of all new construction, both public and private, in the United States will reach a record total of $19,000 million in 1949, according to estimates by the U. S. Departments of Labor and Commerce. Nevertheless, it is expected that domestic requirements in 1949 for softwood and hardwood lumber for construction purposes will, at 11.78 million standards, be 3.5 percent lower than in 1948. An explanation is that total private construction is expected to drop 5 percent from the 1948 level, while public construction, which consumes relatively less timber, will increase more than 22 percent.

United States lumber exports have also declined, the drop amounting to more than 50 percent between 1947 and 1948. During the first half of 1949, exports of combined softwood and hardwood lumber were 15 percent below the rate for the corresponding period of 1948; shipments to the United Kingdom, Argentina, China, and the Union of South Africa had declined considerably, although those to some destinations had increased.

Diminished demand has resulted in a slight decline in production of lumber and lumber products, from 145 percent of prewar in 1948 to 127 percent in the first half of 1949.

As of 9 July 1949, stocks in mills in the main producing centers of the southern states and of the west coast of the United States were more than 35 percent higher than a year before. At the same time, unfilled orders on these mills were about 32 percent lower than a year earlier.

Domestic lumber prices in the United States have fallen somewhat, but most prices for higher grades have remained firm; According to official forecasts, domestic consumption in 1950/51 will attain only about 17.3 million standards, production being about 16.9 million and net imports about 900,000 standards.

Canada's production of softwood and hardwood lumber in 1948 declined by about 14 percent from the previous year, and for the whole of 1949 is expected to be about 2 to 3 percent below 1948.

The Canadian sawmill industry is dependent on export trade to the extent of 40 to 50 percent of its total output, the United States being its principal market. Between 1947 and 1948 Canada's dumber exports dropped nearly 10 percent from the 1947 levels to about 1.2 million standards, 98 percent of which was softwood lumber. Exports to the United States increased from 548,000 standards in 1947 to 824,000 standards in 1948, offsetting to a considerable extent the serious fall in shipments to all other destinations. The United Kingdom, second only to the United States as a buyer of Canadian lumber, took only 286,000 standards, compared with 574,000 standards in 1947. During the first quarter of 1949, Canada's lumber exports further declined by 31 percent below the corresponding period of 1948.

Domestic prices for softwood lumber in Canada remained firm throughout 1948, but export prices, particularly to the United States, declined slightly during the last quarter of the year. Though domestic and export prices for hardwood remained firm, reluctance to accept lower grades was felt. During the first half of 1949, there was a slight drop in prices for lower grades of lumber. In Canada, as well as in the United States, a number of sawmills discontinued operations.

Were it not for payment difficulties, shipments from the United States and Canada could contribute greatly to Europe's reconstruction needs. According to official estimates, the minimum quantities available for export from the United States in 1950 total about 500,000 standards and those from Canada 800,000 standards, after allowing for shipments to the United States at about the 1948 level. There is strong pressure in both countries to activate exports to Europe. Canada is making full use of the efficient service it operates for marketing its forest products abroad, with active representation by both the Federal Government and private business associations, backed by established grading-rules.

Far East and Oceania

Japan is today, as in the prewar years, one of the world's largest producers of softwood lumber, but the present rate of production, 2.03 million standards in 1948, is at the expense of limited forest resources which are being seriously overcut. In the prewar period, Japan imported 300,000 standards of lumber yearly, mostly of softwoods, but also drew on adjacent countries for supplies which were not considered as imports. These supplies are no longer available, and since a reduction in forest output is planned, import requirements are likely to rise considerably.

In Australia the production of sawn timber in 1948 reached a record of almost one million standards, and is expected to rise still further in 1950 and 1951. New Zealand expects to be in a position to export some 70,000 standards by 1955 without in any way depleting its forest resources. Since it is not a hard-currency area, it should be able in a few years to meet some of Asia's demand for softwood lumber.

The Forestry and Timber Utilization Conference for Asia and the Pacific, held under the auspices of FAO at Mysore, India, in the spring of 1949, called attention to means for overcoming the prevailing shortage of forest products in the region by increasing the now absolutely inadequate output of lumber. The development of forest output and trade within the region will be fostered through a projected Regional Forestry and Forest Products Commission.

