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Brazilian Berneck S. A. Painéis e Serrados to invest in a new MDF production line

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Berneck S. A. Painéis e Serrados placed an order for a Generation 9 ContiRoll® NEO for its new location in Lages, Brazil with Siempelkamp.

Following the plant’s startup, scheduled for spring of 2021, the new Berneck production location in Lages will manufacture 1,665 m² of MDF daily. The installation of the plant is scheduled to begin in the second quarter of 2020 and the production of the first board is forecast for December of the same year.

According to the announcement, it is already the company’s fifth production plant with ContiRoll® technology. With the investment Berneck intends to meet the increasing demand of the Latin American market.

The scope of supply for the Siempelkamp’s order from Berneck includes the resin kitchen equipped with the Ecoresinator, the continuous press line with ContiRoll® to the finishing line with the cooling turners and the intermediate storage.

The drying of the wood fibers takes place in a flue gas-free indirectly steam-heated flash tube dryer made by Büttner. The engineering of the whole plant is carried out by Siempelkamp’s Belgium subsidiary Sicoplan based on laser-scan-supported surveying of the local production site. Sicoplan is also responsible for the planning of the steel construction and the wiring necessary for the process equipment. Both will be implemented by Siempelkamp.

The ContiRoll® Generation 9 has length of 48.8 m and width of 9″. The key design feature of the NEO version is its ultra-flexible, extended press infeed.

Ten press frames with a distance of 530 mm from each other provide for solid static conditions; the booster hot platen, extended by 100 %, together with the highly specialized press hydraulics, allows production increases of up to 30 %.

The scope of supply also includes that all five of Berneck’s production locations will be equipped with Prod-IQ Next. For Berneck, this state-of the-art digitalization will make a self-optimizing, almost reject-free production of wood-based materials with continuously high product quality possible.

About Berneck S. A. Painéis e Serrados:

The company is one of the largest producers in the South American market and maintains trade relations to more than 60 countries. It primarily processes wood from pine trees (Pinus elliottii) grown on the company’s sustainable plantations which cover an area of 63,000 ha. To offset forestry use Berneck plants more than 4 million trees each year, both pine and teak trees (Tectona grandis), at the company’s plantations close to Brasnorte in Central Brazil. The wood-based materials manufacturer uses 100 % of the harvested wood. The waste materials from its saw mills are the source material for the production of MDP, MDF and HDF. Berneck employs approximately 1,600 people at production locations in Araucária, Curitibanos, Brasnorte, and, in the future, Lages.

Global trade of softwood lumber down in 2018

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Global trade of softwood lumber from January through September 2018 was down 2.5% as compared to the same period last year. China, Japan, the United Kingdom and the MENA region reduced their imports, while the US and continental Europe have imported more lumber this year than in 2017.

Lumber markets – North America

After US lumber imports reached a 10-year high in the 2Q/18, import volumes fell 3.5% to 9.44 million m3 in the 3Q/18, which was still over ten percent more than in the same quarter in 2017. The trend over the past few years has been that the market share for overseas lumber supply to the US has increased at the expense of Canadian supply, as reported in the Wood Resource Quarterly (WRQ). The Canadian share has fallen from 95% of total imports in 2016 to 91% in 2018.

Lumber prices in the US plummeted during the summer and fall, with major grades falling about 40% from June to November.

Lumber exports from Canada were down in all markets in the 3Q, and the total export volume was down 4.3% q-o-q. Almost 80% of the shipments were destined for the United States. During the first nine months of 2018, export volumes to China were 16% lower than the same period last year.

Lumber markets – Northern Europe

Lumber exports from both Finland and Sweden slowed substantially in the late summer, with August shipments being down 10% (Finland) and 6% (Sweden) from August 2017. The biggest decrease in Finnish exports so far this year have been in shipments to China and Saudi Arabia, while Swedish sawmills have reduced exports to Egypt, China and Japan the most. Both countries have kept up sales in the European market in 2018 with only minor changes in shipped volumes from 2017, according to the WRQ. Lumber prices in both Finland and Sweden have remained fairly stable during most of 2018.

