Article archive

Mixed lumber price trends in the US

Posted on by GWMI Admin

The first full workweek of the year generated more inquiries and sales of framing lumber in the US, but traders’ views of the market were mixed. Price trends were mixed, as well, although producers were mostly taking a firmer stance and raising quotes in late trading.
One major exception was the green Fir market, as demand from California lagged. Softness in green Fir and early week losses in Southern Pine were the primary culprits in a $2 drop in the Random Lengths Framing Lumber Composite Price.

This Week
Jan 11		 Last Week
Jan 4		 Year Ago
2018
Random Lengths Framing Lumber Composite Price* $327 $329 $445
KD Western S-P-F #2&Btr 2x4 R/L Mill Price 324 326 486
KD Eastern S-P-F #1&2 2x4 R/L, delivered Great Lakes 403 401 557
Green Douglas Fir Std&Btr 2x4 R/L (Portland) 240 245 495
Southern Pine (Westside) #2 2x4 R/L 374 381 482
KD Coast Hem-Fir #2&Btr 2x4 R/L 343 340 495
Ponderosa Pine (Inland) #2&Btr 1x12 R/L 795 795 735
* Weighted average of 15 key items

Random Lengths Panel Market Report

Structural panel trading was mixed. A dull week of trading left OSB prices mostly flat across all regions. A few deals were reported early in the week in the North Central region. Order files extended mostly to the last two weeks of January. A perception that orders shipped in January held little to no downside risk spread among Southern Pine plywood buyers, and led to a more consistent sales pace. Western Fir plywood sales picked up, as traders returned from the holidays.

(f.o.b. mill prices) This Week
Jan 11		 Last Week
Jan 4		 Year Ago
2018
Random Lengths Structural Panel Composite Price* $366 $365 $444
Southern (west-east) 15/32-inch 3-ply rated sheathing plywood 360-395 360-390 460-500
Southern (west-east) 15/32-inch 4-ply rated sheathing plywood 365-400 365-395 465-505
Western 1/2-inch 4-ply rated sheathing plywood 365 355 481
North Central 7/16-inch Oriented Strand Board 210 208 310
*Weighted average of 11 key items

Central/West Africa: Logs & sawnwood prices continue to stand firm

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Across the Central/West African region producers report no major change in overall international market sentiment since the end of November.
Prices and order volumes continue to be on the firm side with no sign of any immediate alteration in the current market conditions. Analysts experienced the usual end of year slowdown in new orders especially from buyers in Europe who are already unwinding business activity as the holiday season approaches. Continue reading "Central/West Africa: Logs & sawnwood prices continue to stand firm"

Central/West Africa: Logs & sawnwood prices continue to stand firm

Posted on by GWMI Admin

Across the Central/West African region producers report no major change in overall international market sentiment since the end of November.

Prices and order volumes continue to be on the firm side with no sign of any immediate alteration in the current market conditions. Analysts experienced the usual end of year slowdown in new orders especially from buyers in Europe who are already unwinding business activity as the holiday season approaches. Continue reading "Central/West Africa: Logs & sawnwood prices continue to stand firm"

Forestry industry production in Ireland to double by 2035

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The Irish forestry industry might invest around €250 million during the next years, in the preparation of a major expansion period. Forest Industries Ireland (FII), a new trade body, forecasts that the timber supplies will double up by 2035 and increase the turnover to €1.6 billion from €800 million.

As reported by Irish Times, Fergal Leamy, chief executive of State forestry company, Coillte, said that the sector has invested €250 million over the last three to four years.

“I would say that there will probably be the same amount again invested in the next few years,” he said, adding that it would be needed to process increased production from Irish forests.

FII predicts that production will double to 6.6 million cubic metres of wood in 2035 from 3.3 million in 2017. Coillte now supplies 51% of this, while 21,000 private growers accounting for the balance. Forests planted with the aid of incentives introduced in the 1980s and ’90s are maturing, increasing overall production.

Mark McAuley, director of FII, which is affiliated to employers’ body Ibec, explained that production is heading for a high point in coming decades, when it will level out. According to Mr McAuley, Brexit is the main immediate challenge facing the industry as Britain is its main overseas market, Irish Times reported.

Michael Glennon, joint chief executive of Longford-based sawmill group, Glennon Brothers, explained that half the timber produced and processed here is exported, with 95% of that going to Britain. He pointed out that the industry fears the impact of delays at Irish and British ports, as timber is delivered to customers as they order it. “Logistics is the key issue for us,” Mr Glennon said.

Despite the UK’s plans to leave the EU, the industry believes that Britain will continue as its main export market. It is Europe’s biggest importer of wood and needs to build 300,000 new homes a year to tackle a housing shortage.

