Required Report - public distribution

**Date:** 11/4/2005

**GAIN Report Number:** CI5027

CI5027

**Chile**

**Solid Wood Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Christine M Sloop, Agricultural Attaché

Office of Agricultural Affairs

**Prepared by:**

Luis Hennicke, Agricultural Specialist

**Report Highlights:**

Chile's forest production will continue to increase as more trees are
reaching harvesting age. Exports also are expected to grow both in
volume and in value in 2005, as prices for forest products are rising
again.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Santiago \[CI1\]

\[CI\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Forest Situation 3](#forest-situation)

[Table 1 - Annual Coniferous Growth Rate
3](#table-1---annual-coniferous-growth-rate)

[Table 2 - Total Chilean Radiata Pine and Eucalyptus Planting
4](#table-2---total-chilean-radiata-pine-and-eucalyptus-planting)

[Table 3 - Radiata Pine: Distribution by Age
4](#table-3---radiata-pine-distribution-by-age)

[Forest Subsidy Program 5](#forest-subsidy-program)

[Table 5 - DL - 701 Payment Summary
5](#table-5---dl---701-payment-summary)

[Native Forest 5](#native-forest)

[Trade Policy 5](#trade-policy)

[Forest Production 6](#forest-production)

[Table 7 - Chile: Log Production 6](#table-7---chile-log-production)

[Forestry Trade 7](#forestry-trade)

[Exports 7](#exports)

[Table 8 - Chile's Forestry Export by Destination
7](#__RefHeading___Toc118880261)

[Table 9 - Chile's Forest Product Export by Major Commodity
8](#__RefHeading___Toc118880262)

[Imports 8](#imports)

[Wood Chips 9](#wood-chips)

[Table 12 - Chile's Wood Chip Production
9](#table-12---chiles-wood-chip-production)

[Table 13 - Chile's Wood Chip exports for 2004
9](#table-13---chiles-wood-chip-exports-for-2004)

[PSD Table 10](#psd-table)

[Export Trade Matrix 10](#export-trade-matrix)

[Softwood Logs 11](#softwood-logs)

[Table 14 - Average Softwood Log Prices
11](#table-14---average-softwood-log-prices)

[PSD Table 11](#psd-table-1)

[Export Trade Matrix 12](#export-trade-matrix-1)

[Softwood Lumber 12](#softwood-lumber)

[Table 15 - Average Softwood Lumber Prices
13](#table-15---average-softwood-lumber-prices)

[PSD Table 13](#psd-table-2)

[Export Trade Matrix 14](#export-trade-matrix-2)

# Executive Summary

Total output of Chile\'s forest sector grew again in 2004. The area
devoted to commercial forestry increased again, by over 32,000 hectares.
Exports increased from \$2.52 billion in 2003 to \$3.40 billion in 2004.

For 2005, both the volume and value of total forest production and
exports is expected to continue growing, as prices for some products
like lumber and wood pulp are recovering.

Development of Chile\'s forest products sector has occurred mainly
through expanded commercial planting, with excellent adaptation of
radiata pine and eucalyptus. Future growths will occur as a result of
developing the relatively untouched and unmanaged native forests in
southern Chile. However, this is contingent on the contents of the
proposed native forest legislation, which has been stalled in Congress
for several years.

# Forest Situation

A total of 130,640 hectares were planted in CY2004, which increased the
total planted area nationwide by 80,067 hectares. Of the total planted
area in 2004, a little over 68,000 hectares correspond to new-planted
area and almost 63,000 hectares are reforestation. Total yearly-planted
area has increased again after some years of a slowdown due to a number
of factors, including less favorable planting and tax incentives in the
new forestry law (DL 701), the high cost of land relative to neighboring
countries, and the disruptive activities of ecologists. Nevertheless,
total forest production will continue to expand as private tree farms
reach harvest able age.

Chile\'s development of an important forest products sector is due in
great part to the success of radiata pine. Radiata pine matures in 20‑24
years in Chile, with thinning it can be available for use after just 15
years, compared to 30 years in New Zealand and Australia, and 40‑60
years in North America and Europe. Since the pine grows so quickly in
Chile, the wood is very soft.