Lumber market – United Kingdom

The United Kingdom is the world’s third largest importer of softwood lumber, after the US and China. In 2017, the country imported 7.5 million m3 of lumber, the highest level seen since 2007 and up almost 50% from five years ago. Sweden has long been the major supplier, with a market share of about 45%. However, demand for imported lumber to the UK has fallen by 20% during the first nine months of 2018.

Import prices for lumber have trended upwards in US dollar terms in the past few years to reach a three-year high in the 2Q/18, followed by a decline of 7.3% in the 3Q/18.

Lumber markets – China

A gloomier outlook by Chinese consumers and a shortage of credits for many provincial governments and state-run firms have contributed to reduced demand for forest products. As a result, total softwood lumber imports to China have slowed in 2018, with volumes in the first nine months falling 11% as compared to the same period in 2017, according to Chinese customs data. Imports were down from all supplying countries except Russia.

Metsa Group starts to export sawn timber to China by train

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A block train packed with 41 containers of sawn timber left Kouvola, eastern Finland Tuesday and headed to Xi'an, the capital of Shaaxi province in northwestern China, or the hometown of renowed Terracotta Warriors.

It takes two weeks for the 1,800 cubic meters of wood products to arrive at Xi'an, which is playing a bridge head role in opening up the central western China, said Tommi Saarnisto product manager of Metsa Fibre, a prominent forest company of Finland. The journey covers Russia and central Asian countries, and the train will enter China from Kazakhstan through Alataw Pass.

Metsa Fibre is currently the biggest provider of softwood pulp in China, but sales of new goods such as sawn timber have begun to grow there, according to Jani Riissanen, the company's SVP in charge of timber business.

Metsa Fibre has been among the "big customers" that are starting to embrace the railway logistic method for their exports to China, said Anu Kujansuu, Marketing Director of Kouvola Cargo Handling company.

"We are looking forward to big customers like Metsa to be interested in the railway transportation," Kujansuu said. She believed the railway service is a good alternative between air transportation and sea transportation, although "the price is a little bit higher."

"There are branches where 'the time is money', and you cannot wait for 45 days for your cargo to go to the customer," Kujansuu elaborated.

And the railway is more environmental friendly compared to other methods, and many big companies are paying attention to this merit, she added.

Riissanen was convinced that the cargo train that arrives at Xi'an provides a good option to expand the market in the vast nation, especially the remote inland areas far from the coast line.

For the moment, the east bound trains are running at an average frequency of twice a week, said Kujansuu on Wednesday. A second block train loaded with hardboard will depart from Kouvola later this week.

Kujansuu seemed satisfied with the development, and she considered the railway service linking with China, which started one year ago, bearing a rosy future.

"Before, I never thought a company located in Kouvola, not in the sea port, in Finland could be so linked to China," she said when commenting on the 40th anniversary of China's open-up policy.

"We didn't realize how close we are to China. Of course we think this new route and all these train routes to Europe from China is a great development," she said.

Consequences of the US China trade war on the wood products markets

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Since September 24, the US imposed 10% duties on Chinese wood products while China imposed 5 or 10% duties on American wood products except for the 25% applied to Southern Yellow Pine imports. For China, wood products supply from the US represents about 10% of the total imports and can be substituted from other sources. Meantime, Chinese furniture manufacturers suffer from the higher costs of the hardwood lumber imported from the US.

US logs and lumber exports to China increased considerably in the last three years, thus the decline of exports may influence forest products suppliers.

China is the largest importing country of southern yellow pine (SYP) logs. If this declines, China would probably buy more New Zealand radiate pine logs or Russian logs in order to replace SYP logs. The next concern is if the US. would increase the duties to 25% in 2019. Continue reading "Consequences of the US China trade war on the wood products markets"

Chinese imports of hardwood chips reach record high in the 3Q/2018

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Chinese pulpmills have continued to increase importation of hardwood chips throughout 2018, and import volumes reached a new record high of 3.5 million odmt in the 3Q/18 - 21% higher than in the 3Q/17. By far the biggest increase in chip supply this year has been in wood chips from Vietnam, with the total volume during the first nine months of 2018 being 34% higher than during the same period in 2017, according to recent Chinese Customs data. Continue reading "Chinese imports of hardwood chips reach record high in the 3Q/2018"

Georgia-Pacific breaks ground for planned US$135M lumber facility in Georgia

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Georgia‐Pacific this week broke ground for planned US$135M lumber facility in Warrenton, Georgia. 

