Plumbing supplies British group Wolseley said on Thursday that it was considering the exit of its remaining building materials business in France, where the market has proved tough.
In the year ended 31 July 2014 Wolseley's business in France generated revenue and trading profit of £577 million and £7 million respectively and had net assets of approximately £130 million.
Wolseley plc is the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials in North America, the UK and Continental Europe.
Group's revenue for the year ended 31 July 2014 was £12,773 million and trading profit was £761 million. Wolseley has approximately 40,000 employees and is listed on the London Stock Exchange.
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EU: Laminate flooring markets go up in 2014
According to a conservative extrapolation for 2014, the 21 ordinary member companies of the EPLF, i.e. the European producers of laminate flooring, sold 465 million square metres of laminate flooring worldwide (463 million in 2013). The total market is therefore at a similar level to the previous year with a slight rise of 0.4%. The regional markets varied greatly in the way they developed in 2014, however: whereas Western Europe experienced a small downturn overall, Eastern Europe experienced an upturn. North America also recorded a significant improvement and growth was even greater in Asia. And finally, in South America, sales of EPLF laminate flooring remain relatively steady.
Sales in the West European core markets of the European laminate flooring industry (including Turkey) declined by just under 3.5% overall in 2014. In absolute figures, West European sales fell from 290 million m² in 2013 to 280 million m² in 2014.
Revenues in Germany ‒ the largest regional single market in Central Europe ‒ were again somewhat weaker compared to the previous year, standing at around 69 million m² in 2014 (previous year: 72 million m²). The EPLF considers that the reason for this downward tendency is the current shift towards what is known as “design flooring” or “LVT floors”. Nevertheless, laminate flooring is still by far the leader in flooring statistics for Germany ‒ and the EPLF’s assessment is that this is set to continue.
Although Turkey still represents the second largest target market in Europe, the decline in sales there has been striking: in 2014, turnover for EPLF members fell by roughly 18% to 54 million m² (previous year: 66 million m²). According to the EPLF, this development is predominantly due to a weaker economic situation, shortages in the supply of raw materials and the temporary shutdown of production plants for maintenance.
France is a large sales market and has remained stable at 39 million m² (previous year: 39 million m²) and occupies third place in Europe. Thanks to its construction sector becoming stronger, the United Kingdom stands in fourth place at 32 million m² (previous year: 29 million m²): a growth of 10%. Netherlands had weaker results in 2014, but a figure of 17 million m² (previous year: 19 million m²) puts them in fifth place. Spain retains sixth place with 14 million m² (previous year: 14 million m²).
On a very pleasing note, EPLF members have recorded substantial growth in the Eastern European business area ‒ despite the political situation: European laminate flooring producers in this region recorded total sales of 110 million m² in 2014 (previous year: 103 million m²), which equates to an increase of 6 % over the previous year. Russia has achieved 27 million m² (previous year 24 million m²) which puts them in the sales ranking on the same level as Poland which shows an improvement at 27 million m² (previous year: 25 million m²). The subsequent places in the ranking are occupied by Rumania with 11 million m² (previous year: 10 million m²), Ukraine with 8 million m² (previous year 9 million m²) and Hungary with 5.8 million m² (previous year (4.6 million m²).
Turnover in North America rose again back in 2013 to around 28 million m², and this trend continued into 2014 with 30 million m². The USA shows a very pleasing 2014 balance sheet for European laminate producers with 19 million m² (previous year 16 million m²) and Canada remained stable in 2014 with 11 million m² (previous year: 11 million m²).
Total sales in 2014 for European laminate production in Asia Pacific stands at around 15 million m²
(previous year: 13 million m²) which means a very encouraging increase of 18%. Most notably, the Chinese market (including Hong Kong) showed substantial growth ‒ the result of European manufacturers exporting products to the high value sector; in 2014, almost 5 million m² were sold here (previous year: 4 million m²). Israel has improved slightly at 2.2 million m² (previous year 2 million m²) and Saudi Arabia is demonstrating positive growth with 1.9 million m² (previous year: 1.3 million m²).
