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June 2007
In the US South, prices were practically unchanged with pine chips averaging $68/odmt (delivered) and pine roundwood ranging from $80-90/odmt. Wood chip prices have been remarkably stable the past few years with only small adjustments of a few dollars up or down. Pine log prices have trended upward as stumpage and transport costs have increased, particularly in the South Central states where average prices are up almost 10% from a year ago to $36/green ton ($90/odmt).
Canada increases imports of wood chips
450 400 350 1000 odmt
300 250 200 150 100 50
3q
1q /0 7
3q
1q /0 6
3q
Export
1q /0 5
3q
Net Trade
1q /0 4
3q
1q /0 3
3q
0 1q /0 2
Only two regions in the US had higher wood costs than Canada during the 2Q; Maine, and the states in the Northwest. Pulpmills in western US have gone through a roller coaster ride, with conifer residual chip prices almost doubling from the 2Q last year to the 1Q of this year, peaking at US$140/odmt (delivered). At their peak this region had the highest conifer fiber costs in the world. During the 2Q/07, pulpmills in the US Northwest were able to build exceptionally high inventories (they increased from 10 days in December to 30 days in May), and wood prices have started to came back down again.
Trade of Wood Chips in Canada
500
1q /0 1
Wood fiber prices were unchanged or falling in most regions this quarter with the exception of British Columbia and Alberta, where tight fiber supply pushed prices of both wood chips and pulplogs upwards. Wood prices in the two western provinces were also impacted by higher market pulp prices as some chip contracts are linked with these prices. As the Canadian dollar strengthened this quarter, wood costs in US dollar terms did go up in all provinces of Canada and are generally higher than in the US.
the 1Q/07, Canada imported almost 500,000 odmt of wood chips, of which most were destined to pulpmills in British Columbia, Quebec and New Brunswick. With continued cut backs in the lumber industry and a strengthening Canadian dollar, it can be expected that Canadian companies will continue to search for additional chip volumes on the US side of the border.
Import
Softwood pulp prices keep going up Global softwood pulp prices are continuing upward, while hardwood pulp prices have leveled off at just over $780/ton according to FOEX Benchmark Index. The average benchmark NBSK pulp price in Europe has increased by almost $150 in one year, reaching $785/ ton (CIF Europe) in June, the highest price since 1996. 800
Benchmark Prices for Market Pulp in Europe
750 700 650 US dollars/ton
Wood fiber prices are moving downward
600 550 500 450
Source: FOEX
As of June 12, 2007: NBSK: $785/ton BHKP: $686/ton
400 350 300 Ja n03 A pr -0 3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5 O ct -0 5 Ja n06 A pr -0 6 Ju l-0 6 Oc t-0 6 Ja n07 A pr -0 7
Wood chip trade between Canada and the US has intensified as Canadian pulpmills are struggling to supply their pulpmills with residual chips from a sawmill sector in decline. Chip imports more than doubled in 12 months from early last year to March of this year. In
Softwood Pulp (NBSK)
Hardwood Pulp (BHKP)
Negotiated prices for wood chips exported to Japan 1H/2007 (FOB): Douglas-fir, U.S. (US$/BDU) 167.50 142.50 (2H/06) SPF, Canada (US$/BDU) 140.00 100.00 (2H/06) Pine, Australia (US$/BDU) 150.00 110-112 (2H/06) Euc., Australia (Aus$/odm 176-180 161 (2H/06)
1
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Market Update
North American Wood Fiber Review
North America
North American Wood Fiber Review
Conifer Wood Fiber Costs in North America Second Quarter, 2007
Chips
Alberta 84 (67 - 96)
British Columbia Chips 91 (83 - 112) Roundwood 113 (79 - 122)
Quebec Chips 126 (99 - 149) Roundwood 151 (117 - 180)
Chips Roundwood
Ontario 122 (95 - 140) 149 (113 - 176)
U.S. Pacific Northwest Chips 118 (83 - 145) Roundwood 91 (69 - 123) U.S. Lake States Chips 79 (66 - 86) Roundwood 81 (60 - 108)
U.S. South Central Chips 69 (60 - 77) Roundwood 89 (80 - 102)
Canadian Maritimes Chips 86 (65 - 104) Roundwood 95 (59 - 106)
U.S. Northeast Chips 94 (61 - 142) Roundwood 98 (74 - 148)
U.S. South East Chips 67 (60 - 72) Roundwood 82 (72 - 92)
Notes. Units in US$/odmt (delivered). 1 odmt (oven-dry metric ton) equal to 1.102 short tons or 2204 lb Exchange rate: Can$ 1.11/US$ (Average 2Q/2007)
Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co. Data collected by Wood Resources International and WRQ sources
© 2007 Wood Resources International, LLC
2
Non-Conifer Wood Fiber Costs in North America Second Quarter, 2007
Quebec Chips 77 (68 - 90) Roundwood 86 (70 - 103) Ontario Chips 74 (68 - 86) Roundwood 81 (70 - 99)
Canadian Maritimes Roundwood 75 (63 - 90)
U.S. Pacific Northwest Chips 134 (92 - 151) Roundwood 94 (62 - 111) U.S. Lake States Chips 58 (51 - 66) Roundwood 73 (50 - 91)
U.S. South Central Chips 65 (54 - 69) Roundwood 82 (73 - 91)
U.S. Northeast Chips 75 (48 - 97) Roundwood 74 (67 - 128)
U.S. South East Chips 63 (57 - 69) Roundwood 82 (74 - 92)
Notes. Units in US$/odmt (delivered). 1 odmt (oven-dry metric ton) equal to 1.102 short tons or 2204 lb Exchange rate: Can$ 1.11/US$ (Average 2Q/2007)
Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co. Data collected by Wood Resources International and WRQ sources
3
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Review
North America
North American Wood Fiber Review
Wood Fiber Costs in North America Second Quarter, 2007 Wood Chips
Roundwood
Avg Min Max US$/odmt (delivered)
Avg Min Max US$/odmt (delivered)
Conifer U.S.
Northwest Lake States Northeast South East South Central
118 79 94 67 69
83 145 66 86 61 142 60 72 60 77
91 81 98 82 89
69 60 74 72 80
123 108 148 92 102
91 84 122 126 86
83 67 95 99 65
112 96 140 149 104
113 ..... 149 151 95
79 ..... 113 117 59
122 ..... 176 180 106
134 58 75 63 65
92 151 51 66 48 97 57 69 54 69
94 73 74 82 82
62 111 50 91 67 128 74 92 73 91
74 77 .....
68 68 .....
81 86 75
70 99 70 103 63 90
Canada
British Columbia Alberta Ontario Quebec Maritimes
Non-Conifer U.S.
Northwest Lake States Northeast South East South Central Canada
Ontario Quebec Maritimes
86 90 .....
Note. Prices are for residual wood chips and roundwood delivered to pulpmill or chip plant (units in US$/odmt). 1 odmt (oven-dry metric ton) equal to 1.102 short tons (dry weight) or 2204 lb Exchange rate: Can$ 1.11/US$ (average 2Q/2007)
Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co Data collected by Wood Resources International and WRQ sources
© 2007 Wood Resources International, LLC
4
Wood Fiber Costs in North America 2Q/06 - 2Q/07 Wood Chips US$/green tons (delivered) 2Q/06 3Q/06 4Q/06 1Q/07 2Q/07
Roundwood US$/green tons (delivered) Change y/y (%)
2Q/06 3Q/06 4Q/06 1Q/07 2Q/07 Change y/y (%)
Conifer U.S. Northwest Lake States Northeast South East South Central
36 31 48 30 34
42 31 44 29 31
60 32 43 30 33
64 32 43 30 31
53 36 43 30 31
Canada British Columbia Alberta Ontario Quebec Maritimes
29 30 63 64 42
31 31 56 59 40
36 34 56 58 40
37 35 52 54 39
41 38 55 57 39
44 30 34 29 29
49 30 34 28 29
54 27 35 29 29
61 27 34 29 29
61 26 34 29 29
33 34 ----
33 34 ----
33 34 ----
32 33 ----
34 35 0
48.7 16.7 -11.3 0.0 -6.8
43.9 26.6 -11.9 -11.2 -6.0
28 37 42 32 33
35 37 41 32 34
43 36 40 33 36
41 35 40 34 38
37 33 40 33 36
28 ---60 61 41
35 ---60 61 40
37 ---59 61 38
41 ---57 58 36
46 ..... 60 61 38
63.2
29 31 32 33 33
32 31 31 33 32
37 30 32 33 34
39 30 31 34 33
38 29 30 33 33
30.3
32 34 31
32 34 31
32 34 30
31 33 30
33 35 30
1.4
32.4 -11.7 -5.8 3.8 8.5
na 1.1 0.2 -6.3
Non-Conifer U.S. Northwest Lake States Northeast South East South Central Canada Ontario Quebec Maritimes
38.2 -12.5 -1.4 0.0 1.6
1.2 0.8 na
-4.4 -7.5 0.0 0.0
1.7 -2.9
Notes. All prices in US dollars per green tons (2000 pounds) or equal to 0.907 metric tonnes Roundwood prices are delivered to pulpmill or chipping facility Chip prices are for residual chips and do not include chips manufactured from roundwood Exchange rate: Can$ 1.11/US$ (average 2Q/2007) Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co. Data collected by Wood Resources International and WRQ sources
5
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Review
WOOD CHIP EXPORTS United States Change
1Q 2007
Wa
Or
OthNW
Ak
North
South
Total, U.S.
from last Q (%)
Conifer Chips Japan Canada
0
111
0
0
0
0
111
-38
220
0
16
0
95
0
331
31
Other
0
0
0
0
0
23
23
2200
Total
220
111
16
0
95
23
465
7
38
-38
14
-100
22
2200
7
Japan
5
0
0
0
0
0
5
-88
Canada
0
0
0
0
139
0
139
-3
Other
0
0
0
0
0
27
27
-31
Total
5
0
0
0
139
27
171
-24
na
-100
na
na
-3
-64
-24
225
111
16
0
234
50
636
42
-40
14
-100
5
-34
-3
Change from last Q (%)
Non-Conifer Chips
Change from last Q (%)
TOTAL Change from last Q (%)
250
-3
Chip Exports from the U.S. in 2005/2006
200 1000 mt (dry weight)
North America
North American Wood Fiber Review
150
100
50
0 Washington
Oregon
1q/06
2q/06
© 2007 Wood Resources International, LLC
Other West
3q/06
6
4q/06
Northeast
1q/07
South
WOOD CHIP IMPORTS United States
Origin 1000 odmt
Change in Imports last quarter last year % %
3q/05
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07
Canada, BC Canada, other Brazil
75 10 160
51 4 73
51 7 73
46 9 132
63 5 100
35 3 128
24 4 72
-31 33 -44
-53 -43 -1
Total
245
128
131
187
168
166
100
-40
-24
Change from last Q
-6.1
-47.8
2.3
42.7
-10.2
-1.2
-39.8
Sources: U.S. Department of Commerce, Statistics Canada and Industry Sources.
