Displaying items by tag: Wood Resources International LLC

Weaker lumber markets are causing global sawlog prices to fall for first time since early 2009, reports the Wood Resource Quarterly

Slowing lumber markets throughout the world have resulted in declining sawlog prices in many of the major lumber-producing regions in Europe and North America, according to the Wood Resource Quarterly. The biggest price reductions occurred in Japan, Sweden, Poland and Russia.

With weaker demand for lumber around the world, sawlog prices fell in a majority of the 21 markets tracked by the Wood Resource Quarterly (WRQ). The Global Conifer Sawlog Price Index (GSPI) declined in the 3Q for the first time since the 1Q/09. With a few exceptions, prices fell in both local currencies and in US dollar terms.

The only region that saw any substantial price increase in the 3Q was British Columbia, where prices were up 5-7 percent from the 2Q. This region has benefited from higher lumber exports and production has gone up during 2011.The price for Coastal Hemlock rose over three percent in the 3Q, while the price for spruce-pine-fir (SPF) logs in Interior BC rose nearly seven percent. Prices in both regions were the highest they have been since the global financial crisis in late 2008.

The biggest price declines the past quarter occurred in Japan, Sweden, Poland and Russia; prices were down between 6-12 percent from the 2Q/11. The three latter
countries are major exporters of lumber, and shipments to European markets and Northern Africa have fallen this summer and fall.

Wood costs have gone down for many sawmills throughout the European continent in the 3Q, mostly due to slowing lumber sales and an expectation of lower lumber production levels during the winter months. In the Nordic countries, there were a number of announcements of curtailments for the 4Q/11 and the first quarter of 2012. Although sawlog prices fell in a majority of the ten countries in Europe covered by the WRQ, they were still higher than the third quarter last year. For most markets, log prices have come up between $15-25/m3 during the past 12 months, with only Western Russia and Norway seeing minor price increases.

Many of the continent’s sawmills are currently paying close to the highest sawlog prices seen in at least 17 years, and this is occurring at a time when lumber prices are far from any record highs, and are even declining in some markets. Because of the weakening lumber demand, it can be expected that log prices will soften in the coming months.

Published in Financial News
Tuesday, 06 December 2011 18:51

Global Timber and Wood Products Market Update

The expansion of pulp production in China continues and the lack of domestic wood fiber sources has resulted in record imports of wood chips in 2011, reports the Wood Resource Quarterly.
 
Chinese pulp mills increasingly have to rely on imported wood chips for their wood fiber needs. In 2011, record volumes are being imported mainly from hardwood plantations in Vietnam, Thailand and Indonesia. Imported wood chip costs from Vietnam have gone up 40 percent in two years and are closing in on costs for chips shipped to Japan, according to the Wood Resource Quarterly.
 
With the lack of sufficient quality and quantity of domestic wood fiber supply, new pulp mills in China are looking to expand importation of wood chips from plantation-rich countries in Southeast Asia to meet their growing fiber needs. In the 3Q/11, Vietnam, Thailand and Indonesia were the major suppliers to China, together accounting for about 88 percent of all imports of hardwood chips, as reported in the Wood Resource Quarterly.
 
Malaysia, Cambodia, Chile and Brazil are few of the recent and still small suppliers of hardwood chips to China. These countries, which all supply wood chips from fastgrowing Eucalyptus and Acacia plantations, are likely to expand their shipments in the coming years when Chinese pulp mills continue to diversify their supply sources.
 
The wood chip imports in the first ten months of 2011 already equal more than the total volume of imports in all of 2010. This year’s imports will reach around seven million tons, or 37 percent higher than in 2010. This upward trend is expected to continue in 2012 and 2013 because the Chinese pulp industry is in an expansion mode.
 
Pulpmills in China consume practically only hardwood fiber, so imports of softwood chips were negligible up until last year when a few shipments started to enter Chinese ports from Australia, Russia, the US and New Zealand. This year, total softwood imports may reach just above 300,000 tons, or four percent of total chip imports.
 
