Weyerhaeuser is buying Plum Creek for US$8.44 billion to form the world's biggest timberland and forest products companies. The new company will keep the Weyerhaeuser name and own more than 13 million acres (5.6 million hectares) across the United States. The total worth of the combined companies is US$23 billion based on current share prices.
The companies anticipate that the move will save up to US$100 million every year.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Plum Creek shareholders will receive 1.60 shares of Weyerhaeuser for each share of Plum Creek held.
“We saw a unique opportunity to combine the two industry leaders,” Weyerhaeuser's CEO Doyle Simons said in an interview. “Discussions had been going on for some time and finally the stars aligned,” he said.
“The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalize fully on the improving housing market,” said Plum Creek CEO Rick Holley in a statement.
Doyle R. Simons will be the president and CEO of the combined company. Plum Creek CEO Rick R. Holley will serve as a nonexecutive chairman.
The acquisition is expected to close in the first quarter of 2016 or early in the second quarter. Following closing, Weyerhaeuser and Plum Creek shareholders will own approximately 65% and 35%, respectively, of the combined company's common stock.
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Weyerhaeuser buys Plum Creek to create world’s biggest timber company
Weyerhaeuser is buying Plum Creek for US$8.44 billion to form the world's biggest timberland and forest products companies. The new company will keep the Weyerhaeuser name and own more than 13 million acres (5.6 million hectares) across the United States. The total worth of the combined companies is US$23 billion based on current share prices.
The companies anticipate that the move will save up to US$100 million every year.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Plum Creek shareholders will receive 1.60 shares of Weyerhaeuser for each share of Plum Creek held.
“We saw a unique opportunity to combine the two industry leaders,” Weyerhaeuser's CEO Doyle Simons said in an interview. “Discussions had been going on for some time and finally the stars aligned,” he said.
“The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalize fully on the improving housing market,” said Plum Creek CEO Rick Holley in a statement.
Doyle R. Simons will be the president and CEO of the combined company. Plum Creek CEO Rick R. Holley will serve as a nonexecutive chairman.
The acquisition is expected to close in the first quarter of 2016 or early in the second quarter. Following closing, Weyerhaeuser and Plum Creek shareholders will own approximately 65% and 35%, respectively, of the combined company's common stock.
October log prices in Central/West Africa
In the two weeks to the end of October Central and West African FOB prices remain largely unchanged with just one or two minor adjustments reflecting the slow demand in China. While demand from European buyers is, at best, moderate it is sufficient to provide a firm base for the current price levels.
Middle East importers and distributers report continued firm business although some importers are still inclined to limit the size of new contracts until they are more certain about how long current FOB prices can be maintained
Production of sapele for Chinese market scaled back
On the supply side, producers in Gabon continue to limit output and have indicated they will temporarily close sawmills if necessary to avoid building up stocks. Mills in Cameroon and the Central African Republic have limited production of sapele for China but there is ongoing demand from Europe and prices are stable.
Opportunities in India
India has become a major tropical log importer but shippers in Central and West Africa have not captured much of the market for logs in India except for plantation teak and some small quantities of gmelina.
The Indian government has ambitious plans to expand house building and this will result in increased demand for wood products and create opportunities for Central and West African producers.
Trade development between Africa and India was a feature of the Third India Africa Summit in New Delhi in late October. This summit was heralded as India’s most extensive interaction with African countries.
Africa's exports to India are smaller than to China but this could change as growth in China slows.
India’s bilateral trade with Africa has grown from a modest US$1 billion in 1995, to US$30 billion in 2008 and is now around US$60 billion.
African exports to India have been growing faster than Indian exports to Africa and six countries, Nigeria, South Africa, Angola, Egypt, Algeria and Morocco account for most Africa’s exports, mainly due to trade in oil, gas and minerals.