Latin America

Latin America, with a lumber production of roughly 7.2 million m³ (s), or 1.5 million standards in 1948, has a relatively low consumption rate. On balance, the region is a lumber-importing area. The only exporting countries of major importance at present are Brazil, Chile, and Mexico.

Brazilian production of softwood lumber was 376,000 standards in 1948, of which 170,000 standards were exported, 90 percent going to South American destinations. Intra-regional and overseas lumber trade slackened toward the end of 1948 and at the beginning of 1949, owing to financial difficulties in Argentina (the most important buyer of South American lumber) and shortages of foreign currencies on the European markets. If Brazil could develop a sawmill industry capable of producing high export quality lumber, production could be stepped up with great advantage. Increasing attention will be paid in the future to the development of the great hardwood forest resources, especially of the Amazon Valley.

Africa

The Union of South Africa in 1946 imported almost twice as much softwood lumber as it produced, namely, 120,000 standards. Imports from the dollar area have since been severely restricted to reduce the drain on exchange, and tight controls have also been imposed on imports from other areas.

In French, Belgian, and some British territories in Africa, output of hardwood lumber or squared logs is rising, considerable quantities being exported to Europe and the United States.

Plywood

Manufacture of plywood, which just before the war was estimated to have attained a yearly volume of 2 million m³, has rapidly recovered and expanded during the past few years. By 1948 it was estimated at some 3.2 million m³. The bulk of production is still concentrated in the United States, Canada, Finland, and Japan. The first two countries accounted for nearly two-thirds of the 1948 world total.

Finland, with a production of 210,000 m³ in 1948, has come very close to the prewar level; output will be increased in 1949. The United Kingdom, Italy, the Netherlands, and Czechoslovakia have surpassed, and France has reached, the prewar figures of production Some countries, such as Switzerland, have established new plywood industries, using their own wood, but large-scale plywood industries in most of the Western European countries depend mainly on imported supplies of raw material.

The plywood industry in North America has expanded greatly during the last decade.⁸ Since the end of the war the Douglas fir plywood industry in the United States has achieved a 70-percent increase in production. However, it is improbable that the 1,738,000 m³ outturn of the United States softwood plywood industry in 1948 will be exceeded during 1949. Similarly, it is officially estimated that Canada's plywood production will be somewhat less in 1949 than in 1948, when it was 293,500 m³, although several new companies will have come into operation; through 1950 and 1951 the output of the Canadian plywood industry is expected to average 266,000 m³.

⁸ Related products, such as sandwich panels with thin high-strength faces and relatively thick, low-strength cores, light in weight and economical of material, are also rapidly coming into use for a variety of structures, including houses, boats, and aircraft. The commercial production of laminated wood products also continues to expand as adhesives are improved and gluing techniques perfected.

Output of the Japanese plywood industry since the war has been limited by the lack of logs; in 1948 it reached only 200,000 m³, less than one-third of the 1940 peak production. If increased imports of logs are obtained, production during 1950 is expected to approximate 250,000 m³, of which 26 percent will be designated for export.

No precise data are available on current plywood production in the U.S.S.R.; however, veneer output in 1948 was nearly 35 percent greater than in 1947, and is planned to reach a volume of 810,000 m³ in 1950.

Brazil greatly expanded its plywood manufacture during the war, the development being encouraged by the United States, anxious to develop additional supplies of this strategic commodity. Production reached over 70,000 m³ in 1946, but capacity has since had to lie idle because the United States market has disappeared and Brazil has not yet developed other export markets. The war also encouraged efforts in some French, British, and Belgian territories in Africa towards establishing hardwood veneer and plywood export industries, which are now yielding good results. There appears to be an important trend in all countries with suitable forest resources towards domestic manufacture of plywood and a reduction in export of veneer logs.