Forecast: North American lumber market expected to grow in 2019; prices to rise

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Growth in U.S. domestic softwood lumber consumption is expected to continue next year and well into 2020 as the U.S. economic recovery (and particularly housing) builds momentum. While there are mainly supply-side constraints to a rapid ramping-up of the housing construction industry’s building capacity, the demand is expected to grow slowly but steadily. U.S. softwood lumber consumption is expected to approach 52 billion bf in 2019 and 55 billion bf in 2020.
Canadian consumption has remained positive in every quarter since 2015, but our forecast is not as robust as it once was: with high home prices limiting demand for new housing, we estimate Canadian consumption growth at just 3.3 per cent in 2018, and forecast 2.5 per cent growth in 2019 and 3.3 per cent in 2020. R&R markets will benefit from years of strong home sales as Canada’s manufacturing sector is bolstered by weakness in the Canadian dollar. Continue reading "Forecast: North American lumber market expected to grow in 2019; prices to rise"

European tropical wood imports impacted by supply issues

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Looking at factors behind the sales trends, European importers earlier reported supply issues out of Asia due to an extended 2017/18 rainy season, with bangkirai decking, meranti and keruing all affected, although judging by the figures, importers have played catch up since.

Issues in Cameroon, however, are ongoing. The underinvested port of Douala remains a persistent bottleneck and conflict between the francophone Cameroon government and Anglophone rebels in the southwest of the country is also impacting supply. Continue reading "European tropical wood imports impacted by supply issues"

Wood pellets market outlook for 2019

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From a North American producer’s perspective, 2018 was one of the best years in quite some time for the wood pellet trade.  

After several years of tempered development following the ramp up of the Drax power station in the UK, new markets and consumers drove strong growth in global demand.

Imports to Denmark, South Korea and Japan all increased at least 40 per cent from previous highs, with Japanese wood pellet imports more than doubling. Better market conditions and less inventory also led to strong growth in North American and European heating markets after several weak years.

Continue reading "Wood pellets market outlook for 2019"

Lumber industry in British Columbia is optimistic about growth in exports to China

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British Columbia lumber producers are getting ready for a rough 2019, considering the concerns over Canada-China trade, the US housing market and American tariffs on Canadian softwood.

According to The Globe and Mail, there is still a huge long-term opportunity for boosting lumber exports to China remains huge, despite recent trade tensions. British Columbia accounts for 97 per cent of Canadian lumber exports to China.

Delegates from Canfor and other B.C. forestry firms such as West Fraser Timber Co. Ltd., Interfor Corp., Conifex Timber Inc. and Tolko Industries Ltd. went to China in December, to promote their lumber and other wood products

“China is a very important export market for Canfor and the forest industry. “We have had positive meetings with senior Chinese government officials and customers as we continue to explore opportunities to expand the uses of wood products and pulp,” Don Kayne, chief executive officer of Vancouver-based Canfor Corp. said.

In an interview before embarking on the trade mission, Mr. Kayne said he is undaunted by short-term disruptions and stock-price volatility. “We’re looking out five years and 10 years. We’re looking at how do we build this company for the future, from a diversification point of view and strategic aspects,” he said.

As reported by The Globe and Mail, over the past decade, B.C. producers have been striving to reduce their reliance on the American market, with China and Japan becoming the top two customers in Asia for B.C. wood products. The U.S. housing market that boomed in recent years has cooled off. Experts forecast that new residential construction in the United States will grow at a slower pace in 2019 than formerly thought.

As well, the long-running softwood dispute between Canada and the United States is expected to continue into 2019 and 2020. The U.S. Department of Commerce collected final countervailing and anti-dumping tariffs averaging 20.23 per cent against most Canadian lumber producers in 2018.

Adding to the Canada-U.S. uncertainty, lumber prices are in a slump. Benchmark two-by-fours made from western spruce, pine and fir decreased to US$328 for 1,000 board feet in December, down 47 per cent when compared with US$622 in June, according to Madison’s Lumber Reporter.

“Prices haven’t found strength and log cost/supply constraints are not going away anytime soon,” RBC Dominion Securities Inc. analyst Paul Quinn said in a research note.

British Columbia is by far Canada’s largest lumber exporter into the United States, with a 53.1-percent share of the total value in 2017, followed by Quebec (18.3 per cent), Alberta (11.5 per cent), Ontario (7.8 per cent) and New Brunswick (6.5 per cent).

Susan Yurkovich, president of the B.C.-based Council of Forest Industries, said she is optimistic about the prospects for long-term growth in lumber exports to China, which is B.C.’s second-largest customer. In 2017, China accounted for 16 per cent of B.C. lumber sold to foreign buyers while the United States remained the largest purchaser with 63 per cent of the total export value, The Globe and Mail reported.