South America as a whole was stable in 2014 at 17 million m² (previous year: 17 million m²). Whereas sales in Mexico followed a downward trend, sinking to around 4 million m² (previous year 5 million m²), the Chilean market shows a significantly better result at 7 million m² (previous year: 6 million m²) compared with the previous year.
China: Redwood imports rise to 92%
According to China Customs, between January and October 2014 China's redwood imports totalled 1.85 million cubic metres valued at US$2.4 billion, up 92% in volume and 124% in value from the same period of 2013.
Of the total, redwood log imports were 1.57 million cubic metres valued at US$2.05 billion, up 82% in volume and 113% in value from the same period of 2013. The average price for redwood log imports rose 16% to US$1,280 per cubic metre.
Redwood sawnwood imports totalled 195,900 cubic metres valued at US$355 million, up 178% in volume e from the same period of 2013. The average price for redwood sawnwood imports rose 2.5% to US$1,631 per cubic.
Between January and October 2014 close to 1.07 million cubic metres of China's redwood imports were from Southeast Asia. A further 750,200 cubic metres were from Africa with most of the remaining volumes coming from Central and South America.
Between January and October 2014 the value of China's redwood furniture and other redwood product exports increased 18% from the same period of 2013
Poland: Heinola installs two tunnel dryers for IKEA's sawmill
IKEA Industry has ordered two automatic Progressive Kilns type HFB from Finnish Heinola Sawmill Machinery Inc. with annual capacity of ca. 80 000 m3 when drying pine to 9 % final moisture content. The kilns are delivered to IKEA Stalowa Wola plant in Poland.
Heinola has earlier delivered to IKEA Wielbark (Poland) five chamber kilns and under construction Heinola has three large chamber kilns to IKEA Chociwell (Poland) plant. The new progressive kilns will be taken into production in September 2015.
Swedish furniture giant IKEA in September 2014 opened Poland's largest sawmill in the south eastern city of Stalowa Wola. Its processing capacity is of 400,000 m3 of logs per year, and the lumber produced will be mainly used in IKEA factories in Poland and Slovakia.
The new IKEA Industry sawmill has started production of pine sawn timber. Full production capacity is to be reached within approximtely two years. Currently, the sawmill employs 43 persons.
In Poland, IKEA has nearly 10 000 employees in 16 manufacturing plants and 13 locations. IKEA Industry Poland specialises in solid wood furniture production, chipboard and particle board production, as well as board-on-frame production.
Finnish Heinola Sawmill Machinery Inc. designs, manufactures and markets technology for sawmills and wood chip fuel production.
Poland: Heinola installs two tunnel dryers for IKEA’s sawmill
IKEA Industry has ordered two automatic Progressive Kilns type HFB from Finnish Heinola Sawmill Machinery Inc. with annual capacity of ca. 80 000 m3 when drying pine to 9 % final moisture content. The kilns are delivered to IKEA Stalowa Wola plant in Poland.
Heinola has earlier delivered to IKEA Wielbark (Poland) five chamber kilns and under construction Heinola has three large chamber kilns to IKEA Chociwell (Poland) plant. The new progressive kilns will be taken into production in September 2015.
Swedish furniture giant IKEA in September 2014 opened Poland's largest sawmill in the south eastern city of Stalowa Wola. Its processing capacity is of 400,000 m3 of logs per year, and the lumber produced will be mainly used in IKEA factories in Poland and Slovakia.
The new IKEA Industry sawmill has started production of pine sawn timber. Full production capacity is to be reached within approximtely two years. Currently, the sawmill employs 43 persons.
In Poland, IKEA has nearly 10 000 employees in 16 manufacturing plants and 13 locations. IKEA Industry Poland specialises in solid wood furniture production, chipboard and particle board production, as well as board-on-frame production.
Finnish Heinola Sawmill Machinery Inc. designs, manufactures and markets technology for sawmills and wood chip fuel production.
Brazil's pine sawnwood exports up 30% in 2014
In 2014 Brazilian exports of pine sawnwood totaled almost 1 million cubic metres year on year, representing a 30% growth compared to the previous year.