Plywood consumption in Europe is still at less than one-half of the prewar level, since restricted purchasing power has limited effective demand. The United Kingdom, followed by the Netherlands, Belgium, and Denmark, has been the main importer. Plywood exports have not yet reached the prewar level, as the U.S.S.R. (with the former Baltic countries) and Poland have been off the market. Now that reparation and restitution deliveries to the U.S.S.R. have been fulfilled, Finland, the largest plywood exporter, should be able to increase its plywood exports to 210,000 m³ in 1949. United States and Canadian exports have declined. By 1950, competition on plywood markets should be lively, when Poland, Japan, Brazil, and possibly the Soviet Union will have considerable export availabilities.

Pitprops

Generally speaking, the important mining and pitprop-consuming areas in South America, the Rhodesias, South Africa, Australia, India, Japan, and the U.S.S.R. produce their own pitwood requirements or obtain them from nearby sources. The United States, the world's largest coal producer, turns out about one-third the world's pitprop supplies without taking any considerable part in trade. Canada exports the main proportion of its output. Europe is by far the most important region in pitprop production and international trade, accounting for about one-half of the total world output and some two-thirds of the total trade.

Under these circumstances, only the European pitprop requirements present a problem of international importance. The demand depends on mining activity; fluctuations which affect it also affect pitprop production and trade. After the war the demand for pitprops in Europe was largely met by calling upon the national forest resources of the countries normally importing pitprops and by considerable shipments from Canada. The Soviet Union, one of the great suppliers of prewar years, has not yet reentered the pitwood market. Poland, after acquisition of the Silesian mines, has changed from an exporting to an importing country, while Germany has been temporarily self-sufficient.

With these changes in the supply-demand pattern, European production, supplemented by imports from Canada, made it possible to cover the requirements of European collieries in 1947 and 1948. Production of pilprops in Europe increased by about 8 percent from 1947 to 1948, while imports from Canada simultaneously declined by nearly 12 percent. The ECE Timber Committee has found that against an estimated import requirement for 1949 of 5,342,000 m³, there is an estimated export availability of 5,524,000 m³, which, having regard to the improved stock position at the beginning of the year, indicates that supplies will be fully sufficient.

This satisfactory position for 1949 has been brought about partly by developments in the pulp market. Pulpwood competes keenly with pitwood, and the recent decline in demand for pulpwood is expected to give impetus to increased output of pitprops.

Imports of Canadian pitprops by the United Kingdom declined in 1948 and again during the first five months of 1949. The new dollar-saving program of the United Kingdom will presumably result in further cuts through 1949-51.

Plans have been made for a rapid development of pitprop production in Japan. Output reached the quantity of 2.1 million m³ in 1948; it is scheduled to be 3.7 million m³ in 1949 and 4.0 million m³ in 1951. No provision is made for exports.

Railway sleepers (ties)

According to recent estimates, there are approximately 1.25 million kilometers of railway track in the world, representing about 3,000 million sleepers (ties), 95 percent of which are made of wood. Maintenance requirements are estimated at about 5 percent annually or 15 million m³. As sleepers rarely appear in national statistics as a separate item and information is generally scanty, it is not possible to give any accurate estimate of world output.

Output in countries reporting to FAO showed an upward trend in 1948, but figures do not include some of the most important producers, e.g., the United States and the Soviet Union. The U.S.S.R. five-year plan provides for an output of 185 million sleepers during the period 1946-50. In Europe a deficit in softwood sleepers is expected to continue, whereas the deficit in hardwood sleepers will gradually decline and probably disappear by 1951.

Railway sleepers have always been of minor importance in relation to other forest products in world trade. In 1937, they accounted for less than 2 percent of all timber exports, and in 1948 the percentage was even smaller. Since World War II, European intra-regional trade in sleepers has been resumed only to a limited extent, the previous major suppliers, the Soviet Union and Poland, having been off the market until 1949. There are indications, however, of increased exports in the near future from a number of Eastern European countries.

