Commodity report

European pitprop supplies

European pitprop supplies

The pitprop supply situation in Europe, which at the beginning of 1950 had not raised any particular fears, was still considered to be satisfactory during the sixth session of the ECE Timber Committee, held in Geneva in April 1950. (Note: FAO provides the technical secretariat for the ECE Timber Committee). The import requirements of the main pitprop consuming countries were expected to be met by the potentialities of exporting countries, although a certain gap existed between forecasts of needs and expected supplies. This, however, was thought to be due to the usual overestimation of import requirements, and the under-estimation of export possibilities.

A sudden increase in the demand for pulpwood towards the end of 1950, however, considerably changed the situation. Thus in October, 1950, the seventh session of the ECE Timber Committee found the gap between import requirements and export possibilities had widened, and amounted to 677,000 solid m³, or 5 percent of total pitprop requirements, as against the earlier assumption of only 3 percent of total pitprop requirements. It was considered too late in the season for much likelihood of the gap being filled by further purchases for delivery in 1950, and therefore it was thought likely that consuming countries would have to draw on stocks more than anticipated. Thus the situation at the close of 1950 already showed signs of deterioration.

Production and Consumption in 1950

Although the net pithead production of hard coal in Europe had increased about 3 percent over production in 1949, consumption of pitprops was estimated to have increased to a less extent. This was due to economies in the use of pitprops in the mines as well as to the increased use of steel props. No statistics on European pitprop consumption, (excluding the U.S.S.R.) during 1950 hate been available, but it may be put at about 15,100,000 m³, as against an estimated 14,900,000 m³, in 1949. As the total European availabilities in 1950 (excluding the production of U.S.S.R. and Eastern Germany for their own use, but including their production for export, and Canadian imports to Europe) may be estimated at 13,385,277 m³, as against about 14,730,345 m³, in 1949, it was obvious that stocks had been heavily drawn upon in the course of the year. Information available seems to indicate that while stocks in most European countries showed considerable increases during 1949, and by the end of the year, in the western European countries only, were estimated at about one million m³, higher than at the beginning of 1949, stocks in the same countries (particularly in Belgium, France, Western Germany and United Kingdom) together showed a decrease of about 1,300,000 m³ in the course of 1950.

TABLE 1 - PITPROP PRODUCTION

	Forecast for 1951 in October 1950	Actual 1950	Forecast for 1950 in October 1950	Actual 1949
	Cubic meters
Austria	343 000	170 800	300 000	208 700
Belgium	850 000	815 000	850 000	850 000
Czechoslovakia	(670 000)	(680 000)	(680 000)	(680 000)
Finland	1 750 000	1 870 000	1 700 000	1 133 960
France	2 700 000	2 100 000	3 150 000	1 800 000
Germany (Western)	3 000 000	2 929 700	3 000 000	3 325 700
Hungary	(100 000)	(100 000)	(100 000)	(100 000)
Ireland	(14 000)	(14 000)	(14 000)	(14 000)
Italy	125 000	111 100	125 000	111 200
Luxembourg	(60 000)	70 342	(60 000)	89 576
Netherlands	(80 000)	92 000	80 000	79 800
Norway	1 100 000	50 000	1 100 000	101 000
Poland	(1 816 000)	(1 816 000)	(1 816 000)	(1 816 000)
Portugal	(240 000)	(240 000)	(240 000)	212 000
Spain	(1 000 000)	(1 000 000)	(1 000 000)	(1 000 000)
Sweden	430 000	268 000	160 000	1 661 000
Turkey	(71 000)	83 000	(71 000)	67 000
United Kingdom	630 000	642 500	630 000	636 000
U.S.S.R.	1,2 (900 000)	1,3 850 000	1 900 000	1,3 (700 000)
Yugoslavia	80 000	1 117 735	1 100 000	1 839 309
TOTAL EUROPE	13 959 000	13 020 000	14 076 000	13 685 545
Canada	1,4 300 000	365 000	1,3 50 000	1 044 800
U.S.A.	...	...	...	...
GRAND TOTAL	14 259 000	13 385 277	14 126 000	14 730 345

¹ Production for export
² Including Eastern Zone of Germany
³ Exports to Western Europe as reported by importing countries, plus estimated exports to Eastern Europe
⁴ Additional quantities available against demand
... Not available
Brackets indicate estimates