Wood Chip Imports to the U.S.
350 300
200 150 100 50
7
/0 7 1q
/0 5
/0 6 1q
Total
1q
/0 4 1q
US West
/0 3
US Other
1q
1q
/0 2
/0 1 1q
/0 0 1q
/9 9 1q
/9 8 1q
/9 7
0 1q
1000 odmt
250
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Review
WOOD CHIP EXPORTS Canada Origin
British Columbia
Other Provinces
Total
1000 odmt Destination 1q/06 2q/06 3q/06 4q/06 1q/07 Change, last Q (%) Change, last year (%)
250
1000 metric ton (dry weight)
U.S.
Japan
Total
US
Japan
Other
Total
All
51 46 63 35 24
26 84 61 57 130
77 130 124 92 154
7 9 5 3 3
0 0 0 0 0
37 0 0 0 0
44 9 5 3 3
121 139 129 95 157
-31 -53
128 400
67 100
0 -57
na na
na -100
0 -93
65 30
British Columbia Wood Chip Exports
200
150
100
50
0 1q /0 0 3q /0 0 1q /0 1 3q /0 1 1q /0 2 3q /0 2 1q /0 3 3q /0 3 1q /0 4 3q /0 4 1q /0 5 3q /0 5 1q /0 6 3q /0 6 1q /0 7
North America
North American Wood Fiber Review
US
Japan
Total
Sources: B.C. Ministry of Forests, Statistics Canada and Industry Sources. © 2007 Wood Resources International, LLC
8
North American Wood Fiber Review
Destination
British Columbia
Ontario
Other
Total
North America
WOOD CHIP IMPORTS Canada
1000 odmt Origin
Wa
Other
Total
Total
Total
Total
1q/06 2q/06 3q/06 4q/06 1q/07
80 71 148 159 225
13 15 27 19 16
93 86 175 178 241
30 24 38 27 33
108 92 171 194 202
231 202 384 399 476
42 181
-16 23
35 159
22 10
4 87
19 106
Change, last Q (%) Change, last year (%)
British Columbia Wood Chip Imports
300
1000 metric ton (dry weight)
250 200 150 100 50
Washington
Other
/0 7 1q
/0 6 3q
/0 6 1q
/0 5 3q
/0 5 1q
/0 4 3q
/0 4 1q
3q
/0 3
/0 3 1q
/0 2 3q
/0 2 1q
/0 1 3q
/0 1 1q
/0 0 3q
1q
/0 0
0
Total
Sources: Statistics Canada, B.C. Ministry of Forests and Industry Sources.
9
© 2007 Wood Resources International, LLC
North American Wood Fiber Review
Western U.S. Wood Fiber Market Update June 2007
The FRA Western Technical Division data reveal that last month's inventory of pulplogs was the highest for the month of May for at least the past 8 years.
Residual and Roundwood Chip Prices 2Q/2007 Western U.S.
200 180 130
140 120
164
149
148
160 US$/BDU (delivered)
Wood fiber inventory levels at pulpmills in the Northwest have experienced an amazing turnaround the past six months; going from a record low of only 10 days in December to the highest June inventory in seven years, equivalent to 30 days fiber consumption. The northeast Washington (Puget Sound) and western Oregon (Willamette Valley) were the only regions where pulpmills did not substantially increase their wood fiber inventories in the 2Q. Much of the increase was the result of lower demand from pulpmills which were taking maintenance downtime during the spring, as well as to higher availability of roundwood chips.
fell by as much as $25/BDU ($22/odmt) in the 2Q compared to the previous quarter. The biggest price drops occurred in the subregions of the Lower Columbia River and Western Oregon, where some sawmills received up to $30/BDU less for their chips this quarter. In those two regions, which are the most competitive areas in the Northwest, residual prices ranged between $125-130/BDU. The lowest wood fiber costs continue to be in the Puget Sound regions and in eastern Washington, Idaho and Montana.
110
162 132
114
152
146
140
139
125
124
108
113
100 80 60 40 20 0
1200
Douglas- Hemlock Douglas- Hemlock Douglasfir fir fir
Softwood Chip and Pulplog Inventory - US NW
W. Washington
1000
Hemlock Douglas- Hemlock fir
Lower Columbia R.
W. Oregon
Residual chips
Roundwood chips
Inland Empire
1000 BDT
800
Despite the sharp price reductions this quarter, wood fiber costs are still substantially higher than a year ago and it is expected that prices of both residual chips and whole-log chips will continue downward in the 3Q.
600
400
200
0 Ja nM 99 ay -9 Se 9 p9 Ja 9 nM 00 ay -0 Se 0 p0 Ja 0 nM 01 ay -0 Se 1 p0 Ja 1 nM 02 ay -0 Se 2 p0 Ja 2 nM 03 ay -0 Se 3 p0 Ja 3 nM 04 ay -0 Se 4 p0 Ja 4 nM 05 ay -0 Se 5 p0 Ja 5 nM 06 ay -0 Se 6 p0 Ja 6 nM 07 ay -0 7
Western U.S.
Surprisingly swift turnaround in wood fiber inventories.
Source: FRA/WTD
Pulplogs
Softwood chips
Total
A number of independent wood chip producers in the region have started to cut back on pulplogs as demand for roundwood chips has declined. This has resulted in reduced pulplog prices region-wide: from $42/green ton to $37/green ton, a drop of over almost five dollars. Some log buyers saw prices fall from almost $50/ton in the first quarter to less than $35/ton in June.
Increased exports of wood chips from the US to British Columbia
As fiber supply has tightened in neighboring British Columbia, pulpmills close to the US border have increasingly been purchasing wood chips in the US Northwest. Wood chip imports to BC in the 1Q were 241,000 odmt, which was up 35% from the previous quarter and 159% higher than a year ago! With expected continued decline in residual supply in the province and strengthening of the Canadian dollar against Dramatic fall of wood fiber prices in the 2Q the US dollar, it is likely that the northbound movement will continue, thus putting price pressure up in After peaking at 12-year record highs, regional averthe northern part of Washington state. age softwood residual chip prices in the Northwest © 2007 Wood Resources International, LLC
10
North American Wood Fiber Review
WOOD CHIP PRICES - Western U.S. April - June 2007
Douglas-Fir
Hemlock
Pine
Cedar
Hardwood
Ave
Range
Ave
Range
Ave
Range
Ave
Range
117
90 - 175
121
90 - 175
na
…. - ….
100
88 - 122
115 100 - 128
Lower Columbia River 141 113 - 185
141
78 - 185
na
…. - ….
98
78 - 117
150 130 - 165
127 108 - 183
127 113 - 168
na
…. - ….
105
93 - 127
na
…. - ….
118
93 - 171
122
93 - 188
126
93 - 188
na
…. - ….
na
…. - ….
128
90 - 185
131
78 - 188
126
93 - 188
101
78 - 127
146 100 - 165
US$/BDU (del.) Washington
Ave
Range
Northwest (Puget Sound)
Oregon/California (Willamette V. & NW Ca)
Inland Empire (E. Wa, Idaho, Montana)
Weighted Average
180
Douglas-fir Chip Prices in Western U.S.
160 140
US$/BDU
120 100 80 60 40 20 0 W. Washington
1q/06 Notes.
Lower Columbia R.
2q/06
3q/06
W. Oregon
4q/06
1q/07
Inland Empire
2q/07
Wood chip prices in above table and graph include both residual chips and chips manufactured from roundwood. Prices are in US$/BDU delivered to domestic pulpmills. 1 BDU= 2400 lb. = 1.09 metric ton (dry weight), 1 BDU = 1.2 BDT
11
© 2007 Wood Resources International, LLC
Western U.S.
(SW Wa + NW Or)
North American Wood Fiber Review
WOOD CHIP INVENTORIES - Western U.S. Company
Location
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Western U.S.
(1000 BDU) Blue Heron Paper Co.
Oregon City, Or
1
1
2
1
2
Boise Cascade Corp.
St. Helens, Or Wallula, Wa
2 19
8 33
14 30
10 40
12 40
Evergreen Pulp
Samoa, Ca
10
8
14
20
45
Georgia Pacific Corp.
Camas, Wa/Wuana, Or Toledo, Or Coos Bay, Or
20 19 3
10 8 4
14 15 13
24 11 21
58 21 10
Inland Empire Paper Co.
Spokane, Wa
3
1
4
5
4
Kimberly Clark
Everett, Wa
8
3
6
22
27
Longview Fibre Co.
Longview, Wa
4
6
9
55
56
Nippon Paper Industries
Port Angeles, Wa
1
1
1
1
1
Oregon Chip Terminal
Coos Bay, Or
15
6
7
20
36
Ponderay Newsprint Co.
Usk, Wa
3
3
4
4
3
Pope&Talbot Pulp, Inc.
Halsey, Or
18
18
26
50
42
Port Townsend Paper Corp.
Pt Townsend, Wa
4
4
9
11
11
Potlatch Corp.
Lewiston, Id
5
6
8
15
39
Roseburg Forest Products
Coos Bay, Or
30
35
50
35
30
Simpson Paper Co.