Pine plywood exports also increased by 10% to around 1.2 million cubic metres in the same period. This performance was underpinned by growth of the construction market in the United States and the appreciation of the US dollar against the Brazilian currency. Weakness in the domestic market in Brazil drove manufacturers to actively seek new international markets.
The United States market accounted for around 45% of Brazilian pine sawnwood exports in 2014 but Europe was the main market for Brazilian pine plywood and this trade was worth US$470 million in 2014. Saudi Arabia, Vietnam, Mexico and China were also important export destinations for Brazilian pine plywood.
Despite the good performance in 2014, exports of both pine sawnwood and plywood are still well below 2008 levels, i.e. before the global financial crisis suggesting there is considerable room for further growth if t he US and EU economies improve.
Brazil’s pine sawnwood exports up 30% in 2014
In 2014 Brazilian exports of pine sawnwood totaled almost 1 million cubic metres year on year, representing a 30% growth compared to the previous year.
Pine plywood exports also increased by 10% to around 1.2 million cubic metres in the same period. This performance was underpinned by growth of the construction market in the United States and the appreciation of the US dollar against the Brazilian currency. Weakness in the domestic market in Brazil drove manufacturers to actively seek new international markets.
The United States market accounted for around 45% of Brazilian pine sawnwood exports in 2014 but Europe was the main market for Brazilian pine plywood and this trade was worth US$470 million in 2014. Saudi Arabia, Vietnam, Mexico and China were also important export destinations for Brazilian pine plywood.
Despite the good performance in 2014, exports of both pine sawnwood and plywood are still well below 2008 levels, i.e. before the global financial crisis suggesting there is considerable room for further growth if t he US and EU economies improve.
China: Imported wood products data in 2014
Despite dropping economic growth, China imported logs and lumber actively last year. According to „China Wood‟, log import in 2014 was 51,410,000 cbms, 13.6% more than 2013 and lumber import was 25,642,000 cbms, 6.7% more. This is the highest import ever recorded.
Although economic growth is revised down to 7%, demand of wood for construction, furniture, wood works and engineering works continues busy while supply of domestic natural resources is severely restricted so it has to import all the sources in the world.
Log import shows some change. Bordering Russia had been overwhelmingly major supply sources but in 2014, New Zealand's radiate pine became the top supply source so Russia and New Zealand are now two major sources. Reason of increase of radiate pine is price advantage over Russian logs.
Also New Zealand government and forestry groups have been promoting marketing of radiate pine logs with technical guidance, which finally paid off. There are increasing inquiries on North American Douglas fir, hemlock and SPF so this will become the third major source.
China also import cedar logs from Japan. The volume is small yet with 310,000 cbms ranked 19th among other sources but if Japanese cedar is approved for construction material, the volume should increase rapidly.
Supply of temperate hardwood from the North East of China has sharply dropping so that import of hardwood from North America and Europe has been increasing. In log import, softwood was 35,840 M cbms and tropical and temperate hardwood was 15,560,000 cbms.
Softwood lumber import was almost 17,630,000 cbms. Plywood export volume is 13,340,000 cbms, 30% more than 2013.
Japan starts running wood biomass power generation facilities
In Japan, after FIT (feed in tariff) system was introduced in July 2012, many plans of wood biomass power generation facility mushroomed and some have already started running. There are total of about sixty plans out which 33 will start operation next year. There are 18 facilities, which will start up by next April.
There are some huge generation plans with power output of 75,000 - 100,000 kw on the coast then small co-gen plants in local area. Six facilities, which use unused wood, are already operating. They are Green Hatsuden Aizu, Green Hatsuden Ooita, Nagano Forest Resources Utilization Co-op., Woody Kawai, Nakagawa Biomass and Miye Enewood.
Fuel raw material procurement is progressing all over Japan. There are difference in supply capacity and prices by the area. In Western Japan and Shikoku, the price of unused wood is 8,000 yen per green ton delivered to chip plant. In Kyushu, there are growing new demand for logs for fuel and export and it is hard to procure with less than 7,000 yen.