The average value for imported wood chips has steadily increased, reaching $180/ton in the 3Q/11, or about 22 percent higher than the same quarter last year, as reported in the Wood Resource Quarterly. Vietnam is the lowest-cost supplier, while the cost for Eucalyptus chips from Australia were at the high-end in the 3Q.
 
The costs chips imported from the major supplying country Vietnam, have gone up almost 40 percent over the past two years. Vietnam is also shipping large chip volumes to Japanese pulp mills and it is interesting to note how the price discrepancy between chips exported to Japan and China has declined from almost $60/ton premium for Japanesebound chips in 2009 to only $14/ton in the 3Q/11.
Published in Asian News
Tuesday, 15 November 2011 11:00

Global Timber and Wood Products Market Update

Global hardwood pulp producers face higher wood fiber costs and lower pulp prices, reports the Wood Resource Quarterly

Profit margins are being squeezed for many hardwood pulp producers worldwide with higher wood fiber costs and lower product prices. The hardwood wood fiber price index (HFPI) reached a 24-year high in the 3Q/11 at the same time as hardwood pulp prices fell by 26% from June through October, reports the Wood Resource Quarterly.

Seattle, USA. The global demand for market pulp has been weakening for the past four months, particularly that of hardwood pulp (BHKP). The market report Pulpwatch reports that global shipment of BHKP pulp fell from 1.76 million tons in June to 1.41 million tons during July. Although shipments picked up to 1.57 million tons in August, the outlook for the next six months is for lower demand and reduced pulp production as compared the first half of 2011.

Hardwood pulp prices (BHKP) have fallen steadily during the fall and were down by 26 percent from June to the early November, according to FOEX. At the same time as pulp prices have fallen, the wood costs have increased, which has squeezed the profit margins for many producers of hardwood pulp. Wood cost as a percentage of the Eucalyptus pulp (EuBKP) price has gone up steadily for five consecutive quarters, from 23 percent in the 2Q/10 to 32.2 percent in the 3Q/11, as reported in the Wood Resource Quarterly. The relative wood cost is currently substantially above the twenty–year average of 23 percent.

Pulp mills in Brazil, Indonesia, Japan, China and Chile saw the biggest increases in hardwood fiber prices the past year, while the rise in wood costs in North America and Europe have been more modest. The Hardwood Wood Fiber Price Index (HFPI) rose for the fifth quarter in a row, reaching US$117.91/odmt, an increase of 14 percent since last summer and an all-time high, according to the Wood Resource Quarterly. Conversely, The Softwood Wood Fiber Price Index (SFPI) fell by less than one percent to $108.90/odmt, which was the first decline since the 2Q/10. In addition to the exchange rate adjustments, wood prices also fell in the local currencies in Russia, France and Spain.

The Softwood Wood Fiber Price Index has been higher than HFPI for 21 of the past 24 years; it is only the past three years that HFPI has been sold at a premium, and the 3Q/11 premium of US$9.01/odmt is the greatest to date. This is of note because over the past few years, some softwood pulp producers had switched to hardwood or invested in hardwood pulp capacity to take advantage of historically lower hardwood fiber costs and higher profit margins. In light of these recent price and cost developments, producers might consider returning to using more softwood pulp in their product mix, whether for market pulp or in their integrated pulp and paper facilities.

Published in Financial News

Log exportation from New Zealand continues to rise at a record pace, with almost onethird of the country’s timber harvest being processed at sawmills in China. The high demand for logs from overseas has increased domestic sawlog prices to their highest levels in 15 years, according to the Wood Resource Quarterly.

Log exports from New Zealand in 2011 are set to reach a new record high. During the first eight months, total shipments were 25 percent higher than the same period last year (54 percent higher by value) and total exports for 2011 may reach as high as 13 million m3, which is more than a doubling from just three years ago. It is worth noting that almost half of the timber harvest in the 2Q was shipped overseas in log form and that almost one-third of the timber harvest in New Zealand is shipped to Chinese sawmills.