China’s market has become increasingly important, ordering $1.07-billion worth of B.C. lumber in 2017, compared with $177-million in 2008. But the value of B.C. softwood shipped to China fell in 2018 compared with 2017 as the sharp drop in lumber prices in the second half of 2018 took its toll.

“Our industry is highly resilient,” said Ms. Yurkovich, who joined Mr. Kayne and other B.C. forestry executives during the swing through China. “Asia in general, and China in particular, continues to be a very important market for B.C. wood products.”

Guy Saint-Jacques, a senior fellow at the University of Alberta’s China Institute and a former Canadian ambassador to China, said it’s understandable that the forestry industry delegation decided to continue onto China since meetings were scheduled months ago, but other Canadian executives will likely take a wait-and-see attitude on travel plans in 2019.

“The Canadian government has to use all available communication channels to try to impress on the Chinese that we have to lower the temperature because we run the risk of causing lasting damage to the relationship,” he said.

Capital Economics senior economist Stephen Brown cautions that Canada’s forestry sector is among the industries exposed to potential retaliation from China. “If tensions escalate much further, we suspect the most likely response from China will be measures to boycott Canada’s exports,” Mr. Brown said in a research note.

Potential Chinese trade tariff and Brexit impacts on the European hardwood market

Posted on by GWMI Admin

Projecting into 2019, importers were concerned at the potential for an increase in market impacts of Chinese tariffs on US timber. Currently at 5-10% these are scheduled to double in March 2019.

“So far, US shippers and Chinese buyers seem to have split the difference, but that will change when tariffs rise,” a UK importer told the country’s Timber Trades Journal. “With China accounting for over 50% of all US hardwood exports, that has to have repercussions.”

As 85% of Chinese US imports are red oak, one importer said they wouldn’t ‘simply be able to shop for oak in Europe on a like for like basis’. “Moreover, China is reported to have high inventories, so impacts will be delayed,” they said.

Another trader, however, felt the longer tariffs persisted, the more likely it was Europe would experience fallout. Possible consequences cited could be: destabilisation of US hardwood prices; increased Chinese consumption of European hardwoods, notably oak, plus tropical timber; and greater diversion of American hardwoods to other global markets, notably Vietnam and the EU.

As for Brexit, at least one leading Nordic softwood supplier plans to increase UK landed stocks in case of delays at customs. One UK hardwood importer did say they planned to use a wider spread of ports in case of administrative hold ups.

However, no UK importer said they were increasing stockholding, with reasons given including hardwoods’ higher unit prices and generally slower stock turn.

“You’ve got to be able to get extra stock, pay for it and have somewhere to put it, and not many hardwood traders can tick all those boxes,” an agent told the TTJ.

While the UK government has said it will transfer the EU Timber Regulation and FLEGT regulation into British law post Brexit, another uncertainty is whether UK operators will have to undertake due diligence on imports from the EU and if there will be mutual recognition of FLEGT licenses.

The UK FLEGT and EUTR competent authority says it says it expects these issues to be resolved before March 29, but at this time there is no firm news.

Longer term, however, UK importers and their suppliers expect Brexit disruption to be time limited. “It may result temporarily in more cautious consumers and stickier supply chains, but working with partners across Europe and worldwide, we’ll find solutions,” said a UK importer.

“It’s in everyone’s interests, suppliers and buyers alike.”

A continental EU supplier echoed this view. “The UK is a big market of 60 million consumers. They’ll ultimately still want hardwood and we’ll still want to supply it,” they said.

US$2.4 trillion worth of construction projects to boost UAE’s wood products demand by 2020

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The wood industry in the United Arab Emirates (UAE) is expected to boom over the next two years as the country ramps up construction activities ahead of the Expo 2020 Dubai. The wood and woodworking machinery industry will be impacted from the massive construction projects being executed as part of the build-up for the Expo 2020 Dubai.

The large-scale event is slated to take place from October 20, 2020 to April 10, 2021 at the 438-hectare site in Dubai where massive construction projects are taking shape. Continue reading "US$2.4 trillion worth of construction projects to boost UAE’s wood products demand by 2020"

IKEA sells particleboard plant in France

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IKEA Industry AB, part of the Inter Ikea Group, has accepted the takeover offer made at the end of September by P3G Industries, the Parisot and CFP owner, for the particleboard plant in Lure trading under IKEA Industry France SAS.

Prior to this, the talks with the employee representation office at the Lure location had commenced following the receipt of the offer.

According to Ikea Industry and P3G the deal’s closing should happen very soon. With the offer for the Lure location, P3G had informed of investments of around € 12 million, above which the previously limited processing options at the plant should be expanded.