Tacoma, Wa
27
21
21
42
29
Smurfit-Stone Container
Missoula, Mt
10
8
13
30
34
SP Newsprint Co.
Newberg, Or
2
2
1
2
2
Weyerhaeuser Co.
Albany, Or Longview, Wa Springfield, Or
34 25 34
15 42 15
32 25 30
30 52 28
38 60 20
305
263
348
529
629
-41.6
-47.1
-25.6
50.3
106.1
TOTALS, Western U.S. Change from last year (%)
Note. Inventories in the above table include both wood chips and sawdust.
© 2007 Wood Resources International, LLC
12
North American Wood Fiber Review
Chip Inventory in Western U.S.
900 800 700
Source: NAWFR
500 400
Western U.S.
1000 BDU
600
300 200 100
Lower Columbia River
Or, West (Willamette V.)
Wa, West (Puget S.)
East Wa/Id/Mt/Ca
Export
Total
7 M ar -0
6 Se p06
M ar -0
5
p05 Se
M ar -0
4 Se p04
M ar -0
p03
3
Se
M ar -0
2 Se p02
M ar -0
p01
1
Se
M ar -0
p00
0
Se
M ar -0
M ar -9
9 Se p99
0
Softwood Chip and Pulplog Inventory - US NW
1200
1000
1000 BDT
800
600
400
Source: FRA/WTD
Pulplogs
Note. 1 BDT=2000 Lb= 0.907 odmt
Softwood chips
May-07
Jan-07
Sep-06
May-06
Jan-06
Sep-05
May-05
Jan-05
Sep-04
May-04
Jan-04
Sep-03
May-03
Jan-03
Sep-02
May-02
Jan-02
Sep-01
May-01
Jan-01
Sep-00
May-00
Jan-00
Sep-99
Jan-99
0
May-99
200
Total
1 BDU = 1.20 BDT
13
© 2007 Wood Resources International, LLC
North American Wood Fiber Review UTILITY LOG PRICES - Western U.S. April - June 2007 Douglas-fir Ave
Range
Hem-fir Ave
Range
Pine Ave
Hardwood
Range
Ave
Range
Western U.S.
US$/green ton o.b. (delivered)
Washington, West
39
35-45
39
36-45
.....
.....
34
28-38
Lower Columbia River
35
28-42
36
28-45
.....
.....
40
32-45
Oregon, West
36
30-42
38
30-47
.....
.....
38
35-41
Idaho/Eastern Washington
37
30-45
37
30-45
37
30-45
.....
.....
Montana, West
43
30-50
43
30-50
43
30-50
.....
.....
Weighted Average
37 (28-50)
(SW Wa + NW Or)
37 (28-50)
39 (30-50)
37 (28-45)
SAWMILL RESIDUE PRICES - Western U.S. April - June 2007 Shavings Ave Range
Sawdust Ave Range
Hog fuel Ave Range
US$/BDT (delivered)
Washington West (Puget Sound)
.....
.....
38
22-40
24
10-30
Lower Colombia River
.....
.....
33
27-42
32
24-50
Oregon West (Willamette Valley) Northeast South
47 52 46
28-65 36-55 28-58
42 48 34
32-50 25-62 18-43
32 .... 31
23-46 .... 24-40
California
53
42-58
50
44-62
38
28-55
Idaho/Montana
41
29-48
47
29-59
35
18-48
Weighted Average
48 (28-65)
(SW Wa + NW Or)
43 (18-62)
29 (10-55)
Note. Prices are in dollars per BDT (eq. 2000 lb or 0.907 metric ton)
© 2007 Wood Resources International, LLC
14
North American Wood Fiber Review
Canadian Wood Fiber Market Update June 2007 A strengthening Canadian dollar impacts fiber procurement strategies
Wood Fiber Costs in British Columbia 1997-2007
140
BC, Coast BC, N. Interior BC, S. Interior Alberta
Can$/odmt (FOB sawmill)
120 100 80 60 40 20
/0 7 1q
/0 6 1q
/0 5 1q
/0 3
/0 4 1q
1q
/0 2 1q
/0 1 1q
/0 0 1q
/9 9 1q
/9 8 1q
/9 7
0 1q
According to WWPA's most recent statistics, the industry was running at 83% of practical capacity in March. This is likely to be lower in the 2Q as more sawmills, particularly in Interior BC and Quebec, have announced curtailments during the quarter. Lumber production in BC was 9% lower in March this year as compared to last year, while production in the rest of the country ran 15% lower than in March 2006. Even many integrated companies with both pulpmills and sawmills took the unusual step at curtailing lumber production despite the impact this will have on the internal wood fiber supply for the pulp manufacturing. This development has forced pulpmills all over Canada to increasingly rely on more expensive roundwood chips.
Increased reliance on manufactured chips in BC
15
© 2007 Wood Resources International, LLC
Historically most pulpmills in the Interior BC have relied on residual chips for over 95% of their wood fiber furnish, as the lumber industry is fairly large relative the pulp sector. As this supply source has diminished the past six months, many pulpmills have been forced to start up whole-log chip programs with increased utilization of smaller trees (mostly beetle-killed) and treetops.
Over the next 8-10 months it can be expected that the share of manufactured chips will increase to between 10-20% of the total fiber supply. Increasingly, coastal pulpmills are also hauling roundwood chips from the Wood fiber prices reaching seven year highs in Interior out to the coast, as prices are competitive with the high-cost volumes on the coast. Declining residual the western provinces volumes on the coast have pushed up pulplog prices In British Columbia and Alberta, chip prices have gone from C$32/ton for hem-fir a year ago to $52/ton in up for four consecutive quarters after dipping to the 2Q/07. record-lows in 1Q/06. Wood chip prices in the two western provinces are now at the highest levels in seven Wood fiber costs down in Eastern Canada years, with Coastal BC prices averaging over C$100/ odmt (FOB sawmill) while average prices in Alberta Wood fiber prices did not change much in Ontario and Interior BC were around C$80/odmt in the 2Q. and Quebec as the overall supply and demand were in balance. However, there were regional differences Assuming the Canadian dollar continues to strengthen within the provinces and some pulpmills have to inand pulp prices remain flat, wood chips prices could creasingly travel further, including into the US, to provery well decline a few dollars next quarter as many cure roundwood for chipping. Wood chip prices avpulpmills still use formula pricing based on mill net prices eraged just over C$135/odmt (US$124/odmt) down about 13% from a year ago. (in US dollars).
Canada
In the middle of June, the Canadian dollar reached 0.93 on the US dollar, and market analysts are predicting that the US and Canadian dollars will be on par later this year. With this strengthening of the Canadian dollar, now at an over 15-year record high against the US dollar, many Canadian companies both in the western and eastern provinces are struggling to keep their mills running. Few are profitable given the current lumber prices in the US market.
North American Wood Fiber Review
WOOD FIBER PRICES - Western Canada April - June 2007 WOOD CHIP Can$/BDU (FOB sawmill)
Douglas-Fir
Hem-fir
Ave Range
Ave Range
Spruce/pine/fir Ave Range
Ave Range
Cedar
85 67-95 82 75-94 113 103-135
85 82 .....
67-95 75-94 .....
..... 65 75
..... 57-69 65-90
.....
82
62-97
.....
.....
31 35 .....
23-36 25-40 .....
..... ..... .....
..... ..... .....
British Columbia North Interior South Interior Coast
Alberta
..... 82 106
..... 75-94 95-128
.....
.....
.....
ROUNDWOOD Can$/m3 ub (delivered)
British Columbia North Interior* South Interior* Coast
120
..... 35 44
..... 25-40 35-46
31 35 52
23-36 25-40 48-54
WOOD CHIP PRICES - Western Canada
Can $/BDU (FOB sawmill)
Canada
100
80
60
40
20
0 BC, Coast 1q/06
BC, N. Interior 2q/06
BC, S. Interior
3q/06
4q/06
Notes. * Only small quantities traded during this quarter Domestic chip prices in Can$ per BDU at sawmill Domestic log prices in Can$ per m3 (delivered) 1 BDU= 2400 Lb. = 1.09 metric ton (dry weight) Exchange rate: Can$ 1.11/US$ (Average for 2Q/ 2007)
© 2007 Wood Resources International, LLC
16
1q/07
Alberta 2q/07
North American Wood Fiber Review
WOOD FIBER PRICES - Eastern Canada April - June 2007 WOOD CHIPS Can$/odmt
Conifer
ROUNDWOOD Can$/odmt
Non-conifer
Conifer
Non-conifer
Ave Range
Ave
Range
Ave Range
Ave
Range
Ontario
135 105-155
82
76-96
165 125-195
90
78-110
Quebec
140 110-165
85
75-100
168 130-200
96
78-114
Maritime Prov.