While log exports have increased substantially this year thanks to demand in China, lumber exports have actually declined from last year. This highlights the concern in the industry that domestic sawmills increasingly have difficulty competing for logs with the log exporters and thus may have to reduced production and the layoff of employees. Sawlog costs for domestic sawmills have continued to go up during 2011 because of competition from the export market. Pine sawlog prices reached record highs in the 3Q/11 with almost a doubling in US dollar terms from early 2009. With the recent price increases, log costs in New Zealand are just below the Global Sawlog Price Index (GSPI), as reported in the Wood Resource Quarterly.

The steady increase in log exports the past five years may very well continue in the coming 15 years as the theoretical harvest level in New Zealand is set to double to 55 million m3 by 2024. Most observers in the industry agree that, for a number of reasons, this timber harvest scenario is less likely. Depending on market conditions, a more realistic level of annual timber harvests in 15 years would be between 35 and 45 million m3 annually. Even this lower harvest outlook alternative would increase available log supply from the current levels by over 50 percent.

Published in Financial News
Friday, 14 October 2011 13:00

Global Timber and Wood Products Market Update

The Global Sawlog Price Index reached a 16-­year high in the 2Q/11; the biggest price increases occurred in Europe, Canada, Russia and New Zealand, reports the Wood Resource Quarterly

Increased consumption of softwood lumber throughout the world has moved sawlog prices to new highs in 2011. The Global Conifer Sawlog Price Index (GSPI) reached a 16-year record high in the 2Q/11, with the greatest increases over last year’s prices occurring in Latvia, Poland, Japan, Russia and Germany, according to the Wood Resource Quarterly.

Seattle, USA. Wood costs often account for 65-75 percent of the production costs when manufacturing softwood lumber. This cost has trended upwards for over two years in many of the major lumber-producing countries around the world, as reported in the Wood Resource Quarterly.

The higher sawlog costs have been the result of growing demand for lumber, not only in the traditional markets of Europe, the US and Japan, but also in China, the Middle East and Northern Africa. For example, the biggest gains in exports for the Nordic countries this year has been to Morocco, a new fast growing market for wood products, and Egypt is now the second most important export market for sawmills in Finland.

China’s increasing demand for wood products is a major factor in the increase in log prices in regions supplying China with lumber, including Western US, British Columbia and New Zealand.

In the 2Q/11, the Global Conifer Sawlog Price Index (GSPI) reached a new all-time high of US$92.27 per m3. This was 5.6 percent more than the previous quarter, and an almost 20 percent jump from the past year. The GSPI has gone up every quarter since the 1Q/09 when the Index was at US$66.10/m3. This almost 40 percent increase in two years is due not only to the weakening of the US dollar against all other currencies in the Index, but also to the higher costs of logs in local currencies. According to the Wood Resource Quarterly (WRQ), the biggest price adjustments in local currencies since early 2009 have occurred in Latvia (+58%), Poland (+39%), Japan (+36%), Russia (+35%) and Germany (35%).

Countries in Western Europe, Japan and China currently have the highest sawlog prices of the 21 regions tracked by the WRQ, while prices in Western Canada, Chile, US South and Russia are lower than the global average. This ranking has not change much the past few years with the exception of the Baltic States of Latvia and Estonia, which now are below the GSPI after having been above the global average three years ago.

Published in Financial News
Tuesday, 04 October 2011 23:03

Global Timber and Wood Products Market Update

Exports of logs and lumber from the US and Canada to China are on pace to reach a record 2.6 billion dollars in 2011, reports the Wood Resource Quarterly

The US and Canada have been exporting record volumes of logs and lumber to China in 2011. The Wood Resource Quarterly predicts that exports in 2011 will double those seen in 2010 to reach an estimated value of 2.6 billion dollars. Lumber shipments from Canada alone could reach 1.2 billion dollars this year. The North American share of log and lumber import volumes to China has increased from four percent in 2005 to 18 percent in 2010.