For other African countries India benefits from a trade surplus. Timber exporters in Africa would seem to have an opportunity beyond teak exports in the Indian market
Log Export Prices
| West Africa logs, FOB | € per m³ | ||
| Asian market |
LM
|
B
|
BC/C
|
| Acajou/ Khaya/N'Gollon |
230
|
230
|
160 |
| Ayous/Obéché/Wawa |
260
|
260
|
180
|
| Azobe & Ekki |
230
|
230
|
160
|
| Belli |
250
|
250
|
-
|
| Bibolo/Dibétou |
150
|
145
|
|
| Iroko | 330 |
290
|
260
|
| Okoume (60% CI, 40% CE, 20% CS) (China only) | 210▼ | 205▼ | 160 |
| Moabi | 335 | 305 | 225 |
| Movingui | 210 |
210
|
160
|
| Niove |
160
|
160
|
-
|
| Okan |
250
|
250 |
-
|
| Padouk |
310
|
285 |
225
|
| Sapele | 305 | 305 | 220 |
| Sipo/Utile |
345
|
340 |
265
|
| Tali | 320 | 320 |
-
|
Sawnwood Export Prices
| West Africa sawnwood, FOB |
€ per m³
|
|
| Ayous | FAS GMS | 410 |
| Bilinga | FAS GMS | 500 |
| Okoumé | FAS GMS |
350▼
|
| Merchantable | 225 | |
| Std/Btr GMS | 270 | |
| Sipo | FAS GMS |
610
|
| FAS fixed sizes | 610 | |
| FAS scantlings | 640 | |
| Padouk | FAS GMS | 930 |
| FAS scantlings | 1000 | |
| Strips | 680 | |
| Sapele | FAS Spanish sizes | 610 |
| FAS scantlings | 620 | |
| Iroko | FAS GMS | 610 |
| Scantlings | 690 | |
| Strips |
440
|
|
| Khaya | FAS GMS |
450
|
| FAS fixed |
460
|
|
| Maobi | FAS GMS |
610
|
| Scantlings |
630
|
|
| Movingui | FAS GMS |
420
|
China: Wooden building materials receive more promotion
China's Ministries of Industry and Housing have developed an action plan to promote the production and use of green building materials. The aim is to increase the proportion and quality of green building materials and will focus on energy consumption in manufacturing and the emission of toxic airborne substances.
According to the plan more wooden building will be developed in China in the near future. The use of wooden structures will be promoted in public building such as schools, kindergartens, nursing homes and in landscaping. In addition, wooden rural housing construction will be promoted in existing and new community developments.
In China, biomass building materials will play a prominent role in the implementation of the action plan and new technologies utilising biomass materials will be introduced.
Priority will be given to the development and use of biomass fibre reinforced wood plastic, home interior furnishing and decoration and an expanded role for bamboo in buildings will be explored.
Finland: Roundwood trade expected to pick up next year
The drop in Finland’s sawnwood production this year will have an effect on domestic roundwood removals and trade. The level of year 2014 will not be achieved, but volumes remain still rather high compared to last few years. Next year rising prospects for end products indicate growth in removals as well as in roundwood trade, according to the latest PTT (Pellervo Economic Research) forecast.
Forest industry investments elevate use of roundwood
Increasing product ion potential in the Finnish forest industry as well as gradual recovery in domestic and export forest product markets will increase the demand for roundwood next year. This year the use of roundwood will decrease slightly, but next year it is expected to rise to over 64.5 million cubic meters. Roundwood imports have concentrated even more than before on birch pulpwood and wood chips. The use of imported roundwood is forecast not to increase during this or next year. Commercial fellings were clearly below last year's volumes during the beginning of the year. For the whole year fellings will decrease only a few percent. Next year commercial roundwood removals will rise to over 57 million cubic meters. This increase is led by standing sales from privately owned forests.
Roundwood trade moderately brisker next year
Weak sawn softwood demand has had a strong influence in this year’s log markets in Finland. In industrial roundwood trade there is a surplus in supply despite increasing pulp product ion. The domestic roundwood market has been somewhat subdued, particularly when spruce logs and spruce pulpwood are concerned. The average annual nominal prices of pine and spruce logs will decrease a few percent of their last year’s respective prices. The average price of pine pulpwood is also expected to fall behind last year’s price despite slightly higher demand.
Next year the increasing need for roundwood will liven up roundwood trade again. The volume will rise particularly in private forests’ standing sales. Prices remain however in a moderate few percent rise. The gross stumpage earnings of private forests will be slightly lower this year compared to last year, but will rise again next year because of evolving roundwood trade.