The new 340,000‐square foot facility will replace the current Warrenton plant, originally built in the early 1970s.

“We have a great team at Warrenton and building a new state‐of‐the‐art facility on this site will make it competitive for years to come. The team has earned it,” said Fritz Mason, vice president and general manager, Georgia-Pacific Lumber.

Once in full production in spring 2019, this technologically advanced facility is set to receive approximately 185 truckloads of pine logs a day while producing approximately 350 million board‐feet of lumber per year. The new facility will produce more than three times what the existing facility is able to do.

Rules for US ash lumber exports to the EU have changed

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Starting December 18, 2018 the rules for shipping ash lumber originating from Canada and the United States has changed.

The only approved option for exporting ash lumber to the EU is the NHLA KD Certificate Program as proof of treatment to obtain a Phyto-Sanitary Certificate.

As announced by USDA-APHIS, "Shipments of Ash lumber certified under the 2.5cm beneath the bark lumber will be allowed a grace period for the wood already in route. The last date such a shipment can arrive and gain entry in to the EU is February 10, 2019, which should cover any shipments in route, even with delays. The 2.5cm option for new shipments cannot be used."

All ash originating from Canada or the United States and traveling to the European Union must be in the "systems approach". The "systems approach" is defined below.

Shipments must have a PHYTO with the accompanying NHLA KD Certificate with clip id numbers.The Shipments must also meet all of the following requirements:

  • 10 percent or less in MC
  • Dry bulb temperature must reach 160 degrees F for 20 hours minimum.
  • Lumber must be debarked, small residual pieces less than the size of a credit card are acceptable.
  • Lumber drying time of 14 days, this includes air drying time.
  • Lumber must be stenciled with KD - HT on both ends of the packs. (bottom right corner)
  • Treatment durations, dry and wet bulb temperatures, and final moisture contents will be recorded for each specific lot, and maintained for a minimum of three years

Obstacles and opportunities in EU sawn hardwood market

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The consensus amongst hardwood importers interviewed during December is that the current state of trade across the EU is satisfactory and there is cautious optimism it will remain that way into 2019. However various issues are causing concern.

One preoccupation is the impact of the UK’s departure from the EU, scheduled for 29 March 2019. Not only is the UK one of the EU’s top direct importers of both tropical and temperate hardwoods, it is a key buyer from international traders on the European continent.

Importers are worried both by the potential effect of Brexit on consumer confidence and on the mechanics of doing business in the British market going forward.

“The overall lack of clarity on Brexit is itself also a headache,” said a continental European hardwood importer/producer. “Business dislikes uncertainty.” Continue reading "Obstacles and opportunities in EU sawn hardwood market"

EU calls on Ukraine to lift the roundwood export ban

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The European Union has called on Ukraine to lift the moratorium on the export of roundwood, as well as to introduce administrative and institutional reforms and ensure the functioning of an efficient and transparent administrative system.

“The EU encouraged Ukraine to continue fighting vested interests in order to improve the business and investment climate and eliminate swiftly trade irritants, such as the wood export ban,” according to the statement following a meeting of the Council of the Ukraine-EU Association, held in Brussels.

“Particular focus should be on effective and timely implementation of the Deep and Comprehensive Free Trade Area, and to further facilitate trade and eliminate technical barriers to trade, including as regards customs procedures, technical regulations, sanitary and phytosanitary systems as well as food safety reform, public procurement and the protection of intellectual property rights,” the report says.

“The Ukrainian side reaffirmed its commitments to technical regulation reform, notably the need to speed up adoption of sectoral and horizontal legislation, including in the area of market surveillance,” it says.