+------------------------------------+---------------------------------+
| ## Table                           |                                 |
|  1 - Annual Coniferous Growth Rate |                                 |
+------------------------------------+---------------------------------+
| Country                            | Growth Rate                     |
|                                    |                                 |
|                                    | (M3/ha/yr)                      |
+------------------------------------+---------------------------------+
| Chile                              | 24.0                            |
+------------------------------------+---------------------------------+
| New Zealand                        | 20.0                            |
+------------------------------------+---------------------------------+
| United States                      | 3.0                             |
+------------------------------------+---------------------------------+
| Sweden                             | 2.9                             |
+------------------------------------+---------------------------------+
| Canada                             | 2.2                             |
+------------------------------------+---------------------------------+

## 

+---------------------------+-------------------+---------------------+
| ## Table 2 - T            |                   |                     |
| otal Chilean Radiata Pine |                   |                     |
|  and Eucalyptus Planting  |                   |                     |
|                           |                   |                     |
| December 2004 (In         |                   |                     |
| Hectares)                 |                   |                     |
+---------------------------+-------------------+---------------------+
| Region                    | Eucalyptus        | Radiata Pine        |
+---------------------------+-------------------+---------------------+
| I (Northern border)       | 288               | \-                  |
+---------------------------+-------------------+---------------------+
| II                        | 2                 | \-                  |
+---------------------------+-------------------+---------------------+
| III                       | 1,259             | 1                   |
+---------------------------+-------------------+---------------------+
| IV                        | 1,846             | 6                   |
+---------------------------+-------------------+---------------------+
| V                         | 36,456            | 11,046              |
+---------------------------+-------------------+---------------------+
| Metropolitan              | 10,881            | 993                 |
+---------------------------+-------------------+---------------------+
| VI                        | 22,656            | 62,127              |
+---------------------------+-------------------+---------------------+
| VII                       | 20,456            | 361,703             |
+---------------------------+-------------------+---------------------+
| VIII                      | 183,329           | 606,240             |
+---------------------------+-------------------+---------------------+
| IX                        | 127,454           | 249,910             |
+---------------------------+-------------------+---------------------+
| X                         | 84,975            | 116,404             |
+---------------------------+-------------------+---------------------+
| XI                        | \-                | \-                  |
+---------------------------+-------------------+---------------------+
| Total \*                  | 489,603           | 1,408,430           |
+---------------------------+-------------------+---------------------+
| \* Limited planting       |                   |                     |
| exists in Regions XI and  |                   |                     |
| XII                       |                   |                     |
+---------------------------+-------------------+---------------------+
| Source: Chile's Forestry  |                   |                     |
| Institute (INFOR)         |                   |                     |
+---------------------------+-------------------+---------------------+

+-----------+-----------+-----------+-----------+-----------+-----------+
| #         |           |           |           |           |           |
| # Table 3 |           |           |           |           |           |
|  - Radiat |           |           |           |           |           |
| a Pine: D |           |           |           |           |           |
| istributi |           |           |           |           |           |
| on by Age |           |           |           |           |           |
|           |           |           |           |           |           |
| (         |           |           |           |           |           |
| Hectares) |           |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+
| Age in    | 1965      | 1980      | 1990      | 2000      | 2004      |
| Years     |           |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 0-5       | 19,663    | 303,994   | 325,626   | 433,861   | 343,085   |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 6-10      | 52,612    | 192,220   | 344,426   | 276,435   | 350,989   |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 11-15     | 86,233    | 76,959    | 369,240   | 319,025   | 320,102   |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 16-20     | 69,858    | 51,974    | 142,772   | 297,982   | 224,971   |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 21-25     | 27,003    | 44,655    | 40,307    | 120,231   | 137,463   |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 26-30     | 4,395     | 33,898    | 10,363    | 17,742    | 22,968    |
+-----------+-----------+-----------+-----------+-----------+-----------+
| 31 or     | 921       | 13,239    | 9,365     | 8,841     | 7,852     |
| more      |           |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+
| Source:   |           |           |           |           |           |
| Chile's   |           |           |           |           |           |
| Forestry  |           |           |           |           |           |
| Institute |           |           |           |           |           |
| (INFOR)   |           |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+

Eucalyptus is the second largest planted species in Chile. Planting has
increased at a more rapid pace than for radiata during the last few
years, because Eucalyptus products command higher prices and can be
harvested even sooner than radiata pine. As of December 2004, over
489,000 hectares have been planted. Eucalyptus has great potential in
Chile, since it can be harvested after only 10 to 15 years. The growth
capacity for Eucalyptus is up to 30 CUM per hectare per year.

Present estimates put total native forests at 13.4 million hectares. Out
of this total, 4 million hectares are protected as forest reserves and 5
million belong to private enterprises and under protection. According to
industry, an estimated 4 million hectares are considered to be
productive. The exploitation of the mostly over‑mature native forest
consists primarily in selective cutting, mainly wood for chip
production. Chilean native forests possess numerous tree species that
have no known European or North American counterpart.