Log production in Japan should be active in winter months but the log market may show different picture when low grade logs bring high prices, which may impact log prices for sawmills and plywood mills.
There are some revisions of the initial plan like downscale of generation capacity and there are some cases of cancellation by failure of property acqui sition and opposition by local residents.
Canada Softwood Lumber Agreement to expire in 2015
The agreement for Canadian exports of softwood sawnwood to the US will expire in October 2015. The current trade agreement from 2006 was a solution to US industry claims that Canadian forest policies subsidize sawnwood production. The agreement specifies higher duties on Canadian exports when softwood sawnwood prices are low.
The Canadian industry fears uncertainty if the trade agreement is not renewed. The US has agreed to not launch legal battles for twelve months after the current agreement expires in 2015.
According to reports by the newspaper Vancouver Sun, the Canadian industry would like to see the current agreement renewed. US sawmills represented by the US Lumber Coalition are reported to oppose a renewal. If Canadian sawmills will have to pay new higher duties on exports to the US, it is likely to affect trade flows to other markets including China.
Between 2001 and the signing of the 2006 agreement, Canadian producers paid CUS$5 billion in expo rt duties to the US. Most of the duties were returned when the 2006 agreement was signed.
Since 2006 several change have occurred in the industry. China has become the second largest export market for Canadian sawnwood producers. The Canadian market share in the US has fallen from 34% in 2006 to 29% in 2013, partly due to lower US demand.
Forest resources in British Columbia are significantly lower now because most trees killed by the mountain pine beetle infestation have been processed.
However, the falling value of the Canadian dollar due to lower oil prices is a threat to US producers. When the agreement expires, Canadian sawnwood will likely be cheaper for US buyers than any time since 2006.
The largest Canadian producers (Canfor, West Fraser Timber and Interfor) have bought sawmills in the US in recent years. This mitigates their risk if a new trade dispute starts after the current trade agreement expires.
Siempelkamp managed to sell 12 wood-based material production plants in 2014
2014 is considered by Siempelkamp Maschinen- und Anlagenbau GmbH a successful business year for its segment of wood-based material production equipment. Twelve customers placed orders with the machine building company from Krefeld, two more than in 2013.
Next to two complete MDF/HDF plants for Turkish customers, including a plant for Çamsan Entegre with a 7 x 48.8 m ContiRoll® as well as a plant for Starwood Orman Ürünleri San A.S. with a 7‘ x 55.5 m press, four additional European customers ordered equipment for the production of wood-based materials from Siempelkamp. An OSB plant went to SmartPly Eu-rope Ltd., Ireland (7 - 9' x 45.4 m ContiRoll®). Rauch Spanplattenwerk (7’ x 52 m ContiRoll®), Germany and an Italian wood-based material manufacturer ordered a particleboard plant each. A fourth manufacturing plant for wood-based materials will be supplied to another customer in Europe. With these results, Siempelkamp was able to record the most significant European orders in its books in 2014.
One plant for Brazil, one for Russia, four in Asia
Asperbras ordered for its Água Clara location a complete MDF plant. Siempelkamp will supply all components for the high-end MDF line ranging from the engineering to the steel structure to the complete fiber preparation system and the forming and press line including a 9’ x 27.1 m ContiRoll® press to the finishing line. Additionally, the customer will be supplied with an energy plant, a short-cycle press line as well as an evaporation facility for the water treatment. The total investment for the complete order amounted to € 67 million.
Siempelkamp also deliver to Plitspichprom (Soyuz Group) particleboard production line including a Generation 8 ContiRoll® press.
Siempelkamp also received significant orders from the Asian market. Akij Group, Bangladesh, ordered a complete high-tech particleboard plant including a forming and press line with a 8' x 23.8 m ContiRoll®. Siempelkamp will supply a plant for the produc-tion of thin MDF/HDF to Luoding Luyuan Wood Based Panel Co., Ltd., China, a MDF plant for the Vietnam Rubber Group, Vietnam, as well as a plant for the production of thin MDF to another customer in Western Asia.