The EU pointed out that “Ukraine shall comply with all prerequisites set out in the AA/DCFTA including incorporating the relevant EU acquis into its legislation, making the administrative and institutional reforms and providing the efficient, effective and transparent administrative system, which are indispensable prior to starting ACAA [Agreement on Conformity Assessment and Acceptance of Industrial Products] negotiations,” it said.

Ukraine has completely prohibited exports of any kind of roundwood from the country on January 1, 2017. According to the country’s legislation, till January 1, 2027 it is allowed to export only sawn (and further processed) wood.

The Verkhovna Rada (Ukrainian Parliament) passed the Ukrainian Law Nr. 325-VIII (09.04.2015) in November 2015, which temporarily prohibits (10 years) the exportation outside the customs territory of Ukraine of untreated wood from all tree species (except pine) as of November 1, 2015. The same would apply to pine as well, but later - starting from January 1, 2017.

The legislative draft in question stipulated a temporary ban for the following: unprocessed wood including raw wood, such as roundwood in the form of logs, poles etc. with moisture content exceeding 22% and sawn timber with the thickness exceeding 70 mm and moisture content more than 22%.

Japan expected to set new record for wood pellet imports

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Wood pellet imports in Japan reached a record 506,000 metric tons in 2017, and are expected to increase again this year.

According to data contained in the country’s annual biofuels report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network, Japan has restarted only a limited number of its nuclear power reactors since the 2011 Great East Japan Earthquake, forcing the country’s power companies to rely on other methods to generate power. Many of these companies have turned to wood pellets as a renewable energy source. According to the report, the current trend of mixing wood pellets or palm kernel shells (PKS) with coal for thermal power generation is expected to continue.

The report shows Japan imported 506,353 metric tons of wood pellets in 2017. Canada was the country’s top wood pellet supplier, with exports to Japan reaching 360,068 metric tons. Vietnam, Thailand and the U.S. supplied a respective 131,115 metric tons, 951 metric tons and 316 metric tons of wood pellets to Japan last year.

In 2012, Japan imported only 71,981 metric tons of wood pellets. By 2013, that volume grew to 83,769 metric tons. Wood pellet imports reached 96,745 metric tons in 2014, 232,425 metric tons in 2015, and 346,855 metric tons in 2016.

Japanese imports of PKS have also grown significantly over the past few years, from 26,211 metric tons in 2012 to nearly 1.14 million metric tons in 2017.

Japan shut down all of its nuclear power reactors in 2011 due to the nuclear incident caused by the Great East Japan Earthquake. As of October 2018, Japan has only resumed operations at nine reactors, and of Japan’s 60 nuclear power plants, 22 are slated for decommissioning predominantly due to their age.

Japan will need to resume operations at all remaining 38 nuclear power plants to reach METI’s target of providing 22-24 percent of Japan’s energy needs through renewable sources by 2030. However, the number of plants that will resume operation remains a topic of national debate. Accordingly, Japan currently relies on other energy sources to generate power – primarily coal and liquid natural gas.

After the nuclear incident, power companies began using wood pellets and PKS as a source for thermal power generation, though coal is still the primary source. Japan does not apply a tariff to imported wood pellets (HS4401.31). As a result, Japan’s imports of wood pellets and PKS are expected to increase for years to come.

Prices for logs continue to increase in Estonia

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Roundwood prices in Estonia increased again in October 2018, similar to the rapid rise in prices which started at the end of 2017 and lasted until the beginning of 2018.
The price trend for pine sawlogs has once again gone up, after several months of decrease. However, the spruce price is still above the pine. Conversely, in the small-diameter segment, the price of pine is above the price of spruce. Overall, the previous price trend in 2018 is stable. Compared to the previous year, prices have risen by 11% to over 12%.
In hardwood, the birch, especially birch sawlogs, the price noticeably increased. For aspen, the rise is only minimal.
For the pulpwood assortments, all prices have risen since September, with the spruce showing the strongest growth with just over 4%, followed by the birch with 3.4% and the pine with 2.2%. The price spectrum is led by the pine with over 49 € / m3, followed by spruce and birch. The price increases compared to the previous year are up to a maximum of 80%. The prices seem to settle at this level after the end of the rapid increase in spring. The price of aspen pulpwood only increased by 1.2% from September to October and, at + 6.6%, is also comparatively slightly above the previous year's level.