# 

# Forest Subsidy Program

Law Decree (DL) 701, which is mainly designed to assist small farmers
now, subsidizes planting costs by as much as 90 percent for the first 15
hectares, but only 75 percent of plantings thereafter. It also
subsidizes 15 percent of the planting costs for larger farmers, when
they plant land, which has been severely eroded, or land that can only
be used for reforestation. A maximum of \$15 million dollars yearly is
destined for this purpose. Special land tax exemptions are also part of
the program. During 2004, almost 20,000 hectares qualified for the
planting subsidy, with payments totaling \$10.0 million. There are no
subsidies for trimming and forest management. During the life of this
program, from 1974 to the end of 2004, the Chilean government has paid
\$245.3 million in subsidies.

+-----------------+-----------------+-------------+--------------------+
| ## Tabl         |                 |             |                    |
| e 5 - DL - 701  |                 |             |                    |
| Payment Summary |                 |             |                    |
+-----------------+-----------------+-------------+--------------------+
|                 | Subsidy Amounts |             | Area Subsidized    |
|                 |                 |             |                    |
|                 | (US\$ Million)  |             | (Hectares)         |
+-----------------+-----------------+-------------+--------------------+
|                 | Period          | Total       | Total              |
+-----------------+-----------------+-------------+--------------------+
| Trimming        | 1983-04         | 12.7        | 408,037            |
+-----------------+-----------------+-------------+--------------------+
| Management      | 1978-04         | 28.2        | 7,108,259          |
+-----------------+-----------------+-------------+--------------------+
| Reforestation   | 1976-04         | 204.3       | 1,145,303          |
+-----------------+-----------------+-------------+--------------------+
| Source: Chile's |                 |             |                    |
| Forestry        |                 |             |                    |
| Institute       |                 |             |                    |
| (INFOR).        |                 |             |                    |
+-----------------+-----------------+-------------+--------------------+

# 

# 

# Native Forest

The proposed law, called \"Law for the Recovery and Promotion of the
Native Forest\" has been sitting in Congress since 1992. The bill has
gone through lengthy discussions and still has not been approved, mainly
due to differing views among the various government agencies involved.
This law is expected to provide a framework for the sustainable
management of Chile\'s extensive native forests.

# Trade Policy 

Chile has signed trade agreements with many countries, among them
Mexico, Canada, European Union, United States, South Korea and EFTA.
However, no significant changes are expected to occur in terms of trade
because some of these countries are not Chile's most important forest
products trading partners and others already had low tariffs for wood
and wood products before the agreements were signed.

Nevertheless, the forest industry is optimistic regarding new
agreements, which are presently in the pipeline, like the ones with
China. Reportedly, forest products are excluded and wood panels are in
the 5-year tariff reduction category. By 2011 these panels should be
duty free.

# Forest Production

Total log production increased to 44.3 billion CUM in 2004, up from 39.1
billion in 2003. Economic recovery observed in the world, mainly in
South East Asia and China, together with an improvement in the Chilean
economy explains another year of expansion. Further expansion is
expected in 2005, as more tree farms reach maturity and are harvested.
Additionally, industry expects a slight but positive increase in demand
for higher value added forest products.

Around 70 percent of Round wood output is used by the forestry industry.
The remainder is used for firewood. Commercial utilization of Round wood
includes pulp, wood chips, sawn wood and lumber production. At least one
half of Chile's population uses firewood in their homes for heating and
cooking purposes.

Tree farm thinning is the main source of Round wood for pulp logs. Wood
chips are mainly a by‑product of sawmill operations.

+------------+---------------+----------------+------------------------+
| ## T       |               |                |                        |
| able 7 - C |               |                |                        |
| hile: Log  |               |                |                        |
| Production |               |                |                        |
+------------+---------------+----------------+------------------------+
|            | Forest Area   |                | Log Harvest            |
|            |               |                |                        |
|            | (Thousand     |                | (1,000 M3)             |
|            | Ha.)          |                |                        |
+------------+---------------+----------------+------------------------+
|            | Planted       | Native         |                        |
+------------+---------------+----------------+------------------------+
| 1996       | 1,836         | 7,123          | 33,388                 |
+------------+---------------+----------------+------------------------+
| 1997       | 1,882         | 7,123          | 34,056                 |
+------------+---------------+----------------+------------------------+
| 1998       | 1,914         | 7,123          | 31,672                 |
+------------+---------------+----------------+------------------------+
| 1999       | 1,952         | 7,123          | 33,972                 |
+------------+---------------+----------------+------------------------+
| 2000       | 1,989         | 13,404         | 36,568                 |
+------------+---------------+----------------+------------------------+
| 2001       | 2,037         | 13,404         | 37,789                 |
+------------+---------------+----------------+------------------------+
| 2002       | 2,074         | 13,404         | 37,791                 |
+------------+---------------+----------------+------------------------+
| 2003       | 1,998         | 13,404         | 39,132                 |
+------------+---------------+----------------+------------------------+
| 2004       | 2,079         | 13,457         | 44,344                 |
+------------+---------------+----------------+------------------------+
| Source:    |               |                |                        |
| Chile's    |               |                |                        |
| Forestry   |               |                |                        |
| Institute  |               |                |                        |
| (INFOR)    |               |                |                        |
+------------+---------------+----------------+------------------------+