Use of forest chips short of targets
High wood inventories at power supply facilit ies have significantly reduced energy wood trade in the first half year of 2015. The use of forest chips will fall far short of the targets set for this year by the Finnish National Forest Program. The long-run targets in Finland's National Energy and Climate Strategy for 2020 seem also challenging.
Key forecast variables for the Finnish forestry in 2015–2016
|
2015f |
2016f |
|
|
% Change |
% Change |
|
| Roundwood markets | ||
|
Use of roundwood |
-1%/0% |
+1%/+3% |
|
Commercial roundwood removals |
-2%/-1% |
+2%/+4% |
|
Roundwood trade in private forests |
-4%/-2% |
+3%/+8% |
|
Wood nominal price 1, log |
-3%/-2% |
+1%/+2% |
|
pulp |
-3%/-1% |
0%/2% |
|
Gross stumpage earnings in private forests |
-4%/-3% |
+3/+6% |
1 standing sales; f PTT’s forecast
Should EU stop support for biomass subsidies?
As bioenergy hits 60 per cent of the renewable energy consumed in the EU, a new briefing by forest NGO Fern highlights its devastating impact on forests.
The briefing says EU support for woody biomass as a renewable energy source undermines its aims of sustainability and cutting carbon emissions, and urges the EU to end subsidies for the use of forest biomass after 2020.
“The EU supports the use of biomass for heating and electricity but has failed to make subsidies conditional to volume limits or sustainability requirements. Most of the biomass is wood, but European forests cannot meet this growing demand,” said Linde Zuidema, who leads Fern’s bioenergy campaign.
“The EU must recognise further support for woody biomass will lead to significant trade-offs with other functions forests have, such as biodiversity protection or climate mitigation. It should focus on measures to reduce energy demands, rather than promoting the incineration of wood, a resource that can be used much more efficiently to substitute carbon-intensive materials than fossil fuels.”
If Member States were to use biomass according to their renewable energy plans, by 2020 the amount of wood used for energy alone would be equivalent to today’s total EU wood harvest, according to Fern.
Fern’s says that if the EU relies on biomass as an energy source after 2020, demand for wood may exceed the amount that the EU can supply domestically with millions of cubic metres of wood. The rapid growth of the biomass market already led to increased reliance on imports of wood pellets, leading to dire environmental and ecological impacts abroad, says Fern.
”Post-2020 climate and energy policies should divert from subsidising the incineration of wood that is directly sourced from the forest. Current practices lead to irreversible impacts on forests and the climate – the direct opposite of what the EU’s renewables policy aimed to accomplish.”
US wants to continue the Softwood Lumber Agreement
After nine years, on October 12, the Softwood Lumber Agreement between US and Canada has expired. The Softwood Lumber Agreement was intended to reduce the competitive imbalances caused by subsidies growing out of Canadian control of most of the fiber supply used to produce softwood lumber in Canada. The Agreement was also meant to minimize the harmful effects of unfairly subsidized imports in the US lumber market, the US Lumber Coalition (USLC) said in a press release. Therefore, the Coalition together with the US Government expressed interest for a new agreement.
The Canadian government has so far been unwilling to enter into negotiations on a new trade agreement. As the Coalition informs, if Canada continues to stay away from negotiations, than the US industry will eventually have no choice but to use its rights under US trade laws to offset the unfair advantages provided to Canadian industry. As part of the original 2006 agreement, members of the USLC committed not to file petitions under the US trade laws for one year after this month’s expiration of the agreement. The chairman of the US Lumber Coalition Charlie Thomas expressed ''the hope that Canada will make use of this next year to work constructively with the U.S. Government to secure a stable and effective agreement that all stakeholders can support''.
The U.S. Lumber Coalition is an alliance of large and small lumber producers from around US. The Coalition was established in order to counter the unfair trade practice of sawyers. This also includes the undervaluation of roundwood from state-owned forests.
Lower sales for Stora Enso's Wood Products division
For the third quarter of 2015, Stora Enso reported lower sales in its Wood Products division. Sales declined both as compared to Q3/2014 (by -12.6%) as well as compared to Q2/2015 (-15.0%). However, operational EBIT remained unchanged despite the lower sales. Lower average prices in local currencies were compensated for by lower personnel and wood costs, according to the company's financial report.
Stora Enso's sales decreased mostly as a result of lower volumes to North African and Middle Eastern markets.