Seattle, USA. Shipments of softwood lumber and logs from the US and Canada to China will reach a new record high in 2011. In 2010, the two countries exported 1.3 billion US dollars worth of softwood products; if the pace seen in the first seven months of 2011 continues, the two countries’ exports will more than double from last year, reaching a record 2.6 billion US dollars, according to the Wood Resource Quarterly.

Despite the disappointing developments in the US housing sector the past year, lumber production in both the US and Canada has been higher in 2011 than in 2010. Many sawmills in the Western US and Canada have benefitted from the dramatic increase in demand from Chinese lumber consumers and some sawmills are exporting up to 30-40 percent of their production to the fast developing market in Asia.

The biggest increase in shipments the past year has been that of softwood lumber from the province of British Columbia in Canada. Much of this lumber comes from the massive supply of timber that has been killed by the pine beetle over the past 15 years. The value of lumber shipments from Canada has increased from just 55 million dollars in 2005 to an estimated 1.2 billion dollars this year.

While Canada has drastically raised lumber shipments to China in recent years, the US has instead expanded exportation of logs to Chinese lumber manufacturers. This year, US west coast log exporters are projected to ship logs valued at over 900 million dollars, which is up from only 42 million dollars just four years ago.

The US and Canada have not only increased shipment volumes of logs and lumber to China the past five years; the countries have also expanded their importance in the Chinese wood market. In 2005, only four percent of all softwood logs and lumber
imported to China originated from North America. Last year, this share had gone up to 18 percent, according to the Wood Resource Quarterly. Many North American log and lumber suppliers have the opportunity to expand their export sales in the coming years and it is likely that their presence in the Chinese market will grow.

Published in Press Releases
Friday, 19 August 2011 10:31

The Global Forest Industry This Quarter

Global timber markets
The Global Conifer Sawlog Price Index (GSPI) reached a new all-time high of US$92.27/m3 in the 2Q/11 (see graph). This was 5.6 percent more than the previous quarter, and an almost 20% jump from a year ago.

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The GSPI has gone up every quarter since the 1Q/09 when the Index was at $66.10/m3. This almost 40% increase in two years is due not only to the weakening of the US dollar against all other currencies in the Index, but also to the higher costs of logs in local currencies.

Global pulpwood price
Wood fiber costs for the global pulp industry have trended upward for over two years. The Softwood Fiber Price Index (SFPI) reached $109.52/odmt in the 2Q/11, a 3.7 percent increase from the previous quarter and a 23% increase from Global Wood Fiber Price Indices 1988 - 2Q/2011 two years ago. In local currencies, fiber prices increased the most in the US Northwest, Western Canada, Russia and Finland. The weakening US dollar against most global currencies resulted in higher fiber prices in all regions covered by the WRQ in US dollar terms.

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The Hardwood Fiber Price Index (HFPI) reached a new all-time-high in the 2Q at $116.44/odmt, which was 5.5 % higher than the 1Q/11 and almost 27% higher than in early 2009. Recently, hardwood prices have increased the most in Indonesia, Finland, Russia and Brazil.

Global pulp markets
Global pulp markets continued to be surprisingly strong in the 2Q/11, setting record high prices for most market pulp grades. The NBSK pulp prices ranged between $1010/ton and $1040/ton both in Europe and in North America, while prices in China were around $850- 930/ton. Global production of market pulp was up as much as eight percent during the first five months of this year compared to 2010. The highest increase occurred in Latin America; the gain in Europe was somewhat smaller.

Global lumber markets
Lumber exports from the Nordic countries slowed during spring, and prices fell slightly. The average export prices of lumber from Finland and Sweden have fallen from last fall and were 3-6 percent lower in April than in October of last year.

Lumber production in the US fell by 13 percent from March to April because of slowing domestic demand, and the average operating rate for US sawmills was down to 67%.

With the persistent weak demand for lumber in the US, sawmills in Eastern Canada continue to struggle, as they are so dependent on the health of the US market for their survival. The operating rate so far in 2011 has been only 55% of capacity.