# Forestry Trade

## Exports

In 2004, Chile\'s forest product exports totaled \$3.40 billion, up from
\$2.52 billion the year before. This amount represents 11 percent of
total Chilean exports. As the global economy shows signs of recovery and
a new wood pulp plant is scheduled to begin operating, the forest
industry forecasts exports will expand further to \$3.6 billion in 2005.
Industry sources believe that new investments in the forestry sector are
a sign that export will rise further.

While industry sources note it is difficult to concretely link the
growth of exports to the United States to the FTA, exports to the United
States did expand over 55 percent during last year. As a result, the
United States has remained Chile\'s largest export market, accounting
for over 29 percent of total exports in 2004. Industry sources expect
another large expansion in exports to the United States, as housing
construction comes to show strong signs of activity. China became the
second largest export market with 10 percent of total exports. In the
coming years, exports to China are expected to grow significantly as a
result of the Chile-China free trade agreement, which should take effect
during late 2006.

Industry sources forecast that forestry exports could exceed US\$6
billion by 2010.

# 

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# Imports

Chile's forest product imports totaled \$747 million in 2004, up from
\$565 million in 2003. For 2005, another expansion of imports is
expected as the Chilean economy keeps growing mainly in the construction
sector.

Chile has an across the board import duty of 6 percent. Additionally
Chile has signed free trade agreements with several countries, among
them: Mexico Venezuela, Colombia and Ecuador. All wood product imports
from these countries are duty free. Additionally, most imports from the
United States and Mercosur countries are duty free.

Most imports come from Brazil (19 percent), Argentina (18 percent) and
the United States (13 percent). Paper, cartons and other manufactured
products are the main imported products (67 percent), followed by
furniture and parts (7 percent), cork and barrels for the wine industry
follow with 5 and 4 percent respectively.

# Wood Chips

Although wood chip output in 2004 expanded slightly again when compared
to the previous year, exports fell, as more chips went to domestic pulp
production. Domestic demand for wood chips has increased as a result of
a new pulp plant starting production and other plants increasing their
production in response to rising wood pulp prices. Smaller amounts of
wood chips were made available for export to Japan, Chile's only export
market for wood chips.

+-------------+-------------+-------------+-------------+-------------+
| ## Table    |             |             |             |             |
| 12 - Chile' |             |             |             |             |
| s Wood Chip |             |             |             |             |
|  Production |             |             |             |             |
|             |             |             |             |             |
| (In         |             |             |             |             |
| Thousand    |             |             |             |             |
| Metric      |             |             |             |             |
| Tons)       |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Year        | Total       | Radiata     | Native      | Eucalyptus  |
|             |             | Pine        |             |             |
+-------------+-------------+-------------+-------------+-------------+
| 1997        | 4,926       | 2,199       | 1,791       | 935         |
+-------------+-------------+-------------+-------------+-------------+
| 1998        | 4,487       | 2,031       | 1,338       | 1,112       |
+-------------+-------------+-------------+-------------+-------------+
| 1999        | 4,837       | 2,241       | 1,016       | 1,544       |
+-------------+-------------+-------------+-------------+-------------+
| 2000        | 5,091       | 2,380       | 719         | 1,968       |
+-------------+-------------+-------------+-------------+-------------+
| 2001        | 5,257       | 2,372       | 386         | 2,464       |
+-------------+-------------+-------------+-------------+-------------+
| 2002        | 5,057       | 2,527       | 156         | 2,375       |
+-------------+-------------+-------------+-------------+-------------+
| 2003        | 5,691       | 2,874       | 5           | 2,810       |
+-------------+-------------+-------------+-------------+-------------+
| 2004        | 5,814       | 3,139       | 2           | 2,673       |
+-------------+-------------+-------------+-------------+-------------+
| Source:     |             |             |             |             |
| Chile's     |             |             |             |             |
| Forestry    |             |             |             |             |
| Institute   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

Chile has a large number of chipping facilities with widely varying
capacities. Most facilities are located in Region VIII (Concepcion).
Close to 50 percent of Chile\'s wood chip production is exported and all
of it goes to Japan's paper and pulp industries.