P3G Industries intends to operate the existing Ikea Industry plant in Lure in conjunction with the particleboard plant of Compagnie Francaise de Panneau (CFP) based in Saint-Loup-sur-Semouse / France, only about 30 km away, making it the second largest wood-based material manufacturer in France. The market share of around 10% achieved so far with CFP will rise to around 22% with the merger. The two plants will supply both the Parisot furniture factories and external customers with particleboard in the future.

The P3G Industries Group, headquartered in Saint-Loup sur Semouse, Haute-Saône, employs some 3,500 people in its 11 plants in France, Eastern Europe and Asia. Specializing in kit furniture (RTA), the group should reach, with this new acquisition, a turnover of 360 million euros.

Brazil: Booming lumber exports boost domestic sawlog prices

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Sawlog prices have increased in the local currency in Brazil in 2018 thanks to higher demand for lumber from the overseas markets.
Prices for pulplogs have also gone up slightly this year despite regional oversupplies of logs. With alternative land- uses becoming more attractive, future available of pulplogs might be restricted in some regions of Brazil in the future.
Softwood lumber exports from Brazil have increased 36% from January through November this year as compared to the same period in 2017. In US dollar terms, the export price has only gone up a modest three percent from the 3Q/17 to the 3Q/18, but because of the weakening Brazilian Real, there has been a 26% increase in the export price in the local currency over the past year. This development has led sawmills to expand export sales, which has resulted in higher demand for sawlogs. As a consequence, there has been continued upward pressure on log prices, which reached a new all-time-high in the 3Q/18, according the Wood Resource Quarterly. This increase is a continuation of a trend that started in 2013 when sawlog prices averaged BRL125/m3.
In US dollar terms, Brazilian sawlog prices have declined the past year because of the strengthening dollar and in the 3Q/18 were at their lowest levels in over two years. Despite excess regional supplies of both pine and eucalyptus pulplog, prices in the local currency have increased slightly this year. Eucalyptus pulplogs have gone up three percent from the 3Q/17 to the 3Q/18, while average prices for softwood pulplogs have increased 1.3% during the same period, reports the WRQ. However, in the Southern region of Brazil, prices for pine pulplogs have declined somewhat, which was an unwelcome development for the many small independent land owners and timberland investors in the region.
The limited price improvements over the past few years, oversupply of pine pulplogs, and potentially more attractive land-use alternatives in the agricultural sector, have led some landowners to choose to plant agricultural crops rather than trees. There is a concern that if many current owners of forest plantations choose this path, there will be insufficient supply of wood raw-material for the forest industry in the southern states in the future.

2019 global lumber market outlook

Posted on by GWMI Admin

After surviving a global slowdown in 2015, world lumber markets became favourable as a general trend of rising prices took hold – up until the second half of 2018, that is, when the trend reversed in almost all markets. What happened?

Many factors combined to cause two contrasting scenarios: too little supply with rising prices in H1/2018, especially in the U.S., followed by too much supply with declining prices by the end of the year. Delayed shipments occurred first in the U.S. market, mainly the result of weather delays from B.C. (and other factors); this inelastic supply led prices to soar to record levels by mid-year. In the second half of fiscal 2018, the opposite occurred: shipments swamped the market, plunging prices by 50 per cent. While average prices for U.S. structural lumber in 2018 were the highest ever recorded, it is still a tale of two half-years. The outcome is that higher-cost mills in western North America have been curtailing production to contend with below-cost prices, but overall supply and demand fundamentals continue to look reasonable for 2019. Continue reading "2019 global lumber market outlook"

US lumber prices continue to fall at the beginning of the year

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US traders welcomed a new year, but failed to discern a clear direction for the market amid the holiday-shortened week. While many traders were back in their offices Wednesday, a number of absences were also noted, and traders anticipated it would take a full week to gain a solid feel for the market.
Buying was limited to covering immediate needs, and a mix of order file strength generated flat to narrowly mixed price trends across framing lumber species. The Random Lengths Framing Lumber Composite Price slipped $3, to $329.

This Week
Jan 4		 Last Week
Dec 28		 Year Ago
2018
Random Lengths Framing Lumber Composite Price* $329 $332 $436
KD Western S-P-F #2&Btr 2x4 R/L Mill Price 326 326 472
KD Eastern S-P-F #1&2 2x4 R/L, delivered Great Lakes 401 400 536
Green Douglas Fir Std&Btr 2x4 R/L (Portland) 245 250 483
Southern Pine (Westside) #2 2x4 R/L 381 389 475
KD Coast Hem-Fir #2&Btr 2x4 R/L 340 340 488
Ponderosa Pine (Inland) #2&Btr 1x12 R/L 795 795 735
* Weighted average of 15 key items

Random Lengths Panel Market Report

Most structural panel traders were indecisive in the holiday-shortened week. With the long break over the year-end holidays, OSB traders struggled to get a handle on price trends. Near-term market direction was difficult to assess in Southern Pine plywood markets during the compressed week of trading. Buyers showed little urgency, and sales were slow to develop. Western Fir plywood activity picked up after the holiday, with some mills reporting their strongest sales in months.