Table 1 shows actual European production of pitprops in 1949 and 1950, as well as the forecasts for 1950 and 1951 production. From this table the fact clearly emerges that the production of the main exporting countries (Finland, Sweden and Poland ) was slightly above the forecasts, and that most of the consuming countries produced quantities more or less equal to the forecasts. France, however, produced only about two-thirds of the planned 1950 production. This was due no doubt to the unusually large stocks of pitprops in the country at the beginning of the year, also to a smaller utilization than had been expected of fire-damaged timber from the Landes. The strong competition from pulpwood is also thought to have affected the production of pitprops to some extent. In fact, the cessation in 1949 of practically all deliveries of small-sized industrial roundwood from Western Germany to France had put the French pulp industries in a difficult position. The total quantities of this roundwood marketed yearly in Europe do not vary greatly from year to year. In consequence, France, instead of receiving large quantities from Western Germany, now has to compete with it for the amounts available from exporting countries, since Western Germany also planned to increase considerably its imports of both pitprops and pulpwood, and, at the same time, reduce the level of exploitation of its own forest resources, which had been largely over-exploited.

The decline in Norwegian pitprop production by about 50 percent was also a result of the competition from pulpwood, insufficient domestic supplies having even forced the Norwegian pulp industries to revert to larger imports of this raw material from Finland and Sweden.

Imports

Although estimated import requirements of pitprops in 1950 were put at 3,997,000 m³, only about 2,918,000 m³ were actually imported during the course of the year. This is shown in Table 2, which gives imports in 1949 and 1950, as well as import forecasts for 1950 and 1951.

TABLE 2 - IMPORTS OF PITPROPS

	Estimated import requirements for 1951 in Oct. 1950	Actual 1950	Estimated import requirements for 1950 in Oct. 1950	Actual 1949
	Cubic meters
Belgium	400 000	199 290	400 000	281 100
France	100 000	300 000	450 000	958 000
Germany (Western)	400 000	112 400	250 000	-
Hungary	(50 000)	(50 000)	(50 000)	(50 000)
Italy	-	6 490	-	1 410
Luxembourg	(10 000)	17 435	(10 000)	4 712
Netherlands	(100 000)	60 763	125 000	202 729
Poland	(450 000)	(450 000)	(450 000)	(450 000)
Spain	(50 000)	(30 000)	(30 000)	(12 000)
Sweden	-	100	-	-
Turkey	(132 000)	132 100	132 000	142 500
United Kingdom	2 470 000	1 559 500	2 100 000	2 390 100
TOTAL EUROPE	4 162 000	2 918 078	3 997 000	4 492 551

- Nil or negligible
Brackets indicate estimates

The most striking changes took place in the imports of Belgium, France, the Netherlands and the United Kingdom. It is obvious that even here developments were to some extent affected by the pulpwood situation. In some cases, too, importers of pitprops were unwilling to pay the rather high prices asked by exporters at the beginning of 1950. These prices had, as is customary, been influenced by the rise in pulpwood prices. Many importers had hoped for a decline in prices later in the year, and when no decline took place, they were unable to find new supplies of pitprops even at the higher prices they were now prepared to pay.

Exports

Although exports of pitprops from European sources in 1950 exceeded forecasts by about 2.2 percent, they were slightly below the 1949 exports, and also substantially below the estimated 1950 import requirements. The main northern exporting countries, Finland and Sweden, exceeded the amounts forecast, as they have done in all post-war years. (Norway, however, exported only about half the planned quantity for the reason given above). Most central European countries also exported more than had been estimated in October 1950, and also more than in 1949. It is interesting to note the increase in exports by eastern European countries (Czechoslovakia and Poland) proving that quantities available for export in these countries were in fact larger than the cautious estimates had shown.

Prices

The slight drop in pitprop prices at the beginning of 1950 was no doubt due to the decline in the prices of pulpwood towards the end of 1949. While prices paid for pitprops in 1949 varied between 290 and 305 shillings per fathom f.o.b., the prices paid for half-barked pulpwood were around U.S. $8.50 and $ 10 per cubic meter f.o.b. (piled). At the beginning of 1950 pulpwood prices, however, had dropped to about U.S. $ 7 per cubic meter f.o.b., which consequently brought pitprop prices to about 270 shillings per fathom f.o.b. at which price the first contracts with northern countries were signed. The steady increase in pulpwood prices towards the summer of 1950 had an immediate effect on pitprop prices, which, in contracts concluded towards the end of the year, averaged 394 shillings per fathom f.o.b. By the end of 1950 pulpwood prices had already reached as much as U.S. $ 10.50 per cubic meter f.o.b. and still showed a strong upward trend. Therefore the first contracts for 1951 pitprop deliveries fetched record prices, and 400 to 410 shillings per fathom f.o.b. was currently paid by the western European importing countries.