+-----------------+-----------------+-----------------+-----------------+
| ##              |                 |                 |                 |
| Table 13 - Chil |                 |                 |                 |
| e's Wood Chip e |                 |                 |                 |
| xports for 2004 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Type            | Volume          | Value           | Unit Value      |
|                 |                 |                 |                 |
|                 | Thousand MT     | Million US\$    | US\$/MT         |
+-----------------+-----------------+-----------------+-----------------+
| Radiata Pine    | 58.4            | 1.8             | 31              |
+-----------------+-----------------+-----------------+-----------------+
| Eucalyptus      | 2,644.7         | 122.5           | 46              |
+-----------------+-----------------+-----------------+-----------------+
| Native Forest   | 0.0             | 0.0             | 0               |
+-----------------+-----------------+-----------------+-----------------+
| Total           | 2,703.1         | 137.3           |                 |
+-----------------+-----------------+-----------------+-----------------+
| Source: Chile's |                 |                 |                 |
| Forestry        |                 |                 |                 |
| Institute       |                 |                 |                 |
| (INFOR)         |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+

+---------------------+-----+-----+-----+-----+-----+-----+--------+
| ## PSD Table        |     |     |     |     |     |     |        |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Country             | Ch  |     |     |     |     |     |        |
|                     | ile |     |     |     |     |     |        |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Commodity           | W   |     |     |     | (1  |     |        |
|                     | ood |     |     |     | 000 |     |        |
|                     | Ch  |     |     |     | MT) |     |        |
|                     | ips |     |     |     |     |     |        |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
|                     | 2   | R   | 2   | Es  | 2   | Fo  | UOM    |
|                     | 004 | evi | 005 | tim | 006 | rec |        |
|                     |     | sed |     | ate |     | ast |        |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
|                     | U   | P   | U   | P   | U   | P   |        |
|                     | SDA | ost | SDA | ost | SDA | ost |        |
|                     | Of  | Est | Of  | Est | Of  | Est |        |
|                     | fic | ima | fic | ima | fic | ima |        |
|                     | ial | te\ | ial | te\ | ial | te\ |        |
|                     | \   | [Ne | \   | [Ne | \   | [Ne |        |
|                     | [Ol | w\] | [Ol | w\] | [Ol | w\] |        |
|                     | d\] |     | d\] |     | d\] |     |        |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Market Year Begin   |     | 0   |     | 0   |     | 0   | M      |
|                     |     | 1/2 |     | 1/2 |     | 1/2 | M/YYYY |
|                     |     | 004 |     | 005 |     | 006 |        |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Production          | 6   | 5   | 6   | 5   | 0   | 5   | (1000  |
|                     | 050 | 814 | 200 | 900 |     | 950 | MT)    |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Imports             | 0   | 0   | 0   | 0   | 0   | 0   | (1000  |
|                     |     |     |     |     |     |     | MT)    |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| TOTAL SUPPLY        | 6   | 5   | 6   | 5   | 0   | 5   | (1000  |
|                     | 050 | 814 | 200 | 900 |     | 950 | MT)    |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Exports             | 2   | 2   | 3   | 2   | 0   | 2   | (1000  |
|                     | 990 | 703 | 020 | 700 |     | 700 | MT)    |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| Domestic            | 3   | 3   | 3   | 3   | 0   | 3   | (1000  |
| Consumption         | 060 | 111 | 180 | 200 |     | 250 | MT)    |
+---------------------+-----+-----+-----+-----+-----+-----+--------+
| TOTAL DISTRIBUTION  | 6   | 5   | 6   | 5   | 0   | 5   | (1000  |
|                     | 050 | 814 | 200 | 900 |     | 950 | MT)    |
+---------------------+-----+-----+-----+-----+-----+-----+--------+

+---------------------+----------------+------------+----------------+
| ##                  |                |            |                |
| Export Trade Matrix |                |            |                |
+---------------------+----------------+------------+----------------+
| Country             | Chile          |            |                |
+---------------------+----------------+------------+----------------+
| Commodity           | Wood Chips     |            |                |
+---------------------+----------------+------------+----------------+
| Time Period         | Jan-Dec        | Units:     | M.T.           |
+---------------------+----------------+------------+----------------+
| Exports for:        | 2003           |            | 2004           |
+---------------------+----------------+------------+----------------+
| U.S.                | 0              | U.S.       | 0              |
+---------------------+----------------+------------+----------------+
| Others              |                | Others     |                |
+---------------------+----------------+------------+----------------+
| Japan               | 2811200        | Japan      | 2703082        |
+---------------------+----------------+------------+----------------+
| Spain               | 39333          |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
|                     |                |            |                |
+---------------------+----------------+------------+----------------+
| Total for Others    | 2850533        |            | 2703082        |
+---------------------+----------------+------------+----------------+
| Others not Listed   | 0              |            | 0              |
+---------------------+----------------+------------+----------------+
| Grand Total         | 2850533        |            | 2703082        |
+---------------------+----------------+------------+----------------+

# Softwood Logs

Total softwood log production expanded again in 2004. In 2005, this
expansion will continue as even more trees become available for harvest.
Although softwood log production will keep expanding in the coming
years, exports are expected to fall due to increased domestic demand for
logs by the processing industry. The pulp industry will require more
logs for pulp production as new plants come on line. There also is a
strong demand by the growing local milling industries for logs for
lumber, for further processing into value added products. Softwood logs
for pulp are exported to Japan and softwood logs for lumber are exported
to South Korea.