Against the background of very competitive markets and political uncertainties, the highly satisfying number of new orders in 2014 is regarded as a positive result by Siempelkamp. The current order backlog of the company promises capacity utilization of Siempelkamp's production facilities into the first quarter of 2016.
Seikku sawmill upgraded by UPM
UPM-Kymmene is making a big investment in log sorting this year at the company's Seikku sawmill in Pori, Finland. In this respect, UPM has placed an order for a high-capacity log sorting facility from the Finnish wood machinery company Nordautomation Oy.
According to the agreement between the two companies, the plant must be operational as early as this summer. Value of the order is of over EUR 3 million.
Seikku Sawmill is located in Pori, in the west coast of Finland, some 240 km from Helsinki. The sawmill produces whitewood standard and special sawn timber. Annual production capacity is around 380,000 cubic meters.
Belgian IVC Group bought by Mohawk Industries for $1.2 billion
Mohawk Industries, Inc. announced that the company has entered into a definitive agreement to acquire the Belgium's IVC Group. The IVC Group is a major manufacturer of sheet vinyl, luxury vinyl tile (LVT) and laminate, with operations in Europe and the United States and sales of approximately $700 million. Mohawk is acquiring IVC for approximately $1.2 billion through a combination of cash and equity. The transaction is expected to be completed around the end of the first quarter of 2015, pending customary closing conditions and regulatory approvals.
The IVC Group was founded in Belgium in 1997 by Filip Balcaen, who is currently IVC's chairman and primary shareholder. IVC is a sheet vinyl provider in Europe and the U.S. and is also a leading player in the fast growing LVT category. IVC primarily distributes their products through large retailers, home centers and regional distributors and is focused on the residential sector. The company employs approximately 1300 people around the globe.
Jeff Lorberbaum, Mohawk's chairman and chief executive officer, stated, "There are many potential synergies between IVC and Mohawk in both Europe and the U.S. Our greatest opportunities are in LVT, which has increased globally around 18% in the past year. IVC is the fastest growing manufacturer of LVT in Europe, and their manufacturing expertise will help start up our new Belgian LVT factory faster. This new plant will allow IVC to further expand their European sales. In the U.S., LVT now represents about 5% of the total flooring market, and sales are projected to grow more than 15% annually through the end of the decade. Their new LVT plant in Dalton, Ga. will be one of the world's largest, most efficient production lines with leading technology and will position us to meet the rapidly growing U.S. market."
IVC's sheet vinyl is constructed with a fiberglass core that provides a cushioned product that does not crack, curl or expand, making it durable and easy to install. Mohawk has distributed sheet vinyl and LVT products for a number of years and expects the IVC products to complement its existing offering.
US housing market projected to continue growth in 2015
In the United States, a strengthening labor market, low interest rates, improving mortgage availability and growing pent-up demand will help to significantly boost single-family housing production in the year ahead and move the housing recovery to higher ground, according to economists speaking at the International Builders’ Show in Las Vegas on Tuesday.
As the US National Association of Home Builders (NAHB) reports, with economic growth near 4 percent for the last half of 2014 and employment gains averaging more than 250,000 per month last year, NAHB Chief Economist David Crowe said these are the primary factors that have helped consumer confidence jump back to pre-recession levels.
"The signs point to a more robust year for housing," Crowe said. "Household balance sheets are returning to normal levels, home owners’ equity is increasing and significant pent-up demand is rising. More than 7 million existing home sales were postponed or lost during the downturn; and while some are lost forever, we should see some catch-up."
The Forecast
NAHB is projecting 993,000 total housing starts in 2015, up 6.7 percent from last year’s total of 930,000 units.
US single-family production is expected to rise 26 percent in 2015 to 804,000 units. "While a good beginning, this is still well below a normal level of 1.3 to 1.4 million single-family starts," Crowe said.
On the multifamily front, NAHB is anticipating 358,000 starts in 2015, up 2 percent from 352,000 last year.