96
na
na
105 65-118
83
70-100
200
72-115
CONIFER WOOD FIBER PRICES - Eastern Canada
180 160
120
Canada
Can$/odmt (del)
140
100 80 60 40 20 0 Ontario Chips
Ontario Roundwood 2q/06
Quebec Chips 3q/06
4q/06
Quebec Roundwood 1q/07
Maritimes Chips
Maritimes Roundwood
2q/07
Notes. Domestic chip and log prices in Can$ per odmt (delivered) 1 odmt (dry weight) = 1.102 short tons (dry weight) = 2204 lb Exchange rate: Can$ 1.11/US$ (Average for 2Q/2007) Sources: Industry contacts and the Wood Resource Quarterly (WRI, LLC)
17
© 2007 Wood Resources International, LLC
North American Wood Fiber Review
The Global Forest Industry - 1Q/2007 Excerpted from our sister publication Wood Resource Quarterly, a 48-page market report tracking global pulpwood and sawlog markets, including prices for most major wood-consuming regions around the world. See www.woodprices.com for more information. The Pulp and Paper Market The supply of softwood market pulp is continuing to be tight as many pulpmills in the Nordic countries, Canada and Western US have had difficulty running at full operating rates due to wood fiber shortages. As a result, NBSK prices have gone up this quarter, reaching $760/ton in Europe and $790/ton in the US. With many pulpmills taking maintenance shut downs in the spring, it can be expected that global pulp supply will continue to be tight and that pulp prices will strengthen further. The global production of market pulp was 3.1% higher in 2006 than 2005, and this trend continued in early 2007 when pulpmills, particularly in Latin America, ran at substantially higher rates than in early 2006. The only region that did not increase production in 2006 was North America, where the pulp sector in Eastern Canada was hard hit by high production costs and reduced wood fiber supply. The Lumber Market The declining trend in housing starts in the US that lasted for much of 2006 ended in November, and numbers have since then stabilized at around 1.5 million starts (seasonally adjusted annual rate). With lower housing starts, demand for lumber has been in decline for almost 12 months, resulting in continued reductions in lumber manu-
facturing. In early 2007, production in both Canada and the US was much lower than in 2006 and there are few signs that demand for lumber will pick up any time soon. With the lower demand for lumber in the US, imports fell by an astonishing 24% in January as compared to the same month in 2006. The biggest decreases in shipments were from Canada, Germany, Austria and Sweden. In March, lumber prices in the US were close to record low levels. The Random Length composite price for framing lumber was down 23.6% from a year ago. The lumber market in Europe is hot, with strong demand in western Europe and limited supply in the Nordic countries, in eastern Europe and in Russia. The tight market has increased lumber prices to recordhigh levels. Lumber consumption in Japan was higher this winter than last year, resulting in an increase in domestic production as well as a rise in imports. In January, imports were up from the US, Russia, Europe and New Zealand, while Canadian shipments were down almost 20%. Global Sawtimber Prices The WRQ Global Conifer Sawlog Price, based on sawlog prices in 18 major regions around the world, was up substantially this quarter, reaching a all-time high of US$82.31/m3 in the 1Q/07. This can be compared
© 2007 Wood Resources International, LLC
18
to US$72.71/m3 the same quarter in 2005, and to US$71.84/m3 in 2004. The biggest price increases this quarter occurred in western US, Finland, Germany and the Baltic States. The Global Average Wood Fiber Price The average global conifer pulpwood price was up 3.5% to $101.76/odmt in the 1Q/07, and as much as 16.8% from a year ago as fiber prices increased in practically all markets covered by the WRQ. Eastern Canada was the only region with both lower wood chip and pulplog prices this quarter. The average global price for nonconifer wood fiber was practically unchanged at $91.47/odmt with lower prices in Canada and Japan, while prices increased in Europe, Russia and Australia. The Wood Pellet Market in North America Wood pellet markets in the US and Canada have really taken off the past few years. Total production in North America increased sharply between 2003 and 2006, doubling from almost 900,000 tons to 1.7 million tons. This year, it is expected that production will reach approximately 2.3 million tons. Despite this dramatic change, the per capita consumption is still much lower than in Europe.
JAPAN Wood Chip Inventory
North American Wood Fiber Review
Wood Fiber Inventory in Japan - Conifer
700
600
1000 odmt
500
400 Inventory Change March, 2006 532,000 odmt March, 2007 505,000 odmt (-5.1 %)
300
200
100
1400
3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5 O ct -0 5 Ja n06 A pr -0 6 Ju l-0 6 O ct -0 6 Ja n07
pr -0
A
Ja n-
03
0
Wood Fiber Inventory in Japan - Non-Conifer
1200
800
600 Inventory Change March, 2006 1,092,000 odmt March, 2007 957,000 odmt (-12.4 %)
400
200
Ja n03 A pr -0 3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5 O ct -0 5 Ja n06 A pr -0 6 Ju l-0 6 O ct -0 6 Ja n07
0
Note. Data include total wood fiber inventory at domestic pulpmills, port yards and on ships.
19
© 2007 Wood Resources International, LLC
Pacific Rim
1000 odmt
1000
North American Wood Fiber Review
JAPAN Imports of Conifer Wood Chips
Origin
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07 Change q/q
Avg value
%
US$/odmt
1000 odmt
USA
153
210
204
201
145
133
-8
185
Australia
228
259
256
249
265
252
-5
145
New Zealand
62
48
43
53
48
57
19
143
Canada
36
55
68
77
73
80
10
156
Fiji
36
18
39
21
33
18
-45
138
Other
66
63
6
5
7
35
400
170
Total
581
653
616
606
571
575
0.7
157
-12.0
12.4
-5.7
-1.6
-5.8
0.7
Change from last quarter (%)
Imports of Conifer Wood Chips 2005/2006 Japan
300
250
1000 odmt
200
150
Pacific Rim
100 50
0 USA
Australia
1q/06
New Zealand
2q/06
3q/06
Notes. Average value in US$/odmt (CIF) Source: Japan Customs Statistics © 2007 Wood Resources International, LLC
20
Canada
4q/06
Fiji
1q/07
Other
North American Wood Fiber Review
JAPAN Imports of Non-Conifer Wood Chips
Origin
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07 Change q/q Avg value
1000 odmt
Australia
%
US$/odmt
1035
876
997
1034
968
1134
17.1
162
South Africa
747
754
650
688
666
646
-3.0
160
Chile
366
533
383
422
436
476
9.2
165
Brazil
193
137
137
160
102
220
115.7
168
Vietnam
199
166
184
179
192
209
8.9
146
Other
398
487
429
351
400
361
-9.8
145
Total
2938
2953
2780
2834
2764
3046
10.2
160
4.3
0.5
-5.9
1.9
-2.5
10.2
Change from last quarter (%)
1200
Imports of Non-Conifer Wood Chips 2005/2006 Japan
1000
1000 odmt
800 600
200 0 Australia
S. Africa
1q/06
Chile
2q/06
3q/06
Vietnam
4q/06
Brazil
Other
1q/07
Notes. Average value in US$/odmt (CIF) Source: Japan Customs Statistics
21
© 2007 Wood Resources International, LLC
Pacific Rim
400
North American Wood Fiber Review
Origin
SOUTH KOREA Imports of Wood Chips 4q/05
1q/06
2q/06
3q/06
4q/06
1q/07 Change Y/Y
1000 odmt
P.R. China
%
32
34
25
62
48
23
-32
0
41
53
0
24
43
5
Australia
20
55
0
25
52
78
42
Vietnam
24
12
20
40
14
40
233
Other
50
76
45
40
14
21
-72
Total
126
218
143
167
152
205
-6
-30.8
73.0
-34.4
16.8
-9.0
34.9
USA
Change from prev. quarter (%)
Imports of Wood Chips in 2005/2006 South Korea
90 80 70 1000 odmt
60 50 40 30
Pacific Rim
20 10 0 Australia
US 1q/06 2q/06
China Vietnam 3q/06 4q/06 1q/07
Source: Korean Official Trade Statistics © 2007 Wood Resources International, LLC
22
Other
North American Wood Fiber Review
TAIWAN Imports of Wood Chips
Origin
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07
1000 odmt
Change q/q %
PR China
36
20
0
34
0
17
na
Australia
81
0
127
83
56
80
43
Indonesia
26
25
19
26
26
17
-35
Vietnam
17
51
40
31
46
26
-43
Other
0
0
0
0
0
0
na
Total
160
96
186
174
128
140
9
Change from last quarter (%)
-29.8
-40.0
93.8
-6.5
-26.4
9.4
Imports of Wood Chips in 2005/2006 Taiwan
140 120
1000 odmt
100 80 60 40
0 P.R. China
Indonesia 1q/06
2q/06
Australia 3q/06
4q/06
Vietnam 1q/07
Note. Average value in US$/odmt (CIF) Source: Taiwan Customs Statistics
23
© 2007 Wood Resources International, LLC
Pacific Rim
20
North American Wood Fiber Review
A Few Facts About the Global Forest Industry: Global Usage of Industrial Roundwood
Global Industrial Roundwood Usage Sawnwood 46.0%
Other Industrial Roundwood 7.7%
Composite Board 6.3%
Pulp 31.2%
Plywood 8.8%
Source: Wood Resources International LLC
Wood Fiber Consumption by the Global Pulp Industry
Conifer chips 27.0%
Non-conifer chips 8.5%
Non-conifer roundwood 29.4% Source: Wood Resources International LLC
Production Costs for Wood-Based Kraft Pulp
Production Costs for Wood-Based Kraft Pulp Wood 42.0%
Labor 15.0%
Chemicals 11.0%
Fiber Consumption by the Global Pulp Industry The global wood-based pulp industry relies on roundwood for up to 65% of its wood fiber needs. The logs are either from fast-growing plantations such as in Latin America and Oceania or from thinnings and tree tops in the slower-growing regions of North America and the Nordic countries. Residual chips are most commonly consumed in the US, Canada, Sweden and Finland as these countries have large sawmilling sectors.
Conifer roundwood 35.1%
Other 16.0%
Almost half of harvested industrial roundwood in the world is used to produce sawnwood, of which the majority is conifer species. Approximately 1/3 of the global roundwood removals are consumed by the pulp industry mainly in the US, Sweden, Finland, Brazil and Indonesia. Pulpwood removals have increased faster than that of sawlogs the past ten years resulting in a higher share of pulpwood harvests today than in the mid-1990’s.
Energy 16.0%
Wood fiber costs account for between 38-52% of the total variable production costs when producing chemical wood-based pulp. Pulpwood costs have traditionally been higher in North America and Europe than in regions with faster-growing plantations such as in Brazil, Chile and Indonesia. The spread in wood costs between the Northern and Southern Hemisphere has declined the past few years.
Source: Wood Resources International LLC
Production Costs for Conifer Sawnwood
Production Costs for Conifer Sawnwood Other 11.0% Labor 15.0%
Energy 4.0% Wood 70.0% Source: Wood Resources International LLC
© 2007 Wood Resources International, LLC
Wood cost is, by far, the largest cost component in the production of conifer sawnwood. Wood costs range from 60% to 75% of the total variable cost depending on the region of the world. Sawmills in North America and Europe typically do have higher wood costs both in real terms and as a percentage of the total production cost, as compared to countries with short-rotation plantations, such as Brazil, Chile and New Zealand.