+--------+------+------+------+------+------+------+------+------+
| ## Ta  |      |      |      |      |      |      |      |      |
| ble 14 |      |      |      |      |      |      |      |      |
|  - Ave |      |      |      |      |      |      |      |      |
| rage S |      |      |      |      |      |      |      |      |
| oftwoo |      |      |      |      |      |      |      |      |
| d Log  |      |      |      |      |      |      |      |      |
| Prices |      |      |      |      |      |      |      |      |
|        |      |      |      |      |      |      |      |      |
| (US\$  |      |      |      |      |      |      |      |      |
| per    |      |      |      |      |      |      |      |      |
| CUM)   |      |      |      |      |      |      |      |      |
+--------+------+------+------+------+------+------+------+------+
|        | 1980 | 1990 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 |
+--------+------+------+------+------+------+------+------+------+
| Export | 54   | 49   | 49   | 46   | 48   | 47   | 46   | 49   |
+--------+------+------+------+------+------+------+------+------+
| Do     | 18   | 33   | 35   | 37   | 31   | 28   | 27   | 30   |
| mestic |      |      |      |      |      |      |      |      |
+--------+------+------+------+------+------+------+------+------+
| CH\    | 39.0 | 3    | 5    | 5    | 6    | 6    | 6    | 6    |
| $/US\$ |      | 04.9 | 08.9 | 39.5 | 34.9 | 88.9 | 91.4 | 09.5 |
+--------+------+------+------+------+------+------+------+------+
| S      |      |      |      |      |      |      |      |      |
| ource: |      |      |      |      |      |      |      |      |
| C      |      |      |      |      |      |      |      |      |
| hile's |      |      |      |      |      |      |      |      |
| Fo     |      |      |      |      |      |      |      |      |
| restry |      |      |      |      |      |      |      |      |
| Ins    |      |      |      |      |      |      |      |      |
| titute |      |      |      |      |      |      |      |      |
| (      |      |      |      |      |      |      |      |      |
| INFOR) |      |      |      |      |      |      |      |      |
+--------+------+------+------+------+------+------+------+------+

+------------------------+------+------+------+------+------+------+
| ## PSD Table           |      |      |      |      |      |      |
+------------------------+------+------+------+------+------+------+
| Country                | C    |      |      |      |      |      |
|                        | hile |      |      |      |      |      |
+------------------------+------+------+------+------+------+------+
| Commodity              | Soft |      |      |      | 1000 |      |
|                        | wood |      |      |      | C    |      |
|                        | Logs |      |      |      | UBIC |      |
|                        |      |      |      |      | ME   |      |
|                        |      |      |      |      | TERS |      |
+------------------------+------+------+------+------+------+------+
|                        | 2004 | Rev  | 2005 | Esti | 2006 | Fore |
|                        |      | ised |      | mate |      | cast |
+------------------------+------+------+------+------+------+------+
|                        | USDA | Post | USDA | Post | USDA | Post |
|                        | Offi | Est  | Offi | Est  | Offi | Est  |
|                        | cial | imat | cial | imat | cial | imat |
|                        | \[O  | e\[N | \[O  | e\[N | \[O  | e\[N |
|                        | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |
+------------------------+------+------+------+------+------+------+
| Market Year Begin      |      | 01/  |      | 01/  |      | 01/  |
|                        |      | 2004 |      | 2005 |      | 2006 |
+------------------------+------+------+------+------+------+------+
| Production             | 1    | 1    | 1    | 1    | 0    | 2    |
|                        | 6200 | 7128 | 7500 | 8850 |      | 0800 |
+------------------------+------+------+------+------+------+------+
| Imports                | 0    | 0    | 0    | 0    | 0    | 0    |
+------------------------+------+------+------+------+------+------+
| TOTAL SUPPLY           | 1    | 1    | 1    | 1    | 0    | 2    |
|                        | 6200 | 7128 | 7500 | 8850 |      | 0800 |
+------------------------+------+------+------+------+------+------+
| Exports                | 295  | 185  | 320  | 100  | 0    | 75   |
+------------------------+------+------+------+------+------+------+
| Domestic Consumption   | 1    | 1    | 1    | 1    | 0    | 2    |
|                        | 5905 | 6943 | 7180 | 8750 |      | 0725 |
+------------------------+------+------+------+------+------+------+
| TOTAL DISTRIBUTION     | 1    | 1    | 1    | 1    | 0    | 2    |
|                        | 6200 | 7128 | 7500 | 8850 |      | 0800 |
+------------------------+------+------+------+------+------+------+