(f.o.b. mill prices) This Week
Jan 4		 Last Week
Dec 28		 Year Ago
2018
Random Lengths Structural Panel Composite Price* $365 $363 $437
Southern (west-east) 15/32-inch 3-ply rated sheathing plywood 360-390 360-390 450-485
Southern (west-east) 15/32-inch 4-ply rated sheathing plywood 365-395 365-395 455-490
Western 1/2-inch 4-ply rated sheathing plywood 355 345 455
North Central 7/16-inch Oriented Strand Board 208 205 305
*Weighted average of 11 key items

 
 

Egger reports sharp turnover rise

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The Egger Group with headquarters in St. Johann in Tirol (Austria) closed with a consolidated turnover of EUR 1.43 billion and an adjusted operative result (EBITDA) of EUR 231.4 million. The outlook for the second half-year is also optimistic, the company said.

“In the last six months we were able to use the overall positive economic situation to our advantage. We utilised the capacities of our 18 modern plants and reached these satisfactory turnovers and results together with our now 9,600 employees”, says Thomas Leissing, Head of Finances/Administration/Logistics and spokesperson of the Egger Group Management, on the day the balance sheet is published. The turnover of the Egger Group for the first half-year 2018/19 was able to reach EUR 1,432.0 million and exceed by 8.2% the previous year’s level.

The adjusted EBITDA (result before interest, taxes and depreciation; revaluation in Argentina acc. to IAS 29/inflation balance not taken into account) increased by 4.0 % to EUR 231.4 million. The adjusted EBITDA margin of 16.2% (previous year: 16.8%) is still at a good level.

Gains by segment

The largest turnover increase, with 76.5 %, was registered by Egger in the furniture and interior design product segment (Egger Decorative Products). The sales in this segment has grown in all relevant geographic markets as compared to the previous year, and reached a total of EUR 1,222.6 million (+3.8 %). When it comes to flooring (Egger Flooring Products), the market situation remains difficult throughout Europe. Nevertheless, the volumes from the Gagarin (RU) plant increased, particularly on the Russian market. This means the division sales increased to EUR 225.3 million (4.7 %), which corresponds to 14.1% of the total turnover. Egger reports for the first time in its half-year balance sheet the newly created segment “Others”. It includes Group functions, the sawmill in Brilon (DE), and currently the Argentinian plant in Concordia acquired in 2017. This segment has a turnover of EUR 151.1 million and currently contributes 9.4% to the Group turnover.

Over recent months, the Egger Group continued its growth investments in almost all plants, including additional finishing capacities or logistics optimisations.

This is currently particularly visible in Egger’s 19th plant location in Biskupiec, Poland.

In the first six months of the 2018/19 business year, investments of EUR 242.9 million (previous year: EUR 264.4 million) were made. EUR 40.4 million (previous year: EUR 36.3 million) was spent on maintenance investments and EUR 202.5 million (previous year: EUR 228.1 million) on growth investments including acquisitions. The number of employees also grows with the investments: On 31.10.2018, Egger had 9,617 employees (annual average: 9,422; +10.4 % as compared to the previous year).

Positive outlook for the second half-year

For the second half-year, Egger is expecting a stable development in all European markets and Russia. The outlook for the largest product segment, Furniture and Interior Design, is stable across all locations. Ulrich Bühler, Head of Sales/Marketing EGGER Group, thinks the challenge for EGGER will be the still relatively new market environment in South America: “Primarily the high level of inflation and the currency fall of the Argentinian Peso are challenging. Our objective in this regard is to expand the hitherto regionally restricted sales of this location to other regions of North and South America. We are happy we were able to fully integrate our new Concordia plant into all Group processes.”

For the flooring segment, EGGER is counting in Western Europe on a stable to slightly upward evolution given the competition context. An increase in laminate flooring is expected in Russia and neighbouring countries. In the OSB market, the recently very positive demand situation flattens again seasonally, but the demand for building products will maintain a good level in 2019 as well.

Segezha starts production of wood pellets at its new plant in Russia

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Segezha Group has started in December the production of wood pellets at the company’s Lesosibirsky LDK No. 1 factory in Russia.

According to the announcement, the investments into the pellet production facility amounted to RUB 816.6 million (around USD 11.4 million). The capacity of the new enterprise is 70,000 tons of finished products, which will be exported. The total amount of investments of Segezha Group into production development in Krasnoyarsk Krai of Russia has exceeded RUB 1.7 million.

