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South America possesses the richest forest resources on the planet, with 21% of the global forest area (832 million hectares). South America is emerging as a major global player in the forest, paper and packaging industry. Projections indicate that by 2011, five of the top ten pulp producers will be based in South America, compared with two at the end of 2006. Regionally, Brazil dominates with an annual industrial harvest of about 120 million m3 - almost 70% of the region's total. Brazil is ranked second to Indonesia as the lowest cost producer of bleached hardwood kraft pulp, with Chile in third place. Brazilian hardwood pulp manufacturing costs are 22% lower than those in the US. Low-cost fibre has propelled the region into the forefront as a key supplier of market pulp. North American and European producers are facing stiff competition in some of their traditional markets.                      The Demand for Wood It has been estimated that global annual industrial fibre production reached 1.5 billion m3 at the end of the millennium. Wood production has risen by 50% since 1960, and is expected to rise between 20% and 50% by 2020. These increases in wood fibre production will be required to meet the needs of the ever-increasing world population. Although nearly 50% of annual global wood harvest is for fuelwood in developing countries, continued development at the global level is also influencing the consumption of forest products. The demand for industrial wood is still growing, driven by increasing consumption of pulp, paper, solid wood and panels, the annual demand for industrial roundwood is forecast to rise from the present 1.3 billion m3 to 1.7 billion m3 by the year 2010. Compared to the average growth rate of 1.6%, world demand for roundwood pulpwood will increase anually by 2.3% and for saw/veneer logs by 1.3%. In Pacific-Asia and Oceania, the demand for wood raw materials will grow by 75-80 million m3 by the year 2010. In absolute terms, this growth rate is second only to Eastern Europe's (including Russia). The current deep recession and expected recovery explain the high growth rates in Eastern Europe. Pulpwood will be the fastest growing raw wood segment in Pacific-Asia and Oceania. Each year an increase of 3.4 million m3 in the pulpwood supply will be needed to cover the growing demand. Almost 80% of this growth will be hardwood, due to the anticipated expansion of pulp industries, mainly in Southeast Asia. In Pacific-Asia and Oceania, the demand for saw/veneer logs will grow by about 10-15 million m3 by the year 2010. The growth rate will be limited by scarce log availability. Reconstituted panels are forecast to substitute for solid wood products, which is also reflected by the fast growth of the demand for wood raw materials for panels.