On the other hand, shipments of sleepers from North America to Europe considerably expanded during the early postwar years, the principal countries of destination being the United Kingdom, the Netherlands, and Belgium. However, while Canada's exports increased from about 222,000 to 281,000 m³, total exports of sleepers from the United States declined from almost 466,000 m³ in 1947 to 234,000 m³ in 1948. It was originally estimated that the United States could deliver 8 to 10 million sleepers out of a requirement of 50 millions for the Marshall Plan countries during the period up to 1951. The balance was expected to come primarily from Eastern Europe but perhaps to some extent from Latin America, notably Chile, Brazil, Costa Rica, Nicaragua, the Guianas, and Surinam. Later developments have increased reliance on sources outside North America.

There is a considerable body of opinion that many countries demand too rigid specifications, especially for hardwood sleepers, which means great conversion wastage and high costs of production.

Wood pulp and pulp products

Wood Pulp

World output (excluding U.S.S.R.) of all grades of wood pulp amounted in 1948 to about 28 million metric tons (see Table 2). Of this quantity, some 5 million tons, or almost 18 percent, moved in international trade. From the point of view of industrial requirements, no shortage of pulp can be said to have prevailed, although consumer needs in pulp products are, in most parts of the world except the United States and Canada, largely unsatisfied.

The main pulp-producing regions are North America, which in 1948 accounted for 68 percent of world output (excluding U.S.S.R.), and Europe, which accounted for 27 percent of world production. The corresponding figures for 1937 were 46 percent and 49 percent.

TABLE 2. - WORLD PULP BALANCE¹

Region	1937		1948		1950
	Consumption	Production	Consumption	Production	Consumption	Production
	Thousand metric tons
Europe	9,900	11,590	7,000	8,050	9,400	9,600
U.S.S.R. (exports)	...	²145	...	40	...	75
Near East and North Africa	15	5	15	10	20	15
North America	12,030	10,950	19,255	20,290	20,290	³20,310
Latin America	245	25	470	190	580	315
Africa	...	...	15	15	15	15
Asia	1,525	1,180	520	505	715	665
Oceania	50	...	200	160	245	175
WORLD TOTAL	23,765	23,895	27,475	27,980	31,265	31,170
	Apparent Surplus (+) or Deficit (-)
Region	1937		1948		1950
	Thousand metric tons
Europe	+1, 690		+1,050		+200
U.S.S.R.	+145		+40		+75
Near East and North Africa	-10		-5		-5
North America	-1,080		-245		4+20
Latin America	-220		-280		-265
Africa	...		...		...
Asia	-345		-15		-50
Oceania	-50		-40		-70
WORLD TOTAL	+130		+505		-95

SOURCE: Report of the Preparatory Conference on World Pulp Problems, Montreal, 1949.
... None, small, or not available.
¹ The forward estimates are based on hypothetical assumptions as to prevailing economic conditions in the various countries of the world.
² Baltic republics.
³ Based on maximum production estimates for the United States.
⁴ It is generally expected that North America will continue to show A net import balance. The calculation on which these surplus figures are based assumes that maximum production will occur, which is not necessarily true.

Production in 1949 does not now seem likely to exceed the 1948 total, as was envisaged by the Montreal Pulp Conference. The 1950 projections may also not be fulfilled on account of the reduced demand in the United States and Canada in 1949. In these countries, newsprint production showed a 7-percent gain during the first six months of 1949 as compared with the corresponding period of 1948, but chemical pulp production and purchases by other paper mills declined significantly. It was clear that mills were buying only sufficient pulp to meet their immediate needs, and their pulp inventories at the end of March 1949 showed a drop of 18 percent from the same date in 1948. According to reports, the anxiety to reduce inventories seems likely to continue up to the last quarter of 1949, but unless the production of paper products begins to slacken, purchases of chemical pulp will have to be resumed early in 1950.

International trade in wood pulp consists primarily of exports from Canada the Scandinavian countries, and Finland, plus certain quantities from the United States to Latin America and other destinations. Imports from Sweden and Finland to the United States in 1947 amounted to more than one-third of the United States wood-pulp imports, and were important dollar earners. But these imports covered only marginal requirements. As the United States pulp market became saturated in 1948, the slackening demand was followed by a downward movement of prices and a sharp reduction, almost to zero, of imports of Scandinavian pulp.