Stora Enso's investment in a new production line for wooden building elements at the Varkaus mill is proceeding according to plan and production is scheduled to begin in the second quarter of 2016. The company's co-determination process regarding temporary layoffs at the Finnish redwood sawmills at Honkalahti and Uimaharju, as well as at the whitewood sawmill at Kitee were conducted in the third quarter and closed in October. The co-determination process at the Varkaus sawmill and the restructuring process at Puumerkki in Finland and Lithuania, started during the third quarter, were also closed in October, says Stora Enso.
Stora Enso Q3/2015; Wood Products division; Key figures
| EUR million | Q3/15 | Q3/14 | Change % Q3/15-Q3/14 | Q2/15 | Change % Q3/15-Q2/15 | 2014 |
| Sales | 375 | 429 | -12.6% | 441 | -15.0% | 1779 |
| Operational EBITDA | 30 | 30 | - | 32 | -6.3% | 126 |
| Deliveries 1000 m3 | 1051 | 1090 | -3.6% | 1142 | -8.0% | 4493 |
Stora Enso’s Wood Products division provides versatile wood-based solutions for building and housing. The company's product range covers all areas of urban construction including massive wood elements and housing modules, wood components and pellets. Stora Enso's also offers a variety of sawn timber goods. Wood Products division operates globally and has more than 20 production units in Europe.
Lower sales for Stora Enso’s Wood Products division
For the third quarter of 2015, Stora Enso reported lower sales in its Wood Products division. Sales declined both as compared to Q3/2014 (by -12.6%) as well as compared to Q2/2015 (-15.0%). However, operational EBIT remained unchanged despite the lower sales. Lower average prices in local currencies were compensated for by lower personnel and wood costs, according to the company's financial report.
Stora Enso's sales decreased mostly as a result of lower volumes to North African and Middle Eastern markets.
Stora Enso's investment in a new production line for wooden building elements at the Varkaus mill is proceeding according to plan and production is scheduled to begin in the second quarter of 2016. The company's co-determination process regarding temporary layoffs at the Finnish redwood sawmills at Honkalahti and Uimaharju, as well as at the whitewood sawmill at Kitee were conducted in the third quarter and closed in October. The co-determination process at the Varkaus sawmill and the restructuring process at Puumerkki in Finland and Lithuania, started during the third quarter, were also closed in October, says Stora Enso.
Stora Enso Q3/2015; Wood Products division; Key figures
| EUR million | Q3/15 | Q3/14 | Change % Q3/15-Q3/14 | Q2/15 | Change % Q3/15-Q2/15 | 2014 |
| Sales | 375 | 429 | -12.6% | 441 | -15.0% | 1779 |
| Operational EBITDA | 30 | 30 | - | 32 | -6.3% | 126 |
| Deliveries 1000 m3 | 1051 | 1090 | -3.6% | 1142 | -8.0% | 4493 |
Stora Enso’s Wood Products division provides versatile wood-based solutions for building and housing. The company's product range covers all areas of urban construction including massive wood elements and housing modules, wood components and pellets. Stora Enso's also offers a variety of sawn timber goods. Wood Products division operates globally and has more than 20 production units in Europe.
One new EUTR monitoring organization
Last week, the European Commission appointed another Monitoring Organisation (MO). The Commission recognised the Spanish organisation AENOR (Asociación Española de Normalización y Certificación) as the 12th MO. AENOR can act as MO in Spain and Portugal.
This year eight more MOs were appointed, including BM TRADA Latvija and Germany's DIN CERTCO this summer, and other five organisations at the beginning of the year.
Only five MOs have permission to offer their services in all EU member states. The other MOs are either just recognised for their home countries or for selected member states.
See full list of MO's here
The European Commision has thoroughly evaluated the accredited MOs, which were found able to assist EU operators in fulfilling their EUTR obligations. MOs provide their clients with EUTR-compliant Due Diligence System and are obliged to keep their system updated. They also conduct regular evaluations of their members' due diligence performance and are formally obliged to report repeated failures to observe due diligence to the relevant Competent Authority.
Stable prices for wood pellets in Austria
In October, the price of Austrian wood pellets is still below the 230 euro mark. This trend started in April and stood stable through spring, summer and the beginning of this year's autumn. In fact, there was no significant price increase this year. At € 229.2/per tonne, Austrian pellets are -6,6% or EUR 16/t cheaper than October of last year. Compared to September 2015, the price is flat.