24
In the US South, prices were practically unchanged with pine chips averaging $68/odmt (delivered) and pine roundwood ranging from $80-90/odmt. Wood chip prices have been remarkably stable the past few years with only small adjustments of a few dollars up or down. Pine log prices have trended upward as stumpage and transport costs have increased, particularly in the South Central states where average prices are up almost 10% from a year ago to $36/green ton ($90/odmt).
Canada increases imports of wood chips
450 400 350 1000 odmt
300 250 200 150 100 50
3q
1q /0 7
3q
1q /0 6
3q
Export
1q /0 5
3q
Net Trade
1q /0 4
3q
1q /0 3
3q
0 1q /0 2
Only two regions in the US had higher wood costs than Canada during the 2Q; Maine, and the states in the Northwest. Pulpmills in western US have gone through a roller coaster ride, with conifer residual chip prices almost doubling from the 2Q last year to the 1Q of this year, peaking at US$140/odmt (delivered). At their peak this region had the highest conifer fiber costs in the world. During the 2Q/07, pulpmills in the US Northwest were able to build exceptionally high inventories (they increased from 10 days in December to 30 days in May), and wood prices have started to came back down again.
Trade of Wood Chips in Canada
500
1q /0 1
Wood fiber prices were unchanged or falling in most regions this quarter with the exception of British Columbia and Alberta, where tight fiber supply pushed prices of both wood chips and pulplogs upwards. Wood prices in the two western provinces were also impacted by higher market pulp prices as some chip contracts are linked with these prices. As the Canadian dollar strengthened this quarter, wood costs in US dollar terms did go up in all provinces of Canada and are generally higher than in the US.
the 1Q/07, Canada imported almost 500,000 odmt of wood chips, of which most were destined to pulpmills in British Columbia, Quebec and New Brunswick. With continued cut backs in the lumber industry and a strengthening Canadian dollar, it can be expected that Canadian companies will continue to search for additional chip volumes on the US side of the border.
Import
Softwood pulp prices keep going up Global softwood pulp prices are continuing upward, while hardwood pulp prices have leveled off at just over $780/ton according to FOEX Benchmark Index. The average benchmark NBSK pulp price in Europe has increased by almost $150 in one year, reaching $785/ ton (CIF Europe) in June, the highest price since 1996. 800
Benchmark Prices for Market Pulp in Europe
750 700 650 US dollars/ton
Wood fiber prices are moving downward
600 550 500 450
Source: FOEX
As of June 12, 2007: NBSK: $785/ton BHKP: $686/ton
400 350 300 Ja n03 A pr -0 3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5 O ct -0 5 Ja n06 A pr -0 6 Ju l-0 6 Oc t-0 6 Ja n07 A pr -0 7
Wood chip trade between Canada and the US has intensified as Canadian pulpmills are struggling to supply their pulpmills with residual chips from a sawmill sector in decline. Chip imports more than doubled in 12 months from early last year to March of this year. In
Softwood Pulp (NBSK)
Hardwood Pulp (BHKP)
Negotiated prices for wood chips exported to Japan 1H/2007 (FOB): Douglas-fir, U.S. (US$/BDU) 167.50 142.50 (2H/06) SPF, Canada (US$/BDU) 140.00 100.00 (2H/06) Pine, Australia (US$/BDU) 150.00 110-112 (2H/06) Euc., Australia (Aus$/odm 176-180 161 (2H/06)
1
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Market Update
North American Wood Fiber Review
North America
North American Wood Fiber Review
Conifer Wood Fiber Costs in North America Second Quarter, 2007
Chips
Alberta 84 (67 - 96)
British Columbia Chips 91 (83 - 112) Roundwood 113 (79 - 122)
Quebec Chips 126 (99 - 149) Roundwood 151 (117 - 180)
Chips Roundwood
Ontario 122 (95 - 140) 149 (113 - 176)
U.S. Pacific Northwest Chips 118 (83 - 145) Roundwood 91 (69 - 123) U.S. Lake States Chips 79 (66 - 86) Roundwood 81 (60 - 108)
U.S. South Central Chips 69 (60 - 77) Roundwood 89 (80 - 102)
Canadian Maritimes Chips 86 (65 - 104) Roundwood 95 (59 - 106)
U.S. Northeast Chips 94 (61 - 142) Roundwood 98 (74 - 148)
U.S. South East Chips 67 (60 - 72) Roundwood 82 (72 - 92)
Notes. Units in US$/odmt (delivered). 1 odmt (oven-dry metric ton) equal to 1.102 short tons or 2204 lb Exchange rate: Can$ 1.11/US$ (Average 2Q/2007)
Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co. Data collected by Wood Resources International and WRQ sources
© 2007 Wood Resources International, LLC
2
Non-Conifer Wood Fiber Costs in North America Second Quarter, 2007
Quebec Chips 77 (68 - 90) Roundwood 86 (70 - 103) Ontario Chips 74 (68 - 86) Roundwood 81 (70 - 99)
Canadian Maritimes Roundwood 75 (63 - 90)
U.S. Pacific Northwest Chips 134 (92 - 151) Roundwood 94 (62 - 111) U.S. Lake States Chips 58 (51 - 66) Roundwood 73 (50 - 91)
U.S. South Central Chips 65 (54 - 69) Roundwood 82 (73 - 91)
U.S. Northeast Chips 75 (48 - 97) Roundwood 74 (67 - 128)
U.S. South East Chips 63 (57 - 69) Roundwood 82 (74 - 92)
Notes. Units in US$/odmt (delivered). 1 odmt (oven-dry metric ton) equal to 1.102 short tons or 2204 lb Exchange rate: Can$ 1.11/US$ (Average 2Q/2007)
Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co. Data collected by Wood Resources International and WRQ sources
3
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Review
North America
North American Wood Fiber Review
Wood Fiber Costs in North America Second Quarter, 2007 Wood Chips
Roundwood
Avg Min Max US$/odmt (delivered)
Avg Min Max US$/odmt (delivered)
Conifer U.S.
Northwest Lake States Northeast South East South Central
118 79 94 67 69
83 145 66 86 61 142 60 72 60 77
91 81 98 82 89
69 60 74 72 80
123 108 148 92 102
91 84 122 126 86
83 67 95 99 65
112 96 140 149 104
113 ..... 149 151 95
79 ..... 113 117 59
122 ..... 176 180 106
134 58 75 63 65
92 151 51 66 48 97 57 69 54 69
94 73 74 82 82
62 111 50 91 67 128 74 92 73 91
74 77 .....
68 68 .....
81 86 75
70 99 70 103 63 90
Canada
British Columbia Alberta Ontario Quebec Maritimes
Non-Conifer U.S.
Northwest Lake States Northeast South East South Central Canada
Ontario Quebec Maritimes
86 90 .....
Note. Prices are for residual wood chips and roundwood delivered to pulpmill or chip plant (units in US$/odmt). 1 odmt (oven-dry metric ton) equal to 1.102 short tons (dry weight) or 2204 lb Exchange rate: Can$ 1.11/US$ (average 2Q/2007)
Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co Data collected by Wood Resources International and WRQ sources
© 2007 Wood Resources International, LLC
4
Wood Fiber Costs in North America 2Q/06 - 2Q/07 Wood Chips US$/green tons (delivered) 2Q/06 3Q/06 4Q/06 1Q/07 2Q/07
Roundwood US$/green tons (delivered) Change y/y (%)
2Q/06 3Q/06 4Q/06 1Q/07 2Q/07 Change y/y (%)
Conifer U.S. Northwest Lake States Northeast South East South Central
36 31 48 30 34
42 31 44 29 31
60 32 43 30 33
64 32 43 30 31
53 36 43 30 31
Canada British Columbia Alberta Ontario Quebec Maritimes
29 30 63 64 42
31 31 56 59 40
36 34 56 58 40
37 35 52 54 39
41 38 55 57 39
44 30 34 29 29
49 30 34 28 29
54 27 35 29 29
61 27 34 29 29
61 26 34 29 29
33 34 ----
33 34 ----
33 34 ----
32 33 ----
34 35 0
48.7 16.7 -11.3 0.0 -6.8
43.9 26.6 -11.9 -11.2 -6.0
28 37 42 32 33
35 37 41 32 34
43 36 40 33 36
41 35 40 34 38
37 33 40 33 36
28 ---60 61 41
35 ---60 61 40
37 ---59 61 38
41 ---57 58 36
46 ..... 60 61 38
63.2
29 31 32 33 33
32 31 31 33 32
37 30 32 33 34
39 30 31 34 33
38 29 30 33 33
30.3
32 34 31
32 34 31
32 34 30
31 33 30
33 35 30
1.4
32.4 -11.7 -5.8 3.8 8.5
na 1.1 0.2 -6.3
Non-Conifer U.S. Northwest Lake States Northeast South East South Central Canada Ontario Quebec Maritimes
38.2 -12.5 -1.4 0.0 1.6
1.2 0.8 na
-4.4 -7.5 0.0 0.0
1.7 -2.9
Notes. All prices in US dollars per green tons (2000 pounds) or equal to 0.907 metric tonnes Roundwood prices are delivered to pulpmill or chipping facility Chip prices are for residual chips and do not include chips manufactured from roundwood Exchange rate: Can$ 1.11/US$ (average 2Q/2007) Sources. US - Lake States All other regions
WRI sources and the Timber Mart-North published by Prentiss & Carlisle Management Co. Data collected by Wood Resources International and WRQ sources
5
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Review
WOOD CHIP EXPORTS United States Change
1Q 2007
Wa
Or
OthNW
Ak
North
South
Total, U.S.
from last Q (%)
Conifer Chips Japan Canada
0
111
0
0
0
0
111
-38
220
0
16
0
95
0
331
31
Other
0
0
0
0
0
23
23
2200
Total
220
111
16
0
95
23
465
7
38
-38
14
-100
22
2200
7
Japan
5
0
0
0
0
0
5
-88
Canada
0
0
0
0
139
0
139
-3
Other
0
0
0
0
0
27
27
-31
Total
5
0
0
0
139
27
171
-24
na
-100
na
na
-3
-64
-24
225
111
16
0
234
50
636
42
-40
14
-100
5
-34
-3
Change from last Q (%)
Non-Conifer Chips
Change from last Q (%)
TOTAL Change from last Q (%)
250
-3
Chip Exports from the U.S. in 2005/2006
200 1000 mt (dry weight)
North America
North American Wood Fiber Review
150
100
50
0 Washington
Oregon
1q/06
2q/06
© 2007 Wood Resources International, LLC
Other West
3q/06
6
4q/06
Northeast
1q/07
South
WOOD CHIP IMPORTS United States
Origin 1000 odmt
Change in Imports last quarter last year % %
3q/05
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07
Canada, BC Canada, other Brazil
75 10 160
51 4 73
51 7 73
46 9 132
63 5 100
35 3 128
24 4 72
-31 33 -44
-53 -43 -1
Total
245
128
131
187
168
166
100
-40
-24
Change from last Q
-6.1
-47.8
2.3
42.7
-10.2
-1.2
-39.8
Sources: U.S. Department of Commerce, Statistics Canada and Industry Sources.