TABLE 3. - INDICES OF IMPORTED WOOD PULP PRICES (UNBLEACHED SULPHITE)

Country	1946	1947	1948	1949
				March	June
	Base: 1938 = 100
United Kingdom	225	318	411	404	...
United States	190	277	312	292	268

The question arises whether the reduction in prices and imports is temporary or permanent and whether, when the demand for pulp recovers in the United States, the imports from Northern Europe will be resumed. The reduction in prices will make it harder for these countries, with their comparatively high production costs, to compete in the United States market. In the ease of Finland, however, the recent devaluation of the markka by 17.7 percent and the release from having to deliver pulp and paper under reparations to the U.S.S.R. is expected to restore its competitive position.

To the extent that the North European producers feel compelled to give priority to whatever they can sell for dollars or other non-European currencies, the chances of satisfying other European requirements for pulp are thereby lessened. European requirements are tending to expand more rapidly than production, although effective demand for imports is still strongly controlled by governmental restrictions on consumption. If these restrictions were eased, European demand could absorb almost the entire European production.

Pulp and paper manufacturing in Western Europe is much below capacity because of lack of raw materials. The Western European countries, including the

GEOGRAPHICAL DISTRIBUTION OF SWEDISH PULP EXPORTS 1936-38 (average), 1947, and 1948

Chart by courtesy of Index, No. 180, June 1949.

United Kingdom, hope to regain their supplies of raw materials in order to reduce their dependence on imported paper and to expand their exports of newsprint and other paper products to underdeveloped countries. At the moment, with falling prices and a greater availability of raw materials from the Scandinavian countries, their industries are recovering. This upturn, however, may be of short duration.

The main difficulty is this question of the raw materials supply.⁹ On the continent of Europe the forests of many countries have been heavily overcut during the war and postwar years. Full use of Europe's existing pulp capacity would require an increase of about 60 percent over the 1947 rate of pulpwood cuttings. This clearly could not be contemplated, nor could the wood be secured by diverting supplies from other products, such as saw timber and pitprops, since demand is high for both of these. The situation is made more acute by the lack of pulpwood exports from the U.S.S.R.

⁹ For forward estimates of pulpwood supplies see Report of Preparatory Conference on World Pulp Problems, Montreal, 1949.

The plans of the underdeveloped countries include, in many instances, the establishment of pulp industries in order to make them independent of imports. Since it is most efficient to manufacture pulp products as part of a continuous process along with the production of pulp, there might be a corresponding shift in paper production capacity.

In Latin America and Africa the possibilities for augmenting the world pulp supply are enormous, providing that social, technical, and economic problems connected with the utilization of tropical forests can be solved. The problems of adapting tropical species to the commercial production of pulp are being explored, and a number of countries are undertaking extended research in that field. Recently France has concluded experiments on an industrial scale for the pulping of a considerable number of African species. Mixtures of as many as 24 of such species have been successfully digested in a commercial plant, and sample lots of good paper have been made from the resulting pulp. A pilot plant is under construction on the Ivory Coast to determine the practical possibilities on a commercial scale.

The use of straw, bagasse, and similar fibers as substitutes for wood in pulp manufacture has already given and may in the future give excellent results from a technical point of view. From the economic point of view their probable usefulness depends upon local conditions in each country.

Dissolving Pulp

Although so-called "dissolving wood pulp" accounts for only about 5 percent of total pulp output, the products manufactured from this commodity are of great importance. Tentative estimates for the breakdown of the consumption of dissolving wood pulp in 1948 in the United States show the following percentages:

	Percent
Viscose and acetate rayon	65
Cellophane	17
Nitrocellulose	3
Plastics	2
Special papers, vulcanized fiber, and miscellaneous	13

Not much change is expected in the immediate future in the demand for dissolving wood pulp for any field except rayon.

Over the last thirty years, the rayon yarn and staple fiber industry has developed greatly. World production of rayon and staple fiber increased between 1930 and its peak year, 1941, from 208,000 tons to over 1.25 million tons. This development was interrupted by the war, but in 1948 production reached 1.12 million tons.