+-----------------+-----------------+-----------------+-----------------+
| ## Expo         |                 |                 |                 |
| rt Trade Matrix |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Country         | Chile           |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Commodity       | Softwood Logs   |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Time Period     | Jan-Dec         | Units:          | CuM             |
+-----------------+-----------------+-----------------+-----------------+
| Exports for:    | 2003            |                 | 2004            |
+-----------------+-----------------+-----------------+-----------------+
| U.S.            | 0               | U.S.            |                 |
+-----------------+-----------------+-----------------+-----------------+
| Others          |                 | Others          |                 |
+-----------------+-----------------+-----------------+-----------------+
| Japan           | 147954          | Japan           | 116946          |
+-----------------+-----------------+-----------------+-----------------+
| So. Korea       | 25043           | So. Korea       | 68025           |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Total for       | 172997          |                 | 184971          |
| Others          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Others not      | 0               |                 | 0               |
| Listed          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Grand Total     | 172997          |                 | 184971          |
+-----------------+-----------------+-----------------+-----------------+

# Softwood Lumber

Although declining in importance relative to other sectors in the forest
industry, saw milling is still the single largest consumer of logs, with
pine logs making up close to 80 percent of total inputs. Close to a
third of the lumber produced is exported. This is mostly the output from
the larger state of the art sawmills. The remaining two‑thirds is
consumed locally. Production of softwood lumber is expected to keep
growing in the next few years as availability of well-managed and
knot-free trees increases. But exports are not expected to grow at the
same rate, as the industry is trying to add value to its output by
increasing its exports of manufactured wood products. However, in the
long term, exports of softwood lumber should still rise as the
availability of knot‑free lumber increases. The increased availability
of knot‑free lumber is attributed to subsidized pruning and forest
management under DL 701, which occurred up until the late nineties.

Softwood lumber expanded again in 2004, compared to the previous year,
as a result of strong foreign demand. For 2005 and 2006, production is
expected to increase as the availability of mature trees increases and
investment in new milling facilities materializes.

+--------+------+------+------+------+------+------+------+------+
| ##     |      |      |      |      |      |      |      |      |
|  Table |      |      |      |      |      |      |      |      |
|  15 -  |      |      |      |      |      |      |      |      |
| Averag |      |      |      |      |      |      |      |      |
| e Soft |      |      |      |      |      |      |      |      |
| wood L |      |      |      |      |      |      |      |      |
| umber  |      |      |      |      |      |      |      |      |
| Prices |      |      |      |      |      |      |      |      |
|        |      |      |      |      |      |      |      |      |
| (US\   |      |      |      |      |      |      |      |      |
| $/CUM) |      |      |      |      |      |      |      |      |
+--------+------+------+------+------+------+------+------+------+
|        | 1980 | 1990 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 |
+--------+------+------+------+------+------+------+------+------+
| Export | 113  | 126  | 136  | 137  | 127  | 129  | 130  | 141  |
+--------+------+------+------+------+------+------+------+------+
| Do     | 76   | 55   | 80   | 76   | 61   | 57   | 58   | 67   |
| mestic |      |      |      |      |      |      |      |      |
+--------+------+------+------+------+------+------+------+------+
| CH\    | 39.0 | 3    | 5    | 5    | 6    | 6    | 6    | 6    |
| $/US\$ |      | 04.9 | 08.9 | 39.5 | 34.9 | 88.9 | 91.4 | 09.5 |
+--------+------+------+------+------+------+------+------+------+
| S      |      |      |      |      |      |      |      |      |
| ource: |      |      |      |      |      |      |      |      |
| C      |      |      |      |      |      |      |      |      |
| hile's |      |      |      |      |      |      |      |      |
| Fo     |      |      |      |      |      |      |      |      |
| restry |      |      |      |      |      |      |      |      |
| Ins    |      |      |      |      |      |      |      |      |
| titute |      |      |      |      |      |      |      |      |
| (I     |      |      |      |      |      |      |      |      |
| NFOR). |      |      |      |      |      |      |      |      |
+--------+------+------+------+------+------+------+------+------+