Wood Chip Imports to the U.S.
350 300
200 150 100 50
7
/0 7 1q
/0 5
/0 6 1q
Total
1q
/0 4 1q
US West
/0 3
US Other
1q
1q
/0 2
/0 1 1q
/0 0 1q
/9 9 1q
/9 8 1q
/9 7
0 1q
1000 odmt
250
© 2007 Wood Resources International, LLC
North America
North American Wood Fiber Review
WOOD CHIP EXPORTS Canada Origin
British Columbia
Other Provinces
Total
1000 odmt Destination 1q/06 2q/06 3q/06 4q/06 1q/07 Change, last Q (%) Change, last year (%)
250
1000 metric ton (dry weight)
U.S.
Japan
Total
US
Japan
Other
Total
All
51 46 63 35 24
26 84 61 57 130
77 130 124 92 154
7 9 5 3 3
0 0 0 0 0
37 0 0 0 0
44 9 5 3 3
121 139 129 95 157
-31 -53
128 400
67 100
0 -57
na na
na -100
0 -93
65 30
British Columbia Wood Chip Exports
200
150
100
50
0 1q /0 0 3q /0 0 1q /0 1 3q /0 1 1q /0 2 3q /0 2 1q /0 3 3q /0 3 1q /0 4 3q /0 4 1q /0 5 3q /0 5 1q /0 6 3q /0 6 1q /0 7
North America
North American Wood Fiber Review
US
Japan
Total
Sources: B.C. Ministry of Forests, Statistics Canada and Industry Sources. © 2007 Wood Resources International, LLC
8
North American Wood Fiber Review
Destination
British Columbia
Ontario
Other
Total
North America
WOOD CHIP IMPORTS Canada
1000 odmt Origin
Wa
Other
Total
Total
Total
Total
1q/06 2q/06 3q/06 4q/06 1q/07
80 71 148 159 225
13 15 27 19 16
93 86 175 178 241
30 24 38 27 33
108 92 171 194 202
231 202 384 399 476
42 181
-16 23
35 159
22 10
4 87
19 106
Change, last Q (%) Change, last year (%)
British Columbia Wood Chip Imports
300
1000 metric ton (dry weight)
250 200 150 100 50
Washington
Other
/0 7 1q
/0 6 3q
/0 6 1q
/0 5 3q
/0 5 1q
/0 4 3q
/0 4 1q
3q
/0 3
/0 3 1q
/0 2 3q
/0 2 1q
/0 1 3q
/0 1 1q
/0 0 3q
1q
/0 0
0
Total
Sources: Statistics Canada, B.C. Ministry of Forests and Industry Sources.
9
© 2007 Wood Resources International, LLC
North American Wood Fiber Review
Western U.S. Wood Fiber Market Update June 2007
The FRA Western Technical Division data reveal that last month's inventory of pulplogs was the highest for the month of May for at least the past 8 years.
Residual and Roundwood Chip Prices 2Q/2007 Western U.S.
200 180 130
140 120
164
149
148
160 US$/BDU (delivered)
Wood fiber inventory levels at pulpmills in the Northwest have experienced an amazing turnaround the past six months; going from a record low of only 10 days in December to the highest June inventory in seven years, equivalent to 30 days fiber consumption. The northeast Washington (Puget Sound) and western Oregon (Willamette Valley) were the only regions where pulpmills did not substantially increase their wood fiber inventories in the 2Q. Much of the increase was the result of lower demand from pulpmills which were taking maintenance downtime during the spring, as well as to higher availability of roundwood chips.
fell by as much as $25/BDU ($22/odmt) in the 2Q compared to the previous quarter. The biggest price drops occurred in the subregions of the Lower Columbia River and Western Oregon, where some sawmills received up to $30/BDU less for their chips this quarter. In those two regions, which are the most competitive areas in the Northwest, residual prices ranged between $125-130/BDU. The lowest wood fiber costs continue to be in the Puget Sound regions and in eastern Washington, Idaho and Montana.
110
162 132
114
152
146
140
139
125
124
108
113
100 80 60 40 20 0
1200
Douglas- Hemlock Douglas- Hemlock Douglasfir fir fir
Softwood Chip and Pulplog Inventory - US NW
W. Washington
1000
Hemlock Douglas- Hemlock fir
Lower Columbia R.
W. Oregon
Residual chips
Roundwood chips
Inland Empire
1000 BDT
800
Despite the sharp price reductions this quarter, wood fiber costs are still substantially higher than a year ago and it is expected that prices of both residual chips and whole-log chips will continue downward in the 3Q.
600
400
200
0 Ja nM 99 ay -9 Se 9 p9 Ja 9 nM 00 ay -0 Se 0 p0 Ja 0 nM 01 ay -0 Se 1 p0 Ja 1 nM 02 ay -0 Se 2 p0 Ja 2 nM 03 ay -0 Se 3 p0 Ja 3 nM 04 ay -0 Se 4 p0 Ja 4 nM 05 ay -0 Se 5 p0 Ja 5 nM 06 ay -0 Se 6 p0 Ja 6 nM 07 ay -0 7
Western U.S.
Surprisingly swift turnaround in wood fiber inventories.
Source: FRA/WTD
Pulplogs
Softwood chips
Total
A number of independent wood chip producers in the region have started to cut back on pulplogs as demand for roundwood chips has declined. This has resulted in reduced pulplog prices region-wide: from $42/green ton to $37/green ton, a drop of over almost five dollars. Some log buyers saw prices fall from almost $50/ton in the first quarter to less than $35/ton in June.
Increased exports of wood chips from the US to British Columbia
As fiber supply has tightened in neighboring British Columbia, pulpmills close to the US border have increasingly been purchasing wood chips in the US Northwest. Wood chip imports to BC in the 1Q were 241,000 odmt, which was up 35% from the previous quarter and 159% higher than a year ago! With expected continued decline in residual supply in the province and strengthening of the Canadian dollar against Dramatic fall of wood fiber prices in the 2Q the US dollar, it is likely that the northbound movement will continue, thus putting price pressure up in After peaking at 12-year record highs, regional averthe northern part of Washington state. age softwood residual chip prices in the Northwest © 2007 Wood Resources International, LLC
10
North American Wood Fiber Review
WOOD CHIP PRICES - Western U.S. April - June 2007
Douglas-Fir
Hemlock
Pine
Cedar
Hardwood
Ave
Range
Ave
Range
Ave
Range
Ave
Range
117
90 - 175
121
90 - 175
na
…. - ….
100
88 - 122
115 100 - 128
Lower Columbia River 141 113 - 185
141
78 - 185
na
…. - ….
98
78 - 117
150 130 - 165
127 108 - 183
127 113 - 168
na
…. - ….
105
93 - 127
na
…. - ….
118
93 - 171
122
93 - 188
126
93 - 188
na
…. - ….
na
…. - ….
128
90 - 185
131
78 - 188
126
93 - 188
101
78 - 127
146 100 - 165
US$/BDU (del.) Washington
Ave
Range
Northwest (Puget Sound)
Oregon/California (Willamette V. & NW Ca)
Inland Empire (E. Wa, Idaho, Montana)
Weighted Average
180
Douglas-fir Chip Prices in Western U.S.
160 140
US$/BDU
120 100 80 60 40 20 0 W. Washington
1q/06 Notes.
Lower Columbia R.
2q/06
3q/06
W. Oregon
4q/06
1q/07
Inland Empire
2q/07
Wood chip prices in above table and graph include both residual chips and chips manufactured from roundwood. Prices are in US$/BDU delivered to domestic pulpmills. 1 BDU= 2400 lb. = 1.09 metric ton (dry weight), 1 BDU = 1.2 BDT
11
© 2007 Wood Resources International, LLC
Western U.S.
(SW Wa + NW Or)
North American Wood Fiber Review
WOOD CHIP INVENTORIES - Western U.S. Company
Location
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Western U.S.
(1000 BDU) Blue Heron Paper Co.
Oregon City, Or
1
1
2
1
2
Boise Cascade Corp.
St. Helens, Or Wallula, Wa
2 19
8 33
14 30
10 40
12 40
Evergreen Pulp
Samoa, Ca
10
8
14
20
45
Georgia Pacific Corp.
Camas, Wa/Wuana, Or Toledo, Or Coos Bay, Or
20 19 3
10 8 4
14 15 13
24 11 21
58 21 10
Inland Empire Paper Co.
Spokane, Wa
3
1
4
5
4
Kimberly Clark
Everett, Wa
8
3
6
22
27
Longview Fibre Co.
Longview, Wa
4
6
9
55
56
Nippon Paper Industries
Port Angeles, Wa
1
1
1
1
1
Oregon Chip Terminal
Coos Bay, Or
15
6
7
20
36
Ponderay Newsprint Co.
Usk, Wa
3
3
4
4
3
Pope&Talbot Pulp, Inc.
Halsey, Or
18
18
26
50
42
Port Townsend Paper Corp.
Pt Townsend, Wa
4
4
9
11
11
Potlatch Corp.
Lewiston, Id
5
6
8
15
39
Roseburg Forest Products
Coos Bay, Or
30
35
50
35
30
Simpson Paper Co.