The price for sacks is currently 3.87€, -5.4% lower than last year and up by an insignificant 0.9% over September 2015. Austrian wood pellets presently offer a price advantage of 31.5% as opposed to extra light heating oil and 44.2% as opposed to natural gas.
In neighbouring countries the price of wood pellets has remained stable as well in October. In Switzerland, the current average price is 378.9 CHF (348.23 EUR) per tonne, which is 1 percent more than in September. In Germany, the price has increased by only 0.3% this month and now stands at 233.78 EUR per tonne.
US is still the main wood pellet supplier to the EU
EU imports of wood pellets from the United States showed no signs of slowing in the first seven months of 2015, with the rate of growth likely to stabilize or even accelerate in the remaining period of the year. According to Eurostat latest statistics, the European Union countries have imported 25% more wood pellets from the U.S. in January-July of 2015 as compared to the correponding period of 2014. Thus the US covers now almost a third (31,56%) of all EU worldwide pellet purchases being its major source.
The driving force behind this development is unmistakably the United Kingdom, as major UK power plants such as Drax are currently undergoing major coal-biomass conversion plans. In January-July, the UK imported 1,85 million tons of wood pellets from the US (+41% yoy) at a value of €327 million. UK is now covering 81,40% of the overall European wood pellet imports from the US.
Belgium is the second EU importer of US pellets, with a quantity of 343 thousand tons, higher by 66% over January-July 2014. On contrast, in the period mentioned, the Netherlands and Denmark, the other two major European pellet consumers, have significantly decreased their imports of US pellets, by -72% and -55% respectively.
TOP 10 Importing Countries
Wood pellets imported from the United States by... (in tons )
| Importing Country | I-VII 2014 | I-VII 2015 | Change in % | |||
|
1,822,610 | 2,281,888 | 25 % | |||
|
1,321,825 | 1,857,547 | 41 % | |||
|
206,889 | 343,369 | 66 % | |||
|
116,332 | 32,959 | -72 % | |||
|
62,238 | 28,165 | -55 % | |||
|
87,420 | 17,655 | -80 % | |||
|
27,908 | 2,193 | -92 % | |||
| TOTAL | 1,822,610 | 2,281,888 | 25 % |
Finnish sawlog prices drop
Throughout the summer the average price for pine and spruce sawlogs in Finland went up, while birch sawlogs price declined, as can be seen in the below table. In August, a slight gain in pine and spruce price can be noticed, while birch sawlog price has decreased by almost one euro.
From January till August, pine logs price lost about EUR 3 per cubic meter, with spruce losing even more. In eight months, birch has become cheaper by more than one euro. Pulpwood value has remained stable, with few minor changes.
From January till August Finnish Forest Industries Federation (FFIF) member companies purchased about 18.2 million cubic meters of roundwood from private forests, which is five percent higher than the average of the last ten years. Sawlogs purchased in January-August amounted 7.6 million cubic meters, while pulpwood purchases reached 9.9 million m3.
Roadside prices of roundwood in Finland EUR/m³ over bark |
August 2014 | July 2015 | August 2015 | Change August 2014 to August 2015 |
| LOGS | ||||
| Pine | 59.09 | 56.23 | 57.11 | -3.35% |
| Spruce | 58.24 | 54.80 | 55.63 | -4.48% |
| Birch | 44.39 | 46.57 | 45.60 | +2.72% |
| PULPWOOD | ||||
| Pine | 28.43 | 28.30 | 28.08 | -1.23% |
| Spruce | 31.03 | 29.95 | 29.80 | -3.96% |
| Birch | 31.24 | 29.27 | 29.26 | -6.33% |
The above prices are collected from metla.fi
Södra to close hardwood sawmill
Södra will initiate negotiations with trade unions with the intention of closing the hardwood sawmill in Traryd, Sweden. Just over 20 employees are affected. In recent years, Södra has worked intensively to increase the profitability of its sawmill and planing operations by optimising the flow of raw material. Global changes, price levels and competition have led Södra to also oversee the structure, as the company states in a press release.