Outlook for 1951 and 1952

Requirements

The total requirements of new pitprop supplies in the main pitprop consuming countries (excluding Spain) were estimated by the seventh session of the ECE Timber Committee at 13,979,000 m³ in 1951, as against 14,228,000 m³ in 1950. The difference was largely due to expectations of large quantities of pitprops being available in France from the timber damaged by the forest fires in the Landes. These quantities, however, have not turned out to be as great as expected. The total European availabilities in 1950, including imports from Canada, were in fact about 1,000,000 m³ less than the above forecast of requirements, so that it is more than likely that in 1951 also requirements will either have to be cut or domestic pitprop production in the main consuming countries will have to be increased and considerably larger quantities imported from Canada. If efforts to stabilize the pitprop supply situation in 1951 were to fail, the repercussions on the situation in 1952 would no doubt lead to a serious deterioration in the supply position, particularly as the further increase in coal production planned for this year also necessitates a considerable increase in pitprop availabilities Where all the pitprops required are to be found will be one of the main problems in the European timber supply picture for 1952. Although the export possibilities of eastern European countries could no doubt be considerably increased it is doubtful under present uncertain conditions whether imports from these sources to Western Europe could actually be stepped up. Any increase in these exports is likely to depend largely on the kind of merchandise western European countries are willing to offer in order to obtain more timber from eastern Europe.

TABLE 3 - EXPORTS OF PITPROPS

	Estimated exports for 1951 in Oct. 1950	Actual, 1950	Estimated exports for 1950 in Oct. 1950	Actual, 1949
	Cubic meters
Austria	120 000	94 000	83 000	79 800
Belgium	50 000	26 970	50 000	10 700
Czechoslovakia	-	1 16 460	(10 000)	1 4 800
Finland	750 000	869 091	700 000	1,133 956
France	200 000	185 000	350 000	140 000
Germany (Western)	100 000	360 700	250 000	700
Hungary	-	-	-	-
Ireland	(12 000)	8 087	(12 000)	7 275
Italy	-	50	-	700
Luxembourg	(50 000)	134 905	(65 000)	51 660
Netherlands	-	-	-	-
Norway	100 000	50 144	100 000	100 970
Poland	(200 000)	1 203 367	(200 000)	1 38 500
Portugal	(200 000)	(150 000)	(200 000)	219 500
Sweden	400 000	213 300	220 000	660 800
Turkey	-	-	-	-
United Kingdom	-	-	-	-
U.S.S.R.	² (900 000)	²,³ (850 000)	² (900 000)	1,³ (700 000)
Yugoslavia	80 000	117 735	100 000	189 309
TOTAL EUROPE	3 162 000	3 310 509	3 240 000	3 338 270
Canada	4 300 000	62 000	50 000	709 700
U.S.A.	...	...	...	-
GRAND TOTAL	³ 462 000	3 372 609	3 290 000	4 047 970

¹ Exports to Western Europe only, as reported by importing countries
² Including Eastern Germany
³ Exports to Western Europe as reported by importing countries: 344,644 cu. m. in 1950 and 193,180 cu m. in 1949. Balance represents estimated exports to Eastern Europe
⁴ Additional quantities available against demand
- Nil or negligible
... Not available
Brackets indicate estimates

As already shown in Table 2 the import requirements for 1951 of the main European pitprop consuming countries show a considerable increase over the 1950 requirements. The fact recorded 1950 imports of pitprops were well below the planned import requirements for that year and consequently resulted in a heavy drawing upon stocks in most countries, will no doubt further increase the 1951 import requirements. Furthermore, the planned increase in the production of hard coal for 1951, i.e. 553,248,000 tons, as against 539,031,000 tons in 1950, will necessitate larger pitprop supplies than in previous years. The production of hard coal in Europe in 1949 and 1950, as well as the planned 1951 production by countries appear in Table 4 below:

TABLE 4 - PRODUCTION OF HARD COAL - (excluding open cast)

	Forecast for 1951	1950	1949
	Million metric tons
Austria	228	(185)	189
Belgium	28 700	27 304	27 850
Czechoslovakia	18 900	18 456	17 150
France	50 960	50 843	51 199
Saar	16 100	15 100	14 262
Germany: (Western)	1 118 600	110 755	103 237
Ireland	160	180	120
Italy	600	1 028	1 100
Netherlands	12 250	12 247	11 705
Norway	350	(340)	408
Poland	81 000	78 001	74 104
Portugal	550	419	441
Spain	10 000	(11 000)	10 600
Sweden	200	203	209
Turkey	...	4 360	4 200
United Kingdom	212 300	207 457	205 930
Yugoslavia	1 350	1 153	1 274
TOTAL	553 248	539 031	523 988

¹ Excluding French zone
... Not available
Brackets indicate estimates.