Lesosibirsky LDK No. 1 is one of the leading sawn timber manufacturers in Russia. The plant has been on the world market for 50 years. Annually LLDK No. 1 processes more than 1 million cubic meters of round timber and produces around 600,000 cubic meters of ready products a year. The enterprise has considerable forest resource base, and cutting-edge wood harvesting and wood-sawing capacities. Its products are exported to European countries, including the UK, France, Spain, Belgium, the states of North Africa and the Middle East, as well as to China. LLDK No. 1 is one of the main employers in the single-profile city of Lesosibirsk, with more than 3,500 jobs.

About Segezha Group:

The company is one of the largest Russian forest industry holdings with the vertically integrated structure and a full cycle of logging and added-value wood processing. The holding comprises Russian and European enterprises in the forest, wood processing and pulp and paper industries, as well as paper packaging. Segezha is ranked: No. 1 in Russia (52%) and No, 2 in Europe (16,5%) for paper sack production, No. 1 in Russia (71%) and No. 4 in Europe in terms of high-quality unbleached sack paper production , No. 5 in Russia and the world’s No. 7 for large-sized birch plywood production, No. 1 in Russia for sawn timber production – 904 thousand cubic meters per year, and No. 1 in Russia for glulam house sets – the volume stands at 25,5 thousand cubic meters per year.

Austrian sawmill industry hits record in 2018; expected to lose momentum in 2019

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Wood processing in Austria has benefitted from the vibrant construction economy at home and abroad for more than 3 years. In 2017, industry sales increased on average by 4.4 per cent to EUR 8.7 billion, predominantly driven by booming residential sector. 

"In 2018, the demand for timber and wood products received a further boost due to the sharp increase in domestic commercial construction and additionally recorded even stronger export growth than in the previous year. The nominal sales growth of 7.2 per cent during the first three quarters is not expected to cool down significantly until the end of the year and is expected to remain in the region of 5 per cent," emphasized UniCredit Bank Austria economist Gunter Wolf.

Wood processing passed its growth peak in the middle of the year. However, a sales increase vis-a-vis the previous year is still possible, as indicated by the further rise in producer prices of almost 1 per cent over recent months the highest since 2012 and, most of all, the yet again optimistic production and price expectations by the wood processing companies for the coming months. Continue reading "Austrian sawmill industry hits record in 2018; expected to lose momentum in 2019"

Armstrong sold its Wood Flooring segment

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Armstrong Flooring announced that it has completed the previously disclosed sale of its Wood Flooring segment to an affiliate of American Industrial Partners. Proceeds from the sale were approximately $90 million, net of closing costs, transaction fees and taxes. The transaction is subject to a customary post-closing working capital adjustment process, which is expected to be completed in the first quarter of 2019.

According to Armstrong Flooring, the completion of the sale permits to intensify its focus on the fastest-growing parts of the flooring market, including Luxury Vinyl Tile and rigid core, as well as a wide range of resilient categories such as Vinyl Composition Tile, resilient sheet and its Diamond 10® line of products. This exclusive focus on resilient flooring is expected to strengthen the company’s product and end market mix while improving its ability to innovate and enhance the profitability of its portfolio.

Don Maier, Chief Executive Officer, commented, “We are excited to enter 2019 with an exclusive focus on resilient flooring, which improves the profitability of our award-winning product portfolio. This transaction is immediately accretive to our EBITDA margin and together with the right-sizing of our cost structure unlocks additional value for Armstrong Flooring’s shareholders. This divestiture positions us well for the future, as we are now able to concentrate our efforts on attractive and growing resilient categories. Additional financial information regarding the transaction will be available to shareholders after the New Year.”

The transaction is valued at approximately 7.2 times the Wood Flooring segment’s trailing twelve month Adjusted EBITDA. As of October 31, 2018 Armstrong Flooring’s Wood Flooring segment comprised six U.S. manufacturing facilities primarily serving the North American region and approximately 1,700 employees.

Rising EU sawn hardwood imports in 2018

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Total EU sawn hardwood imports were up 4% for the first nine months of 2018 at 1.62 million cu.m. Tropical timber was ahead 7% to 720,000 cu.m and temperate hardwood increased 2% to 900,000cu.m.

By supplier country, strongest growth came from Indonesia, albeit from a relatively low base, with EU imports of Indonesian sawnwood up 75% to 17,600 cu.m in the January to September period. All sawnwood exported by Indonesia to the EU has been FLEGT licensed since November 2016, and all must be S4S as rough sawn exports are banned.

In the first nine months of 2018, EU sawnwood imports also increased strongly from Gabon, up 22% to 88,200cu.m, Brazil up 19% to 91,300cu.m and Malaysia, up 10% to 121,600 cu.m.