+-----------------------------+-----+-----+-----+-----+-----+-----+
| ## PSD Table                |     |     |     |     |     |     |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Country                     | Ch  |     |     |     |     |     |
|                             | ile |     |     |     |     |     |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Commodity                   | So  |     |     | 1   |     |     |
|                             | ftw |     |     | 000 |     |     |
|                             | ood |     |     | CU  |     |     |
|                             | Lum |     |     | BIC |     |     |
|                             | ber |     |     | MET |     |     |
|                             |     |     |     | ERS |     |     |
+-----------------------------+-----+-----+-----+-----+-----+-----+
|                             | 2   | R   | 2   | Es  | 2   | Fo  |
|                             | 004 | evi | 005 | tim | 006 | rec |
|                             |     | sed |     | ate |     | ast |
+-----------------------------+-----+-----+-----+-----+-----+-----+
|                             | U   | P   | U   | P   | U   | P   |
|                             | SDA | ost | SDA | ost | SDA | ost |
|                             | Of  | Est | Of  | Est | Of  | Est |
|                             | fic | ima | fic | ima | fic | ima |
|                             | ial | te\ | ial | te\ | ial | te\ |
|                             | \   | [Ne | \   | [Ne | \   | [Ne |
|                             | [Ol | w\] | [Ol | w\] | [Ol | w\] |
|                             | d\] |     | d\] |     | d\] |     |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Market Year Begin           |     | 0   |     | 0   |     | 0   |
|                             |     | 1/1 |     | 1/2 |     | 1/2 |
|                             |     | 999 |     | 000 |     | 001 |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Production                  | 7   | 7   | 8   | 8   | 0   | 9   |
|                             | 970 | 754 | 770 | 680 |     | 700 |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Imports                     | 0   | 0   | 0   | 0   | 0   | 0   |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| TOTAL SUPPLY                | 7   | 7   | 8   | 8   | 0   | 9   |
|                             | 970 | 754 | 770 | 680 |     | 700 |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Exports                     | 2   | 2   | 2   | 3   | 0   | 3   |
|                             | 700 | 797 | 970 | 220 |     | 670 |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| Domestic Consumption        | 5   | 4   | 5   | 5   | 0   | 6   |
|                             | 270 | 957 | 800 | 460 |     | 030 |
+-----------------------------+-----+-----+-----+-----+-----+-----+
| TOTAL DISTRIBUTION          | 7   | 7   | 8   | 8   | 0   | 9   |
|                             | 970 | 754 | 770 | 680 |     | 700 |
+-----------------------------+-----+-----+-----+-----+-----+-----+

+----------------------+---------------+---------------+---------------+
| ##                   |               |               |               |
|  Export Trade Matrix |               |               |               |
+----------------------+---------------+---------------+---------------+
| Country              | Chile         |               |               |
+----------------------+---------------+---------------+---------------+
| Commodity            | Softwood      |               |               |
|                      | Lumber        |               |               |
+----------------------+---------------+---------------+---------------+
| Time Period          | Jan-Dec       | Units:        | CuM           |
+----------------------+---------------+---------------+---------------+
| Exports for:         | 2003          |               | 2004          |
+----------------------+---------------+---------------+---------------+
| U.S.                 | 370374        | U.S.          | 540164        |
+----------------------+---------------+---------------+---------------+
| Others               |               | Others        |               |
+----------------------+---------------+---------------+---------------+
| Mexico               | 536483        | Mexico        | 616120        |
+----------------------+---------------+---------------+---------------+
| Japan                | 380122        | Japan         | 462511        |
+----------------------+---------------+---------------+---------------+
| Saudi Arabia         | 179202        | UA Emirates   | 256177        |
+----------------------+---------------+---------------+---------------+
| UA Emirates          | 173617        | Saudi Arabia  | 211629        |
+----------------------+---------------+---------------+---------------+
| Taiwan               | 86485         | China         | 130119        |
+----------------------+---------------+---------------+---------------+
| China                | 84054         | Spain         | 115020        |
+----------------------+---------------+---------------+---------------+
| Morocco              | 77760         | Morocco       | 72571         |
+----------------------+---------------+---------------+---------------+
| Spain                | 71151         | So. Korea     | 68578         |
+----------------------+---------------+---------------+---------------+
| So. Korea            | 46506         | Taiwan        | 66576         |
+----------------------+---------------+---------------+---------------+
| Kuwait               | 37212         | Kuwait        | 54183         |
+----------------------+---------------+---------------+---------------+
| Total for Others     | 1672592       |               | 2053484       |
+----------------------+---------------+---------------+---------------+
| Others not Listed    | 245704        |               | 203839        |
+----------------------+---------------+---------------+---------------+
| Grand Total          | 2288670       |               | 2797487       |
+----------------------+---------------+---------------+---------------+