Lumber imports to China continue to set new records. During the first five months of 2011, the importation of softwood lumber was up 72% from the same period last year.

Global biomass markets
Prices for woody biomass, including mill residues and forest residues, increased slightly in all major biomass-consuming regions of the US in the 2Q.

Pellet prices in Europe were unchanged or slightly lower in the 2Q as compared to the 1Q, but the long-term trends are still upward with prices being close to record levels.

Asian demand for biomass energy is finally beginning to emerge. Japan, China and South Korea has recently announced policies to increase the use of biomass.

Published in Financial News

European demand for wood pellets has to a large extent, driven the expansion of pellet capacity in both the US and Canada the past five years. The North American Wood Fiber Review reports that in coming years, it is likely that demand for pellets will increase not only in Europe, but also in Asia and North America, which will generate new opportunities for pellet producers, particularly in Western Canada and Eastern US.

 

Seattle, USA. A number of new wood pellet plants in the US and Canada are set to commence operations during 2011, with more plants planned in the coming years. With the additional capacity coming on line, the industry is eyeing the growing demand in four regions – Europe, Asia, and to a lesser extent the Maritime Provinces of Eastern Canada and Northeastern US. The existing coal-fired energy sector in the US South remains a potent, yet unrealized market to date. Federal policies in the US that restrict the emissions of CO2 gases would ultimately benefit the pellet industry in North America, as many coal plants would likely begin using pellets for co-firing as is the case in Europe. These changes would drastically alter existing pellet flows and production plans.

 

Europe has, by far, been the largest export market for North American pellet producers for a number of years, shipping nearly 1.5 million metric tons in 2010, as reported in the North American Wood Fiber Review. The most significant potential for increased wood pellet utilization, both short and long term, will continue to be in this region, as the European Union's 27 member countries have a goal of sourcing 20 percent of the Union's total energy needs with renewable sources by 2020. In 2008, biomass utilized in the EU provided 80 million tons of oil equivalents (mtoe), and the European Commission estimates that this consumption may increase to 140 mtoe by 2020. In addition, Germany's recently declared goal to totally eliminate its nuclear power industry by 2022 will increase the country's demand for renewable energy, including woody biomass in the future. Other countries, including Italy, Finland, Poland and Switzerland are starting to question the viability of nuclear power as a future source of energy.

 

Asian demand for biomass energy is finally beginning to emerge, and shows signs of significant potential growth. South Korea has recently announced policies to increase the portion of energy consumption from renewable sources, including woody biomass. The country's new Renewable Portfolio Standard calls for reducing green house gases by 30 percent by 2020, while concurrently increasing its use of wood pellets to five million tons in ten years. Japan's confidence in nuclear power has continued to plummet since the Fukushima nuclear plant crisis in early 2011, which will likely result in an increase in woody biomass usage as a portion of a larger renewable energy portfolio in the next few years.

 

The growing European and Asian demand for wood bioenergy is being answered by a number of US and Canadian companies already engaged in or moving towards an expanding export market. Besides British Columbia, which has been the major supplier of pellets to Europe, the US South has recently witnessed the opening of a few large pellet plants with plans to ship a majority of their production to European consumers.

 

There is much uncertainty regarding future energy policies worldwide but one thing is undeniable – pellet demand in Europe, Asia and perhaps also in the US will be experiencing dramatic growth over the next five years.

Published in Financial News

Supply, demand, logistics and pricing of pulpwood and biomass will be the focus at the 5th International Woodfibre Resource and Trade Conference in Singapore


Global demand for wood fiber for both pulp manufacturing and renewable energy increased during 2010 and 2011.Worldwide trade of wood chips in 2010 was up 24 percent because of increased production of pulp and paper products worldwide; China showed the greatest growth in chip imports, with an increase over 400 percent in the past two years. Australia continues to be the major wood chip exporter, and shipped 11 percent more in 2010 than 2009.

 

Consumption and trade of biomass in the form of wood pellets has also gone up dramatically the past few years. In 2010, the estimated global consumption of wood pellets was 13 million tons, a doubling in four years.