In temperate species, EU imports from the US, the largest external supplier, were static at 247,200 cu.m in the first nine months of the year. Imports increased 39% to 139,200 cu.m from Russia and 7% to 68,200cu.m from Serbia. However, these gains were partially offset by a 10% fall in imports from Ukraine, to 215,000cu.m, and an 8% fall from Belarus to 47,000cu.m.

By import country, the UK’s total hardwood imports from January to September 2018 were down 4% at 329,300cu.m, with tropical 21% lower at 65,900 cu.m and temperate ahead 2% at 263,400 cu.m. There was a particularly sharp fall in UK imports from Cameroon, Malaysia and Congo, down 17%, 25% and 27% respectively, while imports from Brazil increased 68%, albeit to just 2,400 cu.m.

The slight gain in UK imports of temperate hardwood in the first nine months of 2018 was mainly driven by supplies from other EU countries and much comprised low grade wood from the Baltic States, most likely for the pallets and packaging sector. Imports from the US, the UK’s largest single supplier of sawn hardwood, were static at 74,100 cu.m. Belgian total sawn hardwood imports rose 14% to 323,100 cu.m in the eight months between January and August 2018, with tropical rising 6% to 200,000 cu.m, and temperate rising 28% to 123,100 cu.m.

After a sharp decline in 2018, Belgium’s imports of tropical sawn hardwood rebounded from African countries in the first eight months of 2018, rising 5% to 93,700 cu.m from Cameroon, 17% to 46,300 cu.m from Gabon, and 39% to 12,700 cu.m from Congo. However, there was a sharp 20% fall in imports from Brazil, to 11,300 cu.m, while imports from Malaysia were also down 6% to 9,000 cu.m.

Analysis of Eurostat trade data suggests that Netherlands’ January to August sawn hardwood imports jumped 73% to 352,100 cu.m, with tropical up 70% to 180,200 cu.m and temperate rising 77% to 172,000 cu.m. It may be that this is indicative of the real trend and certainly anecdotal comments by Dutch traders imply good trading conditions in the Netherlands this year.

There are also factors that may be driving significant shifts in hardwood stockholding and trading patterns in northern Europe at present, notably extreme volatility in recent shipments to Europe from Africa, the financial difficulties of some large European companies engaged in the hardwood trade, concerns about Brexit, and tightening enforcement of EUTR.

On the other hand, Netherlands trade data has been quite unreliable in recent years and the level of increase in trade reported this year seems suspiciously high. This data may be amended in the future.

For now, the statistics indicate that Netherlands tropical sawn wood imports in the first eight months of 2018 increased 34% to 62,700 cu.m from Malaysia, 45% to 28,400 cu.m from Brazil, and 141% to 13,800 cu.m from Indonesia. Netherlands imports of sawnwood identified as tropical from other EU countries (mainly Belgium) also increased nearly three-fold to 54,000 cu.m in the first eight months of 2018.

The rise in Netherlands imports of temperate sawn hardwood also came mainly from other EU countries, with imports rising 87% to 44,800 cu.m from Germany, 60% to 28,400 cu.m from France, and more than doubling to 17,200 cu.m from Belgium.

Total German sawn hardwood imports were 222,000 cu.m in the first eight months of 2018, exactly equivalent to the same period in 2017. Imports of tropical sawnwood increased 13% to 47,900cu.m while imports of temperate sawnwood were 3% lower at 174,200cu.m.

The biggest increase in Germany’s tropical sawn imports came from Cameroon, up 25% to 4,500cu.m, and in indirect tropical timber purchases from the Netherlands and Belgium, ahead 31% to 6,500cu.m and 43% to 10,400cu.m respectively.

Germany recorded big falls in imports of temperate sawn hardwood from Belarus and Ukraine, down 24% and 27% to 16,200cu.m and 5,300cu.m respectively in the first eight months of 2018.

Spain’s overall sawn hardwood imports fell 12% to 92,700 cu.m in the first eight months of 2018, with tropical 21% lower at 33,000 cu.m and temperate 7% down at 59,700 cu.m. Steep falls were seen in imports from Cameroon, 39% lower at 29,600cu.m, and temperate hardwood from France, 24% down at 15,800 cu.m.

Spain’s tropical imports from Brazil were up 25% and indirect trade via Portugal increased 86% to 2,800 cu.m. Spain’s imports of sawn hardwood from the United States fell 3% to 21,800 cu.m in the eight month period.

Italy’s total imports of sawn hardwood fell 1% to 449,000 cu.m in the first eight months of 2018. Imports of tropical sawnwood increased 25% to 82,000 cu.m while imports of temperate sawnwood fell 5% to 367,000 cu.m.