Oct'17 € / m3 Sep'18 €/m3 Oct'18 € / m3 Change% Oct 17 to Oct 18 Change% Sep to Oct 18
Pine 67.97 73.84 75.64 11.28% 2.44%
Spruce d<18cm 55.84 61.75 62.65 12.20% 1.46%
Spruce 68.54 76.90 76.93 12.24% 0.04%
Spruce d <18cm 54.18 60.84 60.94 12.48% 0.16%
Birch veneer 113.41 117.72 119.34 5.23% 1.38%
Birch 60.92 65.98 68.41 12.29% 3.68%
Aspen 33.87 42.76 42.92 26.72% 0.37%
Pine pulpwood 28.18 48.30 49.36 75.16% 2.19%
Spruce pulpwood 26.90 46.50 48.41 79.96% 4.11%
Birch pulpwood 26.26 41.68 43.09 64.09% 3.38%
Aspen pulpwood 20.02 21.09 21.34 6.59% 1.19%
Energy wood 20.75 20.96 21.95 5.78% 4.72%

Chinese wood products companies shift to Vietnam

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The tariffs imposed on the imports of Chinese goods to the US have hit the target: to push production out of China, but not to the United States.

According to South China Morning Post, after less than a month, the Trump Administration has collected $200 billion out of the Chinese imports, with a 10% tariff.

The main furniture manufacturer in Hong Kong, Man Wah Holdings, is expanding outside Ho Chi Minh City in Vietnam. In June, Man Wah Holdings, whose products are widespread in the US, has purchased one of the largest furniture factories in Vietnam.

Vietnamese consulting firms have brought about 40 Chinese companies per month to Vietnam in over 50 industrial areas of the country, because if "some companies can absorb a tariff of 10 percent, a tariff of 25 percent would devour their profit (...) They should relocate and close their factories in China. "

Although the import duty is actually paid by the US companies, additional costs are usually transferred directly to customers. As a result, many consider tariffs as taxes on consumers, rather than as a deterrent to the importation of foreign goods.

Producers of American common goods are shifting production to Vietnam and other countries, where Trump's tariffs on China do not apply. Even if Trump and Xi Jinping met at the G20 to discuss commercial tensions, companies in the United States and China do not intend to wait.

Companies with thousands of factories in China are moving out of the country, which seems to be the only practical solution to avoid losses due to higher tariffs.

A study by Koch Industries, published in December, predicts that, in 2030, the US economy would have contracted by 0.7 percentage points and the Chinese economy would have plummeted by 2.25 percentage points, as companies shifted production to avoid the rates.

Germany: Wood pellets prices in 2018 well above last year's levels

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The price of wood pellets in Germany increased as expected in December. The average price for a 6 tons (t) purchase quantity is now 260.81 € / t. 
This is an increase of 2.5% on the previous month and 6.2% on the same month of the previous year. Pellets in Germany currently have a price advantage over heating oil of 24.4% and over natural gas of around 12%.
On average in 2018, pellets cost € 247.39 / t, 3.15% more than in 2017. In the same period, heating oil was 22.4% more expensive, so that the kilowatt hour in 2018 cost on average 6.99 ct / kWh. Pellets thus keep their long-term price advantage for heating oil.
Regional prices (purchase quantity 6 t):
Central Germany: 257.33 EUR / t.
North and East Germany: 258,29 EUR / t
Southern Germany: 262.24 EUR / t
Larger quantities (26 t):
South: 247.71 EUR / t, Central: 239.92 EUR / t; North/East: 239.26 EUR / t (all incl. VAT).

Germany: Wood pellets prices in 2018 well above last year’s levels

Posted on by GWMI Admin

The price of wood pellets in Germany increased as expected in December. The average price for a 6 tons (t) purchase quantity is now 260.81 € / t. 