"We converted the Traryd sawmill from softwood to hardwood in 2011 in an attempt to manage our members' hardwood logs efficiently. We have tried a range of solutions, such as only sawing hardwood, sawing both softwood and hardwood, and becoming more integrated with our hardwood sawmill in Djursdala. However, none of these endeavours has borne fruit and despite great effort, we have not been able to meet our return targets. Against this background, we have now decided to initiate negotiations regarding a step-by-step closure of the sawmill in 2016," says Håkan Svensson, President of Södra Wood.
Södra Wood is one of three business areas in the Södra Group, with operations that supply sawn and planed timber, as well as interior wood products. Södra Wood has 11 sawmills, of which nine handle softwood and produce sawn timber from spruce and pine. Two of the sawmills, Traryd and Djursdala, process hardwood, and produce timber from oak, birch, ash and alder. Södra Wood produces approximately 2 million cubic metres of sawn timber annually.
Data on first half Malaysian wood products exports
The Malaysian Timber Industry Board (MTIB) reported timber sector exports of RM10.46 billion (approx. US$ 3.77 billion) in the first half of the year. Wooden furniture exports accounted for the biggest share of wood product exports at RM3.33 billion (31.8% of the total).
Plywood exports ranked second at RM2.25 billion (21.5%) followed by sawnwood exports at RM1.47 billion (14.0%). Log exports comprised just under 10% of all wood product exports at RM998 million in the first half of this year.
Exports of wooden furniture were mainly from manufacturers in Peninsular Malaysia. Furniture exports from Sabah and Sarawak combined contributed barely 1% to total furniture exports.
On the other hand, Sarawak is the biggest exporter of plywood (918,286 cu.m or 72% of Malaysia‘s total plywood export) and exporters in Sabah shipped 248,500 cu.m accounting for another 20% of total plywood exports. Plywood mills in Peninsular Malaysia shipped 102,280 cu.m or 8% of total plywood shipments.
Peninsular Malaysia was the leading exporter of sawnwood at 636,340 cu.m followed by Sarawak 276,080 cu.m and Sabah 107,000.
Companies in Sarawak dominated the log export trade by Malaysia shipping around 1,388,900 cu.m or 88.7% of total log exports in the first half of this year. Main export markets for Malaysian wood products.
| Destination | |
| Asia | 6,775,532,506 |
| West Asia | 1,030,937,151 |
| East Asia | 3,267,889,784 |
| South Asia | 1,065,606,356 |
| Central Asia | 16,636,316 |
| Europe | 1,084,874,341 |
| EU | 1,084,874,341 |
| Europe, non-EU | 64,849,481 |
| Oceania/Pacific | 524,609,314 |
| Americas | 1,749,720,913 |
| Central America | 19,927,034 |
| North America | 1,654,316,694 |
| South America | 75,477,187 |
| Africa | 320,581,472 |
| Others | 4,443,437 |
| Grand Total | 10,459,761,985 |
Source: MTIB
Illegal logging in Romania skyrocketing, says Greenpeace
The environmental organization Greenpeace has released a research showing that in Romania a total of one million cubic meters of wood were cut illegally in 2013 and 2014. According to the results of the Greenpeace research, over 3 hectares of forest are disappearing in Romania every hour.
The damages caused by illegal logging in Romania recorded during 2013-2014 worth about EUR 52.1 million. The counties that recorded the highest number of cases of illegal logging are: Arges – 5,851 cases (12.85 percent of all cases nationwide), Bacau – 3,538 cases (7.77 percent) and Mures – 3,351 cases (7.36 percent). Arges county also recorded the highest number of cases of illegal logging identified by the authorities between 2009 and 2011: 6,458 cases.
The Greenpeace research shows a significant increase in illegal logging. According to Greenpeace, in the analyzed period (2013-2014), there were 45,509 cases of illegal deforestation, equivalent to an average of 62 cases/day, up from 28 cases/day recorded during 2009-2011 and 50 cases/day in 2012. The authorities have therefore identified nationwide an amount of 1,011,892 cubic meters of wood, associated to the cases of illegal logging, i.e. 22 cubic meters/event, up from 120,836 cubic meters in 2012 and 452,842 cubic meters in 2009-2011.