Tacoma, Wa
27
21
21
42
29
Smurfit-Stone Container
Missoula, Mt
10
8
13
30
34
SP Newsprint Co.
Newberg, Or
2
2
1
2
2
Weyerhaeuser Co.
Albany, Or Longview, Wa Springfield, Or
34 25 34
15 42 15
32 25 30
30 52 28
38 60 20
305
263
348
529
629
-41.6
-47.1
-25.6
50.3
106.1
TOTALS, Western U.S. Change from last year (%)
Note. Inventories in the above table include both wood chips and sawdust.
© 2007 Wood Resources International, LLC
12
North American Wood Fiber Review
Chip Inventory in Western U.S.
900 800 700
Source: NAWFR
500 400
Western U.S.
1000 BDU
600
300 200 100
Lower Columbia River
Or, West (Willamette V.)
Wa, West (Puget S.)
East Wa/Id/Mt/Ca
Export
Total
7 M ar -0
6 Se p06
M ar -0
5
p05 Se
M ar -0
4 Se p04
M ar -0
p03
3
Se
M ar -0
2 Se p02
M ar -0
p01
1
Se
M ar -0
p00
0
Se
M ar -0
M ar -9
9 Se p99
0
Softwood Chip and Pulplog Inventory - US NW
1200
1000
1000 BDT
800
600
400
Source: FRA/WTD
Pulplogs
Note. 1 BDT=2000 Lb= 0.907 odmt
Softwood chips
May-07
Jan-07
Sep-06
May-06
Jan-06
Sep-05
May-05
Jan-05
Sep-04
May-04
Jan-04
Sep-03
May-03
Jan-03
Sep-02
May-02
Jan-02
Sep-01
May-01
Jan-01
Sep-00
May-00
Jan-00
Sep-99
Jan-99
0
May-99
200
Total
1 BDU = 1.20 BDT
13
© 2007 Wood Resources International, LLC
North American Wood Fiber Review UTILITY LOG PRICES - Western U.S. April - June 2007 Douglas-fir Ave
Range
Hem-fir Ave
Range
Pine Ave
Hardwood
Range
Ave
Range
Western U.S.
US$/green ton o.b. (delivered)
Washington, West
39
35-45
39
36-45
.....
.....
34
28-38
Lower Columbia River
35
28-42
36
28-45
.....
.....
40
32-45
Oregon, West
36
30-42
38
30-47
.....
.....
38
35-41
Idaho/Eastern Washington
37
30-45
37
30-45
37
30-45
.....
.....
Montana, West
43
30-50
43
30-50
43
30-50
.....
.....
Weighted Average
37 (28-50)
(SW Wa + NW Or)
37 (28-50)
39 (30-50)
37 (28-45)
SAWMILL RESIDUE PRICES - Western U.S. April - June 2007 Shavings Ave Range
Sawdust Ave Range
Hog fuel Ave Range
US$/BDT (delivered)
Washington West (Puget Sound)
.....
.....
38
22-40
24
10-30
Lower Colombia River
.....
.....
33
27-42
32
24-50
Oregon West (Willamette Valley) Northeast South
47 52 46
28-65 36-55 28-58
42 48 34
32-50 25-62 18-43
32 .... 31
23-46 .... 24-40
California
53
42-58
50
44-62
38
28-55
Idaho/Montana
41
29-48
47
29-59
35
18-48
Weighted Average
48 (28-65)
(SW Wa + NW Or)
43 (18-62)
29 (10-55)
Note. Prices are in dollars per BDT (eq. 2000 lb or 0.907 metric ton)
© 2007 Wood Resources International, LLC
14
North American Wood Fiber Review
Canadian Wood Fiber Market Update June 2007 A strengthening Canadian dollar impacts fiber procurement strategies
Wood Fiber Costs in British Columbia 1997-2007
140
BC, Coast BC, N. Interior BC, S. Interior Alberta
Can$/odmt (FOB sawmill)
120 100 80 60 40 20
/0 7 1q
/0 6 1q
/0 5 1q
/0 3
/0 4 1q
1q
/0 2 1q
/0 1 1q
/0 0 1q
/9 9 1q
/9 8 1q
/9 7
0 1q
According to WWPA's most recent statistics, the industry was running at 83% of practical capacity in March. This is likely to be lower in the 2Q as more sawmills, particularly in Interior BC and Quebec, have announced curtailments during the quarter. Lumber production in BC was 9% lower in March this year as compared to last year, while production in the rest of the country ran 15% lower than in March 2006. Even many integrated companies with both pulpmills and sawmills took the unusual step at curtailing lumber production despite the impact this will have on the internal wood fiber supply for the pulp manufacturing. This development has forced pulpmills all over Canada to increasingly rely on more expensive roundwood chips.
Increased reliance on manufactured chips in BC
15
© 2007 Wood Resources International, LLC
Historically most pulpmills in the Interior BC have relied on residual chips for over 95% of their wood fiber furnish, as the lumber industry is fairly large relative the pulp sector. As this supply source has diminished the past six months, many pulpmills have been forced to start up whole-log chip programs with increased utilization of smaller trees (mostly beetle-killed) and treetops.
Over the next 8-10 months it can be expected that the share of manufactured chips will increase to between 10-20% of the total fiber supply. Increasingly, coastal pulpmills are also hauling roundwood chips from the Wood fiber prices reaching seven year highs in Interior out to the coast, as prices are competitive with the high-cost volumes on the coast. Declining residual the western provinces volumes on the coast have pushed up pulplog prices In British Columbia and Alberta, chip prices have gone from C$32/ton for hem-fir a year ago to $52/ton in up for four consecutive quarters after dipping to the 2Q/07. record-lows in 1Q/06. Wood chip prices in the two western provinces are now at the highest levels in seven Wood fiber costs down in Eastern Canada years, with Coastal BC prices averaging over C$100/ odmt (FOB sawmill) while average prices in Alberta Wood fiber prices did not change much in Ontario and Interior BC were around C$80/odmt in the 2Q. and Quebec as the overall supply and demand were in balance. However, there were regional differences Assuming the Canadian dollar continues to strengthen within the provinces and some pulpmills have to inand pulp prices remain flat, wood chips prices could creasingly travel further, including into the US, to provery well decline a few dollars next quarter as many cure roundwood for chipping. Wood chip prices avpulpmills still use formula pricing based on mill net prices eraged just over C$135/odmt (US$124/odmt) down about 13% from a year ago. (in US dollars).
Canada
In the middle of June, the Canadian dollar reached 0.93 on the US dollar, and market analysts are predicting that the US and Canadian dollars will be on par later this year. With this strengthening of the Canadian dollar, now at an over 15-year record high against the US dollar, many Canadian companies both in the western and eastern provinces are struggling to keep their mills running. Few are profitable given the current lumber prices in the US market.
North American Wood Fiber Review
WOOD FIBER PRICES - Western Canada April - June 2007 WOOD CHIP Can$/BDU (FOB sawmill)
Douglas-Fir
Hem-fir
Ave Range
Ave Range
Spruce/pine/fir Ave Range
Ave Range
Cedar
85 67-95 82 75-94 113 103-135
85 82 .....
67-95 75-94 .....
..... 65 75
..... 57-69 65-90
.....
82
62-97
.....
.....
31 35 .....
23-36 25-40 .....
..... ..... .....
..... ..... .....
British Columbia North Interior South Interior Coast
Alberta
..... 82 106
..... 75-94 95-128
.....
.....
.....
ROUNDWOOD Can$/m3 ub (delivered)
British Columbia North Interior* South Interior* Coast
120
..... 35 44
..... 25-40 35-46
31 35 52
23-36 25-40 48-54
WOOD CHIP PRICES - Western Canada
Can $/BDU (FOB sawmill)
Canada
100
80
60
40
20
0 BC, Coast 1q/06
BC, N. Interior 2q/06
BC, S. Interior
3q/06
4q/06
Notes. * Only small quantities traded during this quarter Domestic chip prices in Can$ per BDU at sawmill Domestic log prices in Can$ per m3 (delivered) 1 BDU= 2400 Lb. = 1.09 metric ton (dry weight) Exchange rate: Can$ 1.11/US$ (Average for 2Q/ 2007)
© 2007 Wood Resources International, LLC
16
1q/07
Alberta 2q/07
North American Wood Fiber Review
WOOD FIBER PRICES - Eastern Canada April - June 2007 WOOD CHIPS Can$/odmt
Conifer
ROUNDWOOD Can$/odmt
Non-conifer
Conifer
Non-conifer
Ave Range
Ave
Range
Ave Range
Ave
Range
Ontario
135 105-155
82
76-96
165 125-195
90
78-110
Quebec
140 110-165
85
75-100
168 130-200
96
78-114
Maritime Prov.