This is an increase of 2.5% on the previous month and 6.2% on the same month of the previous year. Pellets in Germany currently have a price advantage over heating oil of 24.4% and over natural gas of around 12%.

On average in 2018, pellets cost € 247.39 / t, 3.15% more than in 2017. In the same period, heating oil was 22.4% more expensive, so that the kilowatt hour in 2018 cost on average 6.99 ct / kWh. Pellets thus keep their long-term price advantage for heating oil.

Regional prices (purchase quantity 6 t):

Central Germany: 257.33 EUR / t.

North and East Germany: 258,29 EUR / t

Southern Germany: 262.24 EUR / t

Larger quantities (26 t):

South: 247.71 EUR / t, Central: 239.92 EUR / t; North/East: 239.26 EUR / t (all incl. VAT).

US lumber prices on a downward trend in December

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Trading in framing lumber limped toward the holidays, as buyers kept a low profile. Prices were flat to mixed, but losers outnumbered gainers and the Random Lengths Framing Lumber Composite Price posted a second consecutive weekly decline.
Buyers placed orders here and there, usually in small lots and specified lengths to fill inventory holes. Some traders noted a mild pickup from some buyers, as deliveries in the new year were assured. But none of it came easy, and caution was evident across all sectors.

Week
Dec 14		 Week
Dec 7		 Year Ago
2017
Random Lengths Framing Lumber Composite Price* $335 $340 $431
KD Western S-P-F #2&Btr 2x4 R/L Mill Price 310 324 445
KD Eastern S-P-F #1&2 2x4 R/L, delivered Great Lakes 402 409 529
Green Douglas Fir Std&Btr 2x4 R/L (Portland) 260 270 470
Southern Pine (Westside) #2 2x4 R/L 396 396 465
KD Coast Hem-Fir #2&Btr 2x4 R/L 340 340 490
Ponderosa Pine (Inland) #2&Btr 1x12 R/L 790 790 730
* Weighted average of 15 key items

Random Lengths Panel Market Report
Structural panel prices slipped amid subdued trading. OSB producers grew more resistant to counters as the week progressed, and order files pushed through December.
This was most apparent in the South, where traders shook off a slow start and the market gained momentum by Friday. Urgency remained absent from Southern Pine plywood trading during another week of unexceptional demand. Western Fir plywood sales remained dull for most traders.

(f.o.b. mill prices) Week
Dec 14		 Week
Dec 7		 Year Ago
2017
Random Lengths Structural Panel Composite Price* $364 $370 $426
Southern (west-east) 15/32-inch 3-ply rated sheathing plywood 360-390 360-390 420-470
Southern (west-east) 15/32-inch 4-ply rated sheathing plywood 365-395 365-395 425-475
Western 1/2-inch 4-ply rated sheathing plywood 347 351 442
North Central 7/16-inch Oriented Strand Board 205 220 300
*Weighted average of 11 key items

Vietnamese wood products exports reach record-high values for 2018

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Vietnam’s wood and wood products exports reached a record high in the first 11 months of 2018 to US$7.22 billion, up 15.63 percent, as compared to the same period last year.

In the last decade, the country’s wood processing industry has grown 2.7 times, making Vietnam the world’s fifth largest wood exporter with a market share of six percent, second largest in Asia, and first in Southeast Asia.

The number of enterprises has grown from 2,500 in 2008 to 4,500 in 2017, including 3,900 domestic and 600 foreign-funded enterprises. Earlier, foreign firms accounted for over 70 percent of the country’s total wood exports, but now, the share of domestic firms in total exports has reached 53 percent.

The wood industry is one of the largest export industries in Vietnam. To ensure a sustainable growth and conservation, the government issued Decision No: 1288/QD-TTg in October 2018, approving a project on sustainable forest management and forest certification by establishing the national forest certification system

Wood production and processing

Wood production in 2017 was estimated to be 11.5 million m3, up 12.4 percent. In the first 11 months of 2018, it was 11.6 million m3, growing by 10 percent, as compared to the same period last year.