Italy’s imports of sawn hardwood from Gabon rose 84% to 19,700 cu.m in the eight month period, while imports from Cameroon rebounded 30% to 40,200 cu.m after a poor year in 2017. Italy’s imports from Cote d’Ivoire fell 15% to 7,400 cu.m, continuing a long-term slide. Italy’s imports from Malaysia also fell, by 23% to 3,200 cu.m.

Italy’s temperate sawn hardwood imports increased from Croatia, by 2% to 119,100cu.m, and the US, by 5% to 38,000cu.m, in the January to August period. However, these gains were offset by declining imports from Hungary (-14% to 43,800 cu.m), Slovenia (-23% to 23,600 cu.m), and Austria (-37% to 15,000cu.m).

For January to September 2018, French sawn hardwood imports were down 1% to 192,600cu.m, with tropical rising 4% to 102,200cu.m and temperate falling 6% to 90,400cu.m.

French imports of tropical sawnwood from Brazil increased 23% to 17,500cu.m in the first nine months of 2018, while imports also increased 19% from Gabon, to 8,100cu.m, and indirect imports via Belgium were up 10% to 15,800cu.m. However, imports into France from Cameroon were 5% lower at 25,200cu.m.

Most temperate sawn hardwood imported into France derives from other EU countries, notably Germany and Romania. French imports from both countries fell sharply in the first 9 months of 2018, down 23% to 22,100 cu.m from Germany and 43% to 5,300 cu.m from Romania.

These declines were partially offset by a 72% increase in French imports from Bosnia, to 5,900 cu.m, a 77% rise from Poland, to 4,300 cu.m, and a 35% rise from Hungary, to 11,000 cu.m.

Global wood pellet trade picked up strongly in 2018 after years of moderate growth

Posted on by GWMI Admin

2018 was one of the strongest years for the global wood pellet market in terms of growth and pricing.
FutureMetrics has released a new white paper that features a 2018 year-end review of the pellet market. The paper, authored by FutureMetrics Senior Economist Seth Walker, shows that the growth in wood pellet trade has picked up over the past year following several years of more moderate growth. From 2013 to 2014, there was a 19 percent growth in wood pellet trade, according to data included in the paper. From 2014 to 2016, the paper shows growth slowed to 7 percent per year and was accompanied by a low pricing environment and limited capacity expansions. In 2017, market conditions improved and global trade increased by 13 percent, to 18.9 million metric tons. In the paper, Walker notes that market improvement continued through 2018 as the growth in global pellet trade accelerated to 26 percent.
According to Walker, FutureMetrics currently projects 2018 pellet trade will reach 23.8 million metric tons, up from 18.9 million metric tons last year. This growth is primarily fueled by increased demand in the U.K., Denmark, South Korea and Japan, he said in the paper.
In the U.K., the paper notes pellet demand increased this year due to commissioning of the Lynemouth Power Station and conversion of a fourth unit at Drax Power Station. Next year, growth in the U.K. is expected to be driven by full operations at Lynemouth and increased availability at Drax. In 2020, FutureMetrics expects U.K. pellet demand to further increase with the scheduled commissioning of MGT’s Teeside CHP plant.
In Denmark, much of the recent growth in demand for wood pellets has come from coal-to-biomass conversions of large central power stations. Moving forward, FutureMetrics expected additional growth in demand to come from smaller-scale district heating operations and continued growth in the residential sector.
In Belgium, the paper notes that industrial wood pellet demand has remained relatively stable over the past several years. Increased imports this year seem to reflect higher capacity use at the country’s two pellet-fueled plants, along with improved conditions in the domestic heating market.
The Netherlands used to be a major market for wood pellets, according to the paper. However, the market rapidly declined in 2012 when a new renewable energy subsidy scheme was introduced. Subsidies have since been awarded for co-firing pellets at several plants. Moving into 2019 and 2020, FutureMetrics predicts the Netherlands will once again become a major market for industrial wood pellets.
Pellet demand in Italy comes primarily from home heating, rather than industrial use. While warm winters and lower prices for competing heating fuels impacted pellet demand over the past few years, FutureMetrics said volumes recovered significantly last year. Over the first eight months of this year, wood pellet imports are up 29 percent and on pace to break records set in 2014.
In Japan, the paper notes that pellet imports are on pace to exceed 1 million metric tons this year, approximately double the volume of imports for 2017. During the first three quarters of this year, 63 percent of Japan’s wood pellet imports came from the Canada, with 31 percent sourced from Vietnam. FutureMetrics expects to see continued rapid expansion in Japanese imports over the next several years.
In South Korea, wood pellet imports are expected to reach 3.4 million metric tons this year. FutureMetrics said more than 95 percent of that volume will be sourced from pellet producers in Southeast Asia.

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