96
na
na
105 65-118
83
70-100
200
72-115
CONIFER WOOD FIBER PRICES - Eastern Canada
180 160
120
Canada
Can$/odmt (del)
140
100 80 60 40 20 0 Ontario Chips
Ontario Roundwood 2q/06
Quebec Chips 3q/06
4q/06
Quebec Roundwood 1q/07
Maritimes Chips
Maritimes Roundwood
2q/07
Notes. Domestic chip and log prices in Can$ per odmt (delivered) 1 odmt (dry weight) = 1.102 short tons (dry weight) = 2204 lb Exchange rate: Can$ 1.11/US$ (Average for 2Q/2007) Sources: Industry contacts and the Wood Resource Quarterly (WRI, LLC)
17
© 2007 Wood Resources International, LLC
North American Wood Fiber Review
The Global Forest Industry - 1Q/2007 Excerpted from our sister publication Wood Resource Quarterly, a 48-page market report tracking global pulpwood and sawlog markets, including prices for most major wood-consuming regions around the world. See www.woodprices.com for more information. The Pulp and Paper Market The supply of softwood market pulp is continuing to be tight as many pulpmills in the Nordic countries, Canada and Western US have had difficulty running at full operating rates due to wood fiber shortages. As a result, NBSK prices have gone up this quarter, reaching $760/ton in Europe and $790/ton in the US. With many pulpmills taking maintenance shut downs in the spring, it can be expected that global pulp supply will continue to be tight and that pulp prices will strengthen further. The global production of market pulp was 3.1% higher in 2006 than 2005, and this trend continued in early 2007 when pulpmills, particularly in Latin America, ran at substantially higher rates than in early 2006. The only region that did not increase production in 2006 was North America, where the pulp sector in Eastern Canada was hard hit by high production costs and reduced wood fiber supply. The Lumber Market The declining trend in housing starts in the US that lasted for much of 2006 ended in November, and numbers have since then stabilized at around 1.5 million starts (seasonally adjusted annual rate). With lower housing starts, demand for lumber has been in decline for almost 12 months, resulting in continued reductions in lumber manu-
facturing. In early 2007, production in both Canada and the US was much lower than in 2006 and there are few signs that demand for lumber will pick up any time soon. With the lower demand for lumber in the US, imports fell by an astonishing 24% in January as compared to the same month in 2006. The biggest decreases in shipments were from Canada, Germany, Austria and Sweden. In March, lumber prices in the US were close to record low levels. The Random Length composite price for framing lumber was down 23.6% from a year ago. The lumber market in Europe is hot, with strong demand in western Europe and limited supply in the Nordic countries, in eastern Europe and in Russia. The tight market has increased lumber prices to recordhigh levels. Lumber consumption in Japan was higher this winter than last year, resulting in an increase in domestic production as well as a rise in imports. In January, imports were up from the US, Russia, Europe and New Zealand, while Canadian shipments were down almost 20%. Global Sawtimber Prices The WRQ Global Conifer Sawlog Price, based on sawlog prices in 18 major regions around the world, was up substantially this quarter, reaching a all-time high of US$82.31/m3 in the 1Q/07. This can be compared
© 2007 Wood Resources International, LLC
18
to US$72.71/m3 the same quarter in 2005, and to US$71.84/m3 in 2004. The biggest price increases this quarter occurred in western US, Finland, Germany and the Baltic States. The Global Average Wood Fiber Price The average global conifer pulpwood price was up 3.5% to $101.76/odmt in the 1Q/07, and as much as 16.8% from a year ago as fiber prices increased in practically all markets covered by the WRQ. Eastern Canada was the only region with both lower wood chip and pulplog prices this quarter. The average global price for nonconifer wood fiber was practically unchanged at $91.47/odmt with lower prices in Canada and Japan, while prices increased in Europe, Russia and Australia. The Wood Pellet Market in North America Wood pellet markets in the US and Canada have really taken off the past few years. Total production in North America increased sharply between 2003 and 2006, doubling from almost 900,000 tons to 1.7 million tons. This year, it is expected that production will reach approximately 2.3 million tons. Despite this dramatic change, the per capita consumption is still much lower than in Europe.
JAPAN Wood Chip Inventory
North American Wood Fiber Review
Wood Fiber Inventory in Japan - Conifer
700
600
1000 odmt
500
400 Inventory Change March, 2006 532,000 odmt March, 2007 505,000 odmt (-5.1 %)
300
200
100
1400
3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5 O ct -0 5 Ja n06 A pr -0 6 Ju l-0 6 O ct -0 6 Ja n07
pr -0
A
Ja n-
03
0
Wood Fiber Inventory in Japan - Non-Conifer
1200
800
600 Inventory Change March, 2006 1,092,000 odmt March, 2007 957,000 odmt (-12.4 %)
400
200
Ja n03 A pr -0 3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5 O ct -0 5 Ja n06 A pr -0 6 Ju l-0 6 O ct -0 6 Ja n07
0
Note. Data include total wood fiber inventory at domestic pulpmills, port yards and on ships.
19
© 2007 Wood Resources International, LLC
Pacific Rim
1000 odmt
1000
North American Wood Fiber Review
JAPAN Imports of Conifer Wood Chips
Origin
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07 Change q/q
Avg value
%
US$/odmt
1000 odmt
USA
153
210
204
201
145
133
-8
185
Australia
228
259
256
249
265
252
-5
145
New Zealand
62
48
43
53
48
57
19
143
Canada
36
55
68
77
73
80
10
156
Fiji
36
18
39
21
33
18
-45
138
Other
66
63
6
5
7
35
400
170
Total
581
653
616
606
571
575
0.7
157
-12.0
12.4
-5.7
-1.6
-5.8
0.7
Change from last quarter (%)
Imports of Conifer Wood Chips 2005/2006 Japan
300
250
1000 odmt
200
150
Pacific Rim
100 50
0 USA
Australia
1q/06
New Zealand
2q/06
3q/06
Notes. Average value in US$/odmt (CIF) Source: Japan Customs Statistics © 2007 Wood Resources International, LLC
20
Canada
4q/06
Fiji
1q/07
Other
North American Wood Fiber Review
JAPAN Imports of Non-Conifer Wood Chips
Origin
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07 Change q/q Avg value
1000 odmt
Australia
%
US$/odmt
1035
876
997
1034
968
1134
17.1
162
South Africa
747
754
650
688
666
646
-3.0
160
Chile
366
533
383
422
436
476
9.2
165
Brazil
193
137
137
160
102
220
115.7
168
Vietnam
199
166
184
179
192
209
8.9
146
Other
398
487
429
351
400
361
-9.8
145
Total
2938
2953
2780
2834
2764
3046
10.2
160
4.3
0.5
-5.9
1.9
-2.5
10.2
Change from last quarter (%)
1200
Imports of Non-Conifer Wood Chips 2005/2006 Japan
1000
1000 odmt
800 600
200 0 Australia
S. Africa
1q/06
Chile
2q/06
3q/06
Vietnam
4q/06
Brazil
Other
1q/07
Notes. Average value in US$/odmt (CIF) Source: Japan Customs Statistics
21
© 2007 Wood Resources International, LLC
Pacific Rim
400
North American Wood Fiber Review
Origin
SOUTH KOREA Imports of Wood Chips 4q/05
1q/06
2q/06
3q/06
4q/06
1q/07 Change Y/Y
1000 odmt
P.R. China
%
32
34
25
62
48
23
-32
0
41
53
0
24
43
5
Australia
20
55
0
25
52
78
42
Vietnam
24
12
20
40
14
40
233
Other
50
76
45
40
14
21
-72
Total
126
218
143
167
152
205
-6
-30.8
73.0
-34.4
16.8
-9.0
34.9
USA
Change from prev. quarter (%)
Imports of Wood Chips in 2005/2006 South Korea
90 80 70 1000 odmt
60 50 40 30
Pacific Rim
20 10 0 Australia
US 1q/06 2q/06
China Vietnam 3q/06 4q/06 1q/07
Source: Korean Official Trade Statistics © 2007 Wood Resources International, LLC
22
Other
North American Wood Fiber Review
TAIWAN Imports of Wood Chips
Origin
4q/05
1q/06
2q/06
3q/06
4q/06
1q/07
1000 odmt
Change q/q %
PR China
36
20
0
34
0
17
na
Australia
81
0
127
83
56
80
43
Indonesia
26
25
19
26
26
17
-35
Vietnam
17
51
40
31
46
26
-43
Other
0
0
0
0
0
0
na
Total
160
96
186
174
128
140
9
Change from last quarter (%)
-29.8
-40.0
93.8
-6.5
-26.4
9.4
Imports of Wood Chips in 2005/2006 Taiwan
140 120
1000 odmt
100 80 60 40
0 P.R. China
Indonesia 1q/06
2q/06
Australia 3q/06
4q/06
Vietnam 1q/07
Note. Average value in US$/odmt (CIF) Source: Taiwan Customs Statistics
23
© 2007 Wood Resources International, LLC
Pacific Rim
20
North American Wood Fiber Review
A Few Facts About the Global Forest Industry: Global Usage of Industrial Roundwood
Global Industrial Roundwood Usage Sawnwood 46.0%
Other Industrial Roundwood 7.7%
Composite Board 6.3%
Pulp 31.2%
Plywood 8.8%
Source: Wood Resources International LLC
Wood Fiber Consumption by the Global Pulp Industry
Conifer chips 27.0%
Non-conifer chips 8.5%
Non-conifer roundwood 29.4% Source: Wood Resources International LLC
Production Costs for Wood-Based Kraft Pulp
Production Costs for Wood-Based Kraft Pulp Wood 42.0%
Labor 15.0%
Chemicals 11.0%
Fiber Consumption by the Global Pulp Industry The global wood-based pulp industry relies on roundwood for up to 65% of its wood fiber needs. The logs are either from fast-growing plantations such as in Latin America and Oceania or from thinnings and tree tops in the slower-growing regions of North America and the Nordic countries. Residual chips are most commonly consumed in the US, Canada, Sweden and Finland as these countries have large sawmilling sectors.
Conifer roundwood 35.1%
Other 16.0%
Almost half of harvested industrial roundwood in the world is used to produce sawnwood, of which the majority is conifer species. Approximately 1/3 of the global roundwood removals are consumed by the pulp industry mainly in the US, Sweden, Finland, Brazil and Indonesia. Pulpwood removals have increased faster than that of sawlogs the past ten years resulting in a higher share of pulpwood harvests today than in the mid-1990’s.
Energy 16.0%
Wood fiber costs account for between 38-52% of the total variable production costs when producing chemical wood-based pulp. Pulpwood costs have traditionally been higher in North America and Europe than in regions with faster-growing plantations such as in Brazil, Chile and Indonesia. The spread in wood costs between the Northern and Southern Hemisphere has declined the past few years.
Source: Wood Resources International LLC
Production Costs for Conifer Sawnwood
Production Costs for Conifer Sawnwood Other 11.0% Labor 15.0%
Energy 4.0% Wood 70.0% Source: Wood Resources International LLC
© 2007 Wood Resources International, LLC
Wood cost is, by far, the largest cost component in the production of conifer sawnwood. Wood costs range from 60% to 75% of the total variable cost depending on the region of the world. Sawmills in North America and Europe typically do have higher wood costs both in real terms and as a percentage of the total production cost, as compared to countries with short-rotation plantations, such as Brazil, Chile and New Zealand.
24
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