It is to be assumed that, as a result of industrial rehabilitation in Germany and Japan, production in Europe and the Far East will revive substantially although it will still be small by prewar standards. There is already a large-scale diversion of sulphite capacity from paper grades to dissolving grades in the Scandinavian countries. In the United States, expansion of the rayon industry is expected to bring steadily increasing demands for dissolving wood pulp. The United States industry in 1948 used 81 percent of wood pulp in rayon manufacture as against 19 percent of cotton-Enter pulp, the corresponding 1938 figures being 75 and 25 percent.

Foreign exchange shortages of major importers of natural fibers are also encouraging use of dissolving wood pulp for rayon manufacture. World consumption of rayon is expected to reach 1.4 million tons in 1949 and 1.5 million tons in 1950. So far in 1949 production of dissolving wood pulp, except in the United States, has not followed the downward production trend that has occurred in paper pulps; there have been price drops to make woodpulp prices more competitive with cotton-linter pulp.

Fiberboards

The manufacture of fiberboards or fiber building boards offers a profitable use for low-grade portions of the forest crop and conversion "waste." The industry has expanded considerably since the war. Production in European countries rose in 1948 by about 14 percent as compared with 1947, and in North America by nearly 17 percent. Total world production in 1948 is estimated at 2.0 million metric tons, as compared with 1.7 million metric tons in 1947.

This upward trend is expected to continue through 1949. The capacity of the Swedish fiberboard industry, which toward the end of 1948 was estimated at almost 100,000 tons of insulating board and 200,000 tons of hardboards yearly, will rise further in 1949 and 1950 on account of new industrial establishments. For the same reason, the capacity of the Finnish fiberboard industry, estimated at about 75,000 tons in 1947, is expected to reach the level of 110,000 tons a year in 1949. The third largest European fiberboard supplier, Norway, which had an annual capacity of approximately 70,000 tons in 1948, will start production shortly in two new factories. Manufacture in the Western Zones of Germany has been steadily recovering. In addition, Austria is expected to increase its production to a very great extent. In a number of other European countries the fiberboard industry has been developed to such a degree that the main part of the requirements can be met from domestic supplies, and some countries, for instance Hungary, are planning to set up new plants.

The fiberboard industry in the United States will be expanded so as to reach a larger output in 1950 than the 1.15 million tons produced in 1948. According to official estimates, production in Canada, which was 143,000 metric tons in 1948, will be over 163,000 metric tons by 1950 or 1951. Australia, which produced about 11,000 metric tons of hardboard in 1947, will probably be able to increase production up to 18,000 metric tons in 1949; softboard output is expected to remain at the present level (about 9,000 metric tons). The Union of South Africa and at least two South American countries are among the newcomers in fiberboard manufacturing.

Exports of the European producers of fiberboard also expanded during 1948, despite the fact that the change from a sellers' to a buyers' market was accentuated by the new domestic production in many countries. The demand for hardboard rose proportionately higher than the demand for insulating board.

TABLE 4. - EXPORTS OF THE MAIN FIBERBOARD SUPPLYING COUNTRIES

Country	1947	1948
	metric tons
Sweden	75,500	94,300
Finland	16,000	31,800
Norway	4,500	10,300
United States	43,000	33,700
Canada	47,000	41,000

In 1948 exports from the three European countries to the United Kingdom were almost doubled, and the total U.K. purchases reached nearly 50,000 metric tons (34,000 tons in 1947). As a result of these large purchases, stocks of fiberboard in the United Kingdom at the beginning of 1949 were unusually high, the softboard stocks corresponding to two years' consumption at present rates. Imports to the Netherlands, the second largest buyer, were more than doubled in 1948 as compared with 1947.

The trend toward a geographical spread in the establishment of fiberboard manufacturing capacity may cause some of the major producing countries to cut down on their production plans. Exporting countries are already looking for new markets, which should be available in some subtropical and tropical regions.

WOOD AND WOOD PRODUCTS RELATIVE LEVELS OF CONSUMPTION, 1948^* - Cubic meters per person

* Based on report data only.