Only around 15% of the reported illegal logging cases ended up in court in 2013. In 2014, even less: 9%. Greenpeace concludes: "At present, the [Romanian] authorities are doing too little to protect Romania's forests. Not only the prosecution of reported cases is insufficient, but the penalties imposed are not enough to effectively fight illegal logging. "
Lumber Liquidators Lacey Act violations
The U.S. hardwood flooring retailer Lumber Liquidators has agreed to plead guilty to violations of a Customs law and the Lacey Act, and pay a combined total of US$10 million in fines, community service payments and forfeited proceeds. $7.8 million will be paid in fines to the Lacey fund, $1.2 million Community Service payments, and $969 thousand in forfeited proceeds. This decision comes after a US Department of Justice investigation which started back in 2013, about the company using illegally imported timber from eastern Russia.
The Lacey Act prohibits trade in fish, wildlife, and plants that have been illegally taken, transported, or sold. Under the Lacey Act, Lumber Liquidators admitted to four cases of failure to exercise proper due care and one felony charge for entry of goods by means of false statement. Lumber Liquidators says that “these violations, including the Class E felony, do not require the company to have acted with a deliberate or wilful intent to violate the law, and the company did not stipulate that it acted with such a deliberate or wilful intent”.
According to the Environmental Investigation Agency (EIA), as part of the agreement, Lumber Liquidators is also obligated to enact a comprehensive and unprecedented Lacey Act compliance plan for all imports to ensure legal wood sourcing, accurate reporting and accurate labeling. The company would be allowed a period of three months to implement such a plan. If it fails to do so, it will have to cease importing hardwood flooring until the Department of Justice decides otherwise.
Lumber Liquidators has been the subject of numerous controversies since the Lacey Act became law. Posing as timber buyers, in 2013 EIA investigators went undercover to expose the illegal wood trade in the Russian Far East and found that a company called Xingjia freely admitted to illegal logging and paying bribes and that its single biggest trading partner was Lumber Liquidators. EIA investigators recorded Xingjia officials saying that Lumber Liquidators knew where the wood came from.
Moreover, back in March, Lumber Liquidators suspended the sale of laminate flooring coming from China, after media allegations and US federal investigations claims that Chinese laminate flooring contained excessive level of formaldehyde, a cancer causing chemical. Since March, shares of Lumber Liquidators had collapsed more than 70%. A number of the company's top executives, including CEO Robert Lynch and CFO Daniel Terrell, left the company.
With more than 370 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring. The company features more than 400 flooring varieties, including solid and engineered hardwood, bamboo, cork, laminate and resilient vinyl.
Swedish lumber exports up 27%
In the first half of 2015, Sweden has exported about 6,7 million cubic meters of sawn and planed softwood lumber. This represents a 27% increase over the same period of 2014. The main export markets for the Swedish lumber were the United Kingdom and Egypt, followed by Germany and Norway.
In particular, exports to Egypt dropped by -7% over the same period of last year, down to a volume of 760,500 cbm. Exports to all other major destinations increased considerably. Shipments to the United States increased almost four times up to 151,000 cubic meters.
Overall, the increase in Swedish exports was supported by larger deliveries to Great Britain, Germany, China, Saudi Arabia and U.S. But even to Denmark, Algeria, Morocco and Belgium considerably more was exported.
Swedish shipments to the EU countries have increased by 26% with over 3,5 million cubic meters delivered.
Despite the dowturn in Egypt, exports to Africa rose by 11% to nearly 1,4 million cbm. More Swedish lumber was delivered to Algeria, Morocco and Tunisia.
Deliveries to Asia declined significantly, due to a boom in shipments to China (+46% higher as compared to the first half of 2014). Exports to Japan recovered well, despite the recent downward trend, and surged by 8%, up to 323,000 cbm.