Production

The estimated European production of pitprops in 1951 shows an increase of about a million m³ over the actual 1950 production. A closer study of Table 1, however, makes it seem rather unlikely that this increase can be attained. In particular, estimated increases in the Austrian and Swedish, as well as in the Norwegian, production of pitprops seem unlikely, as all these countries are at present concentrating on increased pulpwood production, and even plan increased imports of pulpwood during both 1951 and 1952. Furthermore, since these countries are not important pitprop consumers, government pressure cannot easily be used to secure a sufficient, or at least the highest possible, pitprop production, as is the case in France and Western Germany, where mining is of vital importance to the country's whole economy.

Export possibilities

A study of Table 3 makes it seem more than probable that the 1951 export volume from European sources will not attain the 1950 level. As already mentioned above, the production, and consequently the export possibilities, of pitprops from countries such as Austria, Sweden and Norway, will probably remain well below the forecasts. For example, in Sweden it is feared that contracts under existing trade agreements to deliver in the course of 1951 about 400,000 m³ of pitprops and about 100,000 m³ of pulpwood would greatly endanger the activity of Swedish pulp industries, which are already suffering from a shortage of raw materials. In fact, the granting of export licences for pulpwood was discontinued in the summer of 1951. In Finland, the largest roundwood exporter in Europe at the moment, the present high level of roundwood exports has also caused some anxiety in industrial timber circles and it is feared that their continuation at this level may endanger the sound development of Finnish wood working industries. Also, it seems unlikely that during 1951 France will be able to export as much as planned in October 1950, and any increase in exports in 1952 seems still more unlikely. The only way to close the gap resulting from the decrease in exports from most countries would no doubt be a substantial increase in Canadian exports of pitprops to Europe, which, if on the 1949 level, would greatly ease the European pitprop situation. This is well within the limits of possibility, as the only country in Europe that depends mainly on foreign supplies is the United Kingdom, which is traditionally almost the sole importer of Canadian pitprops in Europe. As in all postwar years, the U.S.S.R. remains an unknown factor which might completely change the picture if any agreement were to be reached between it and western European importing countries.

Prices

The great increase in both pitprop and pulpwood prices, already referred to in the section dealing with 1950, continued during the first half of 1951, and U.S. $ 16 to $ 17 per piled cubic meter of half-barked pulpwood f.o.b. (around 700 shillings per fathom f.o.b.) was currently paid for contracts concluded at the end of this period. The corresponding price for pitprops at the same time, was generally estimated at around 600 shillings per fathom f.o.b. Any further changes in the pitprop prices depend entirely on the development of pulpwood prices during the second half of 1951. So far the price situation seems to have stabilized somewhat, and in many quarters the present level is considered as a ceiling. The development of pitprop and pulpwood prices, however, depends on so many imponderables, that, as past experience has shown, it is too hazardous to make any definite predictions.

Competition from Pulpwood

The increasing influence of pulpwood on the market for small-sized industrial roundwood emerges from the fact that while European and U.S.S.R. exports of pitprops slightly declined, (2,460,509 m³ in 1950 as against 2,638,270 m³ in 1949), exports of pulpwood practically doubled, and were 3,017,753 m³ in 1950 as against 1,690,295 m³ in 1949. Exports of pulpwood from eastern European countries, which in 1949 were only 8,500 m³ (from Czechoslovakia only) rose to 140,650 m³ in 1950. Moreover, imports of pulpwood by western European countries, which in 1949 were 2,169,382 m³ had in 1950 risen to 2,702,099 m³.

TABLE 5 - PULPWOOD

	Imports		Exports
	1950	1949	1950	1949
	Cubic meters
Austria	87 400	185 300	*	-
Belgium	218 580	54 300	1 910	23 900
Czechoslovakia	...	..	1 060	8 500
Finland	...	2 362	1,882 293	845 900
France	161 000	680 000	18 000	*
Germany (Western)	638 400	217 600	107 400	300
Germany (Eastern)	...	...	4 970	...
Italy	355 160	36 120	520	420
Luxembourg	-	-	200	30 348
Netherlands	251 400	242 000	-	-
Norway	216 659	62 700	1 808	...
Poland	...	...	90 570	...
Portugal	...	24 700	...	26 600
Sweden	501 900	436 400	256 400	129 100
(Switzerland)	33 900	99 000	13 000	...
Turkey	-	27 700	...	...
United Kingdom	237 700	101 200	-	-
U.S.S.R.	...	...	44 050	...
Yugoslavia	...	...	595 572	626 227
TOTAL. EUROPE	2 702 099	2 169 382	3 017 75	1 690 295
Canada 1			92 700	76 000
GRAND TOTAL	2 702 099	2 169 382	3 110 453	1 766 895