The sale of new single-family homes in US is expected to hit 564,000 this year, a 29.3 percent increase above last year’s 436,000 in sales.
Meanwhile, residential remodeling activity is expected to register a 3 percent gain this year over 2014.
The ongoing housing recovery will see single-family starts steadily climb from 49 percent of normal production at the end of the third quarter of 2014 all the way up to 90 percent of normal by the end of 2016, Crowe said. Examining the recovery on a state level, by the end of 2016, the top 40 percent of states will be back to near normal production levels, compared to the bottom 20 percent, which will still be below 75 percent.
Where are All the New Households?
David Berson, chief economist at Nationwide Insurance, said the number of new household formations in US was far fewer in the current economic expansion than in previous recoveries.
"Give the job growth we’ve seen in 2014, there should have been better household formations," he said, adding that the slower pace may be because "the real acceleration in job growth has occurred just recently – in the last six months."
As the economy and job growth continue to strengthen in 2015, Berson said this will be a "significant factor to encourage people who have doubled up to move out on their own."
Moreover, he noted that the real slowdown in household formations has come from the Millennials, who have suffered disproportionately from stagnant wage growth and student debt. However, he added that this key demographic is getting older and ready to set down roots. "The leading edge are now in their young 30s," said Berson. "Homeownership desire is much higher for those who are in their 30s than those in their 20s."
A Rising Economy Lifts Housing
Freddie Mac Chief Economist Frank Nothaft also foresees a good year for US housing.
"We’re projecting 3 percent economic growth in 2015, which would only be the second year in the last decade that we’ve seen growth at that level," said Nothaft. "A stronger economy supports a rise in household formation and home buying."
Not quite as bullish as NAHB, Nothaft expects that housing starts will rise about 15 percent in 2015, and that home sales will be up 4 percent, which would be the best year for home sales since 2007. He added that nationwide home prices this year should increase about 3.5 percent to 4 percent above last year’s level.
With 30-year mortgages currently running at about 3.75 percent, Nothaft called them "dirt cheap" and said he expects rates to rise this year but remain at affordable levels.
"If we see economic growth running at 3 percent at an annualized, rate, the Federal Reserve should begin to push up short-term interest rates by the second half of 2015," said Nothaft. "We see mortgage rates going up to 4.5 percent on the high side at the end of this year, going from dirt cheap to cheap. Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth."
EU: Changing plywood market shares
EU plywood import trade have varied very widely between different products types over the last four years. Tropical hardwood plywood imports fell continuously from June 2010 to June 2013, losing share to Chinese MLH, Russian birch and other temperate hardwood products (particularly from Ukraine, Belarus, and Uruguay) at that time.
EU imports of Chinese MLH plywood rose sharply in the period between November 2009 and June 2012 and then subsided for the next 18 months as the much anticipated recovery in European construction continued to be delayed.
The EU rise in imports of Russian birch peaked much earlier, in June 2011, but then subsided more slowly.
In the softwood plywood sector, Brazil lost share to other suppliers in the period 2009 to June 2012, but has been regaining share ever since.
There has been an upward trend in imports in all plywood products types during 2014. The pace of increase in imports this year has been particularly rapid for Chinese MLH, Brazilian softwood and Russian birch plywood.
Plywood imports have risen into all the main EU markets during 2014, with particularly strong growth in the UK.
2015 brings increased consumption in sawn softwood
The United Nations Committee on Forests and the Forest Industry (COFFI) forecasts that the production of sawn softwood is expected to increase in the UNECE* region at an annual rate of 2.2% in 2014 and 1.7% in 2015, with a subregional breakdown as follows: Europe +3.0% in 2014 and +0.3% in 2015; CIS**+2.0% in 2014 and +0.8% in 2015; and North America at +1.4% in 2014 and +3.5% in 2015.
Economic development in Europe, however, is expected to be uneven, with a few countries experiencing strong growth and others contraction. For those countries indicating a positive outlook, exports appear to the biggest driver and not consumption in the subregion.