Major provinces of wood production in 2017 were Tuyen Quang, Quang Nam, Quang Ngai, and Binh Dinh.

In the wood processing sector, Binh Duong attracts a large number of enterprises due to its labor force and its linkages to key timber areas in the Southeast and Central Highlands of Vietnam. In 2017, Binh Duong’s wood processing exports reached US$4 billion, accounting for 54.8 percent of Vietnam’s total wood exports. In the first six months of 2018, their exports have already reached US$1.5 billion.

Trade

Exports

In the first 11 months of 2018, forestry products exports were estimated at US$8.49 billion, up 16.6 percent, accounting for almost a quarter of the total agriculture-forestry-fishery exports.

Within forestry products, wood and wood products exports reached US$7.22 billion during the same period, up 15.63 percent compared to the same period last year.

Exports are estimated to reach US$9.3 billion in 2018, with trade surplus estimated at US$6.4 billion.

Major export markets include the US, Japan, the European Union (EU), China, and Korea, accounting for 87.33 percent of the total exports.

Imports

In the first 11 months of 2018, imports of wood and wooden furniture reached US$2.1 billion, up 6.17 percent, compared to the same period last year.

Major import markets include China, the US, Cambodia, and Thailand.

Going forward

In October 2018, Vietnam and the EU signed a Voluntary Partnership Agreement (VPA) on Forest Law Enforcement, Governance, and Trade (FLEGT). This agreement will help improve regulations on forest management, reduce illegal logging, and increase exports of timber products to the EU.

In addition, the upcoming Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will lead to a further increase in export orders.

To achieve the government’s exports target of US$12-13 billion by 2020 and retain their competitiveness, companies in the wood processing sector need to continue to focus on improving efficiency and increasing investments in advanced technologies and equipment.

Number of furniture companies in Belarus doubled in the last three years

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In 2018 furniture output in Belarus may reach roughly $612 million, 60.6% up from 2013, the press service of the Belarusian timber, woodworking, pulp and paper industry concern Bellesbumprom told BelTA news agency after an IKEA business forum took place in the China-Belarus industrial park Great Stone on 12 December.

Presenting the Belarusian furniture industry, Bellesbumprom Deputy Chairman Mikhail Kasko said that the number of furniture producers has more than doubled in the last three years, rising from 600 to 1,294. New Belarusian companies as well as foreign-owned ones are being set up while the existing enterprises are expanding and modernizing their manufacturing. In 2018 Belarus' furniture output is expected to reach some $612 million, 60.6% up from 2013. Belarusian companies export over 80% of the furniture they make, 30 percentage points more than in 2013. The main target markets are Russia (50%), Poland (10%), and Kazakhstan.

Deliveries to the European Union rise in a measured fashion. According to Bellesbumprom, furniture export exceeds furniture import by three times. On the whole, the Belarusian furniture industry develops dynamically. The fact owes a lot to the accomplished modernization of woodworking enterprises.

Global construction growth likely to have reached its peak in 2018

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After ten years of growth (2008-2018), the peak has been reached in the global construction growth cycle: 2018 will be the turning point.

Growth in this industry should gradually cool down to +3.0% in 2019, from +3.5% in 2018, according to Euler Hermes’ proprietary data on millions of companies across 70 countries.

Over the past decade, most of the growth came from emerging markets (+57% since 2008), while developed markets have not even fully regained their pre-crisis volumes. Going forward, slowing GDP growth and tighter financial and monetary conditions will explain the deceleration in the residential sector (+3% y/y in 2019, after +3.5% y/y in 2018, and +4% y/y in 2017). Necessary fiscal discipline and the impetus of e-commerce respectively explain the limited boost expected from the infrastructure and commercial segments.

According to our local experts, who report their sentiment every quarter regarding demand, profitability, liquidity and business environment, the construction sector has been incapable of building buffers and fully recovering from the 2008 crisis despite the healthy expansionary global business cycle:

  •  Liquidity has historically been, and will remain, the largest pain point for the industry on a global scale with the average construction sector DSO remaining at 85 days, suggesting that construction remains among the top three worst preforming sectors in regard to payment delays.
  • Demand has barely recovered in some of the largest construction markets. The volume of growth on the construction markets in developed economies was negative (-0.4% CAGR) during the current global construction cycle (2008–now). In some of the largest construction markets, such as France, Germany, Italy and the US the demand has still not recovered to the pre-crisis volumes.
  • Profitability has also been under increasing pressure from rising input costs, most notably labor costs.