¹ To Europe only
* Small
- Nil or negligible
... Not available

The import requirements of these countries in 1951, however, were growing more rapidly than in the case of pitprops, and were estimated to be about 4,000,000 m³ in 1951 and around 5,000,000 m³ in 1952. Further increases in the next few years are considered to be inevitable, if the western European pulp and paper industries are to meet the strong demand or even maintain their present levels of production. In order to secure sufficient quantities of raw material, efforts are being made to find means of employing species other than conifers for pulping. This, however, needs time, also the problem of finding sufficient quantities of such pulpwood remains unsolved. Therefore the present competition for small-sized industrial roundwood is reflected in high prices which has caused a serious situation in western European pulp industries.

Conclusion

As already explained above, the European situation of small-sized industrial roundwood suddenly deteriorated towards the end of 1950 and has since then shown no change for the better. It is difficult to make any statement on the pitprop or pulpwood situations separately, as both these categories of roundwood are closely related to each other. The fluctuating demand for pitprops and pulpwood traditionally allowed large-scale stockpiling of one category at the expense of the other, and the situation on the whole was until recently well under control. Now, however, the demand for both these categories is unusually strong and no change appears likely in the future. The situation must, therefore, be considered as potentially serious. The pitprop requirements of the main industrial countries, Belgium, France, Western Germany and the United Kingdom, are considered to be absolutely essential for these countries' industrial activities, which in their turn are greatly dependent on the production of coal. The Korean conflict and the resulting re-armament program in Western Europe make it still more important to increase the present level of coal production in these countries. At present, however, it seems doubtful whether pitprop supplies available for western Europe today will allow even the present level of coal production to be maintained. The United Kingdom, which is chiefly a pitprop-consuming country, its pulpwood consumption being insignificant, may always be expected to revert to larger pitprop purchases from Canada. Thus a possible shortage of pitprops in the United Kingdom will not necessarily affect the European situation. France and Germany, however, present a different picture. These countries, both of which are at present large scale consumers of pitprops as well as of pulpwood, find themselves in a different situation. The pitwood resources of both countries have during the past years greatly decreased, those of France as a result of disastrous forest fires, and those of Western Germany as a result of large scale over-exploitation. Thus, both France and Western Germany are now forced to revert increasingly to imports, mainly from European sources. Most of the traditional roundwood exporting countries, however, as mentioned above, show signs of reluctance towards increasing their exports of roundwood, in some cases towards any exports of roundwood at all. The only country with substantial timber resources and which might still enter the European roundwood market on a large scale remains therefore the U.S.S.R., but, at least under present conditions, any substantial increase in roundwood exports from this country to western Europe appears to be rather speculative.

Note: During the eighth session of the Timber Committee of the Economic Commission for Europe, 28-31 Aug 1951 consultations were organized between working parties appointed by the Timber and Coal Committees. The estimates of these working parties showed for 1952 a pitprop deficit of more than 2 million m³, but it is conceivable that actual exports might be somewhat higher than anticipated and thus reduce the size of the gap. Even so, the shortage of pitprops caused by the competing claims for pulpwood had assumed serious proportions and might interfere with the planned increase in coal output in several countries.

The Timber Committee therefore drew the attention of governments to this critical situation, and recommended that measures be contemplated to increase in the major coal producing countries the domestic production of pitprops, and in the major wood exporting countries to give priority to export sales of pitprops. The priority for pitprops constituted, however, a short-term measure only, and should be limited to the essential requirements of coal-mines which might be revised by the Coal Committee in the light of the present shortage. The Timber Committee further stressed the need to make pitwood contracts at the earliest possible moment and recommended that governments encourage and facilitate such transactions.

The Timber Committee believed, on the other hand, that the shortage of small sized roundwood and the intensive competition for pitprops and pulpwood was not just a temporary phenomenon, but showed indications of becoming increasingly severe. The Committee therefore decided to include the review of the European pulpwood situation on the agenda of its next session and instructed the Secretariat to extend the scope of its quarterly timber statistics and bulletins to pulpwood as well. This should enable the Committee to undertake at its future sessions periodic reviews of pulpwood in the same way as is done with regard to other wood categories. It further requested the Executive Secretary to study, in co-operation with FAO, appropriate measures to overcome the apparent growing shortage of small sized roundwood and to submit these proposals to the Committee in due course. These proposals might also take into consideration the conclusions reached in the European Timber Trends Study, which the Secretariat has nearly finished.