In line with generally improving but unsettled global economic trends, 2013 was characterized by recoveries in North America and the CIS countries and by varying conditions – from unsettled to improving – in Europe.
Sawn softwood consumption increased by 5.2% in North America in 2013 due to gains in the housing market, and by 8.8% in the CIS. Europe recorded a 1.7% drop in apparent consumption, as some countries continued to struggle economically, but there were production gains in all the UNECE subregions: North America (5.2%); CIS countries (4.0%); and Europe (1.3%).
As European demand for sawn softwood stabilized and overseas exports increased, production in Europe grew slightly – by 1.3% – in 2013, to 97.9 million m3 . This growth was due mainly to increased production in Finland, Romania and Poland, which collectively added 1.3 million m3 of production.
In Europe and the Middle East, sawn softwood prices increased moderately in 2013 compared with 2012. Improved capacity utilization led to price increases, and sawmilling companies with export market exposure were able to improve their profitability. Most European mills made at least some profit in 2013, instead of the losses seen in 2012.
Apparent sawn softwood consumption in the CIS increased to 19.44 million m3 , and production amounted to 35.78 million m 3 , an increase of 4.0% over 2012.
Fuelled by strong export demand as well and the strength of the euro and the US dollar at the end of 2013 and early 2014, sawmills increased production and prices increased in 2013 compared with 2012.
In 2013, Russian exports increased: to China (by 21.5%, to 7.5 million m3 ); Uzbekistan (by 28%, to 2.66 million m 3 ); Azerbaijan (by 16%, to 1.0 million m 3 ); Tajikistan (by 14%, to 955,000 m3); and dropped in Egypt (-21% to 1.37 million m3).
Apparent sawn softwood consumption increased in North America by 5.2% in 2013, to 80.33 million m3. This was due to gains in new residential housing starts, repairs and remodelling. Apparent sawn softwood consumption increased in the US by 7.1% (to 65.95 million m 3 ) in 2013, but it declined in Canada by 2.6% (to 14.38 million m3) due to a slowdown in its overheated housing market.
US sawn softwood output was 51.05 million m3 (+4.7%) in 2013, and Canada’s output rose at a faster rate (5.8%), to 41.55 million m3, despite negative domestic market growth.
China has become a key alternative market for producers: in 2013, record exports of sawn softwood were made by the Russian Federation (7.5 million m3), Canada (6.8 million m3), the US (875,000 m3) and Europe (1.3 million m3).
Extremely bad weather in the eastern half of North America in the first quarter of 2014 and a port strike in Vancouver caused difficult logistical issues for sawmills, creating a surplus of lumber and eroding prices in key markets.
For 2014 prices have improved in most key markets, including the US, China and Europe, but some markets – such as those in Japan, North Africa and the Middle East – have seen prices soften due to excess supply.
*UNECE
United Nations Economic Commission for Europe. UNECE region includes 56 countries from Europe, North America and the former USSR.
**CIS
Commonwealth of Independent States (CIS region) consists of Russia, Ukraine, Belarus, Armenia, Azerbaijan , Kazakhstan, Kyrgyzstan , Moldova, Tajikistan, Turkmenistan and Uzbekistan.
Armstrong Group leaves the European flooring business
The U.S. flooring group, Armstrong World Industries, Inc. in December announced that, following a review of strategic alternatives, it has decided to exit its European flooring business and cease further funding of its DLW subsidiary effective immediately. As a result of this decision, local DLW management filed for insolvency in Germany.
Our difficult, but necessary, decision to exit the European flooring business and discontinue funding our DLW subsidiary in Germany was the culmination of a comprehensive evaluation of strategic alternatives following years of disappointing results, multiple restructuring initiatives and significant financial investments, said Armstrong CEO, Matthew J. Espe.
DLW management concluded that its operations could not be financed and sustained without funding from its Armstrong parent and, as a result, filed for insolvency under applicable German law. Armstrong expects all operations at the two DLW manufacturing plants in Germany, as well as at the DLW administrative offices across Europe, to continue in the normal course for the near term. A preliminary insolvency administrator in Germany will be appointed by the local court.