These trends raise a number of questions about the future supply, trade and pricing of wood fiber:

How will demand for wood fiber for pulp manufacturing and energy generation develop in China and Japan?

What is the wood supply outlook in Australia, Southeast Asia, Latin America and Africa?

Which regions in the world have the most competitive wood fiber prices?

What are the latest developments in the supply/demand balance of woody biomass in Europe?

Will newly established energy plantations meet increases in demand for energy wood fiber?

What new woodfiber supply projects globally have recently started up, or are planned?


These questions, among others, will be answered by industry experts at the upcoming 5th International Woodfibre Resource and Trade Conference, which will be held in Singapore on October 30 - November 2, 2011. The conference is organized by DANA Ltd., Pike y Compania, and Wood Resources International LLC. As of June 30th, delegates from 26 countries have registered to attend the conference.

 

As always, the focus of these International Pulpwood Conferences will be to not only to educate, but to provide unique networking opportunities between wood fiber suppliers, consumers, traders and shipping companies from around the world.


For registration and for more information about this exciting opportunity to meet with participants in the global forest industry and biomass sectors and to hear about the latest developments in international trade of wood fiber please visit the official website, http://www.woodfibreconference.com

Published in Exhibitions

Increased foreign interest in pulp mills and plantations in Australia while the timber ownership is in transitional mode, reports the Wood Resource Quarterly


The plantation ownership in Australia is in transition after the Management Investment Scheme (MIS) collapsed in 2009, reports the Wood Resource Quarterly. Foreign pension funds and pulp companies have shown increased interest in acquiring timber assets as forest plantations owners have gone into receivership.


Seattle, USA. In the aftermath of the collapsed Management Investment Schemes (MIS), plantation ownership and management of the Australian timber resources is in a transitional mode, reports the Wood Resource Quarterly. The MIS plantation scheme was launched in 1997 with the objective of pooling funds from small investors to make large investments in forest plantations. The MIS companies established, managed and marketed the timber investments on behalf of the individual investors. During the period 1997 until the partial collapse in 2009, the plantation area in Australia grew from 1.1
million hectares (ha) to about 1.9 million ha, with Eucalyptus being the preferred species planted. At that time, MIS companies managed about 75 percent of the hardwood plantations and six percent of the softwood plantations.


Since 2009, a number of MIS forest companies have gone into receivership, including the FEA Group, Great Southern Plantations, Environinvest, Willmott Forestry and Timber Corp. There are reportedly a number of timber companies and investors showing interest in taking over the management responsibility of the MIS schemes.


Unexpectedly, an investment company in the province of Alberta, Canada, recently announced it would acquire 240,000 ha of timber assets from the largest MIS company, Great Southern Plantations. The institutional investment company, AIMCo, which invests globally on behalf of pension and government funds, will partner with the Australia New Zealand Forest Fund. The new ownership may create a more stable long–term supply source for forest and energy companies located in Asia.


There is continued interest from foreign investors both to acquire pulp mills and forest plantations. The latest development is the Singapore-based pulp company APRIL, with pulp mills in Indonesia and China, which is considering the purchase of forest plantations and export chip loading facilities. The intention would be to export Eucalyptus wood chips to the company’s pulp plant in Rizhao, China.


Plantation Eucalyptus log production in the 1Q/11 was significantly higher than the same quarter last year. This development came at the same time as availability of roundwood and wood chips from natural forests declined substantially. Prices for pulplogs have not shifted much the past year in local currency, with plantation hardwood continuing to be about 24 percent higher for plantation wood compared to wood from natural forests.


Pine and Eucalyptus pulplog prices, in US dollar terms, have climbed steadily in Australia for almost two years, according to the Wood Resource Quarterly (WRQ). Prices are currently the highest ever recorded since WRQ started tracking Australian prices in 1990. During the past nine years, Eucalyptus log prices have more than tripled, with only Sweden, Spain and Germany currently having higher hardwood pulpwood prices.

Published in Oceania News
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