| Country (Top 15 destinations) | H1/2014 |
H1/2015 | Change in % |
| United Kingdom | 1,103,159 | 1,376,165 | +25% |
| Egypt | 819,362 | 760,557 | -7% |
| Germany | 414,769 | 524,412 | +26% |
| Norway | 392,256 | 475,961 | +21% |
| Denmark | 350,337 | 433,939 | +24% |
| Japan | 298,604 | 323,689 | +8% |
| Algeria | 234,585 | 320,478 | +37% |
| China | 198,177 | 289,937 | +46% |
| Saudi Arabia | 136,077 | 250,470 | +84% |
| Morocco | 166,504 | 248,118 | +49% |
| Belgium | 136,308 | 176,623 | +30% |
| France | 161,314 | 166,438 | +3% |
| USA | 40,400 | 151,788 | +276% |
| Poland | 62,134 | 95,973 | +54% |
| Spain | 48,111 | 85,247 | +77% |
| Others | 786,245 | 1,087,939 | 38% |
| Total | 5,348,342 | 6,767,734 | +27% |
Lowest level in five years for Chinese timber imports
China imported softwood logs and lumber valued at just over 500 million dollars during the month of August this year. This was 28% lower than the same month in 2014 and the lowest level in five years. As recent as in April last year, the import value reached an all-time high of almost 900 million dollars.
The reduced demand for both overseas and domestic wood products in 2015 has been a consequence of the slowdown in the Chinese economy, which has not only reduced construction activities but also consumer spending on home remodeling and furniture.
Not only have log and lumber imports plummeted the past year, but so has the price paid for imported products. In August, the average costs of imported softwood logs were down 28% from their peak in April of 2014 to reach their lowest level since 2009. The biggest price drops this year have been for logs from Canada, New Zealand and Russia. Domestic log prices have been more stable in 2015, with Chinese fir sawlog prices declining only five percent from 2Q/14 to the 2Q/15, according to Wood Resource Quarterly.
Lumber import prices have also fallen during 2014 and 2015, but the decline has been less dramatic than those for logs. In August this year, average lumber import prices were US$191/m3, or 15% lower than their peak in September last year. The biggest price declines have been for lumber imported from Europe, while the price fall for hemlock and Douglas-fir from the US has been quite moderate.
It is interesting to note that the Swedish and Finnish sawmills, which are selling into the high-end market in China, actually have been increasing shipments to China the past year. This is in contrast to most other supplying countries, which have reduced their sales to China in 2015. With the higher cost lumber, the market share for the Nordic sawmills was only six percent of the total import volume in August, but had reached as high as ten percent of the total import value of lumber.
Important changes in US hardwood production and sales
During this year's International Hardwood Conference (IHC) held in Copenhagen from 16-18 September, Mike Snow, Executive Director of the American Hardwood Export Council, spoke about structural changes in the US hardwood industry that increased the sector‘s emphasis on exports in recent years. Total US hardwood production peaked as long ago as 1999 and, after sliding for a few years, fell sharply by 49.3% between 2005 and 2009.
US hardwood production started to recover from 2009 but is still way below peak levels. It‘s also well below potential: as harvest has remained well below growth the volume of hardwood standing in US forests has more than doubled to over 11 billion cubic metres in the last 50 years.
Mr. Snow noted that while demand for hardwood in some industrial sectors in the US has been rising, there has been a long term decline in US domestic consumption of graded lumber in the furniture and construction sectors.
US lumber production has shifted from around 60% grade and 40% industrial lumber to 40% grade and 60% industrial. The vast majority of the graded lumber produced in the US is now exported.
In terms of US hardwood lumber exports, China and other Asian markets like Vietnam and Thailand have significantly gained in importance over the last ten years, whereas volumes to Europe have declined. China, in particular, saw disproportionate growth: between 1999 and 2006 US exports to China increased by 759% and between 2009 and 2015 by another 270%.
Mr. Snow also confirmed the increasing importance of the Chinese domestic market as a wood consumer. He said that whereas a decade ago, around 80% of the American hardwood imported by China was further processed and re-exported, the proportions have now reversed with only around 20% re-exported and up to 80% destined for the domestic market.
In addition to more promotion and more education, he emphasised the need to develop innovative tools to deliver credible technical and performance data on hardwood materials. It is necessary to scientifically prove the advantageous performance of hardwoods compared with other building materials.
Moreover, wood promotion should support the use of wood through simple and understandable messages. AHEC is showing how it‘s possible to influence fashion trends to favour of a wider range of hardwood timbers by working with high-profile architects and designers.
Besides structural applications and a focus on environmental advantages, Mr. Venables identified exterior applications and a wider use of species and grades as new opportunities for the hardwood sector. As an example, he presented AHEC‘s ―Endless Stair project, made from cross-laminated Tulipwood produced from No 2 Common grade material.