Armstrong acquired DLW in 1998 to establish a stronghold and serve as a catalyst for the development of its European flooring business. DLW subsequently struggled with declining market conditions as a result of the ongoing economic crisis, including a significant decrease in public funding, which particularly affected the business's key commercial segments, notably hospitals and schools. These developments contributed to intensified price pressure and overcapacities within the whole European flooring industry, further weakening DLW's competitive position. "Despite investing approximately $150 million in the business since 2007, DLW has been unable to generate profit or achieve its strategic plans. These results, and our ultimate decision, however, in no way reflect the dedication, effort and commitment of DLW employees over the years, for which we remain grateful," Mr. Espe continued.
Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors and ceilings. In 2013, Armstrong's consolidated net sales totaled approximately $2.7 billion. As of September 30, 2014, Armstrong operated 34 plants in eight countries and had approximately 8,600 employees worldwide.
Closed Myllykoski mill to be sold by UPM
UPM is currently negotiating with the Finnish biofuel developer Suomen Bioetanoli, upon the selling of the closed Myllykoski mill in Kouvola in southern Finland. The Finnish Ministry of Employment and Economy has granted to Suomen Bioetanoli some Euro 30 million ($35 million) for the construction of a bioethanol production facility at UPM's mill.
UPM-shuttered Myllykoski mill manager, Timo Suutarla, says that the bio-ethanol plant in plan is a good thing in UPM's point of view. New activities to the factory have been sought since the paper mill production ended in 2011.
The two parties are currently in a negotiation phase. The deal would include the entire Myllykoski mill site, including the remaining equipment.
Low European market for okoume plywood
Despite the consistency in supply, Europe's market for okoume plywood continues to suffer from weak demand. There were early signs of improving construction and economic activity in the first half of 2014 in the two key markets for this product – France and the Netherlands.
However, activity and market confidence weakened again in the second half of the year. Since the change in Gabon's GSP status on 1 January 2014, plywood imported into the EU from Gabon has attracted a 7% duty.
However manufacturers of okoume plywood in Europe have been granted an exemption and pay no duty on okoume veneer imported from Gabon. Even with this advantage, there is little sign of an upturn in market demand for European produced okoume plywood.
Producers continue to report very low profitability but are struggling to push through price increases in the current market. The simple fact is that Europe's few remaining tropical hardwood plywood manufacturers are uncompetitive relative to overseas suppliers.
Decreasing log exports to Asia causes log prices in Western US to fall in the 3Q
There has been a constant upward pressure on domestic sawlog prices in the US Northwest for the past five years as a result of an increase in the exportation of sawlogs and softwood lumber to Asia. In just over four years, log export volumes to China, Japan and South Korea have almost doubled to reach close to an all-time high of 2.5 million m3 in the 2Q/14.
As a consequence of the higher demand for logs from the export market, average prices for sawlogs at local sawmills have more than doubled from early 2009 to the 2Q/14, according to the Wood Resource Quarterly (WRQ).
In the 3Q/14, US export volumes to Asia were down by almost 25% from the 2Q/14, with Chinese shipments down by over 32% to their lowest quarterly volumes since the 1Q/13. The total volume shipped to Asia in the 3Q was at its lowest level in over two years.
The two major factors influencing the decline in log shipments from the US to China are decreased demand for wood from the housing sector and high log inventories within China itself.
The weaker demand for logs in the export market has resulted in lower log export prices during the summer and fall. The average export value reached an all-time high in the first quarter this year and has since fallen over six percent.
The slowdown in the log export shipments has been welcome news for sawmills on the US west coast. Prices for Douglas-fir sawlogs in the 3Q/14 were down nine percent from their eight-year high in the 1Q/14.
Despite the recent decline, current price levels in the Northwest are still 13-25% higher than the ten-year price averages, depending on species and sub-region. Interestingly, the price decline that was experienced in 2014 may be short-lived. There are reports that both domestic and export log prices stopped falling during the 4Q, mainly as a result of higher production levels at the region’s sawmills.