As a first sign of turnaround, the synchronous deterioration across a wide range of geographies is noticeable in the latest major insolvencies statistics: over the first nine months of 2018, there has been 41 major insolvency cases registered (+7), more than in the retail sector (39).

“While growing for the past decade, the construction sector did not “repair the roof while the sun [was] shining” to quote J.F. Kennedy. According to our proprietary data, on dozen of millions of companies across 70 countries, average sector risk ratings for demand, profitability and liquidity did not improve. As a result, the construction sector is less prepared for a downturn”, said Ludovic Subran, Global Head of Macroeconomic Research at Allianz and Chief economist at Euler Hermes.

The construction sector is definitely a good candidate for being the biggest victim of the next crisis. This is essential since construction is an important part of all economies (advanced and emerging) and plays a role in magnifying or reducing the impact of a cyclical slump.

Five construction outlooks for 2019:

1. The US: Construction to grow by +3% y/y in 2018 and +2.1% y/y in 2019. Residential market shows warning signs. Demand and operating margins below pre-crisis level.

2. China: Construction to grow by +4.2% y/y in 2018 and +4% y/y in 2019. Rising leverage and high liquidity risk.

3. France: Construction to grow by +1.6% y/y in 2018, and +1.5% in 2019. Weaker demand and operating margins. Liquidity, after a long period of improvement, is starting to show the first signs of stress.

4. The UK: Construction to grow by +0.5% y/y in 2018 and +1.5% in 2019. Recovering demand, but crippled profitability and deteriorating liquidity. The uncertainty over Brexit continues to weigh on business and consumer confidence.

5. Germany: Construction to grow by +2.9% y/y in 2018 and +2.8% y/y in 2019. Solid demand and profitability. However, liquidity has stopped improving and is showing first signs of deterioration.

South Korean wood pellet imports reach all-time high

Posted on by GWMI Admin

South Korean wood pellet imports reached an all-time high in November, as more cargoes reached Busan and Pohang ports compared with last month.

South Korea imported 358,867t of wood pellets in November, up by 69.2pc from 212,150t in November last year. This was also 7.8pc higher than t October when imports reached what was then the historic high of 333,002t for any month.

Imports through Gwangyang and Gunsan, the main ports for bringing wood pellets into South Korea, were stable in November. Pellet imports through Busan and Pohang ports increased compared with the previous month, a South Korean trader said.

Busan and Pohang ports are used for delivering wood pellets to utility Koen's 125MW Yeongdong No.1 unit, according to market participants. The unit consumes 550,000 t/yr of wood pellets at capacity.

Koen is expected to burn even more wood pellets in 2020 as the conversion of Yeongdong No.2 from coal to biomass is scheduled to be completed by June 2020. The 200MW No.2 unit is expected to consume an additional 900,000 t/yr at capacity, taking the company's requirement to 1.45mn t/yr and making Yeongdong the largest dedicated biomass-fired plant in South Korea with a combined capacity of 325MW.

If Koen had not planned to convert Yeongdong No.2 to biomass, the unit would have been shut by 2025 because it was one of the 10 older coal plants that the government ordered retired ahead of schedule under a plan to phase out coal use for power generation.

Wood pellets from Vietnam still dominated South Korea's imports in November, accounting for a 61pc share. South Korea received 219,035t of Vietnamese pellets in November, up by 79.3pc from a year earlier and up by 6.4pc from October.

Malaysia, Indonesia and Thailand were South Korea's second-, third- and fourth-largest suppliers in October, accounting for 20.1pc, 7.6pc and 6.6pc of deliveries respectively. These three countries supplied a total volume of 123,099t to South Korea, up by 66.1pc from a year earlier.

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