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WhatWood Global Trends Review Global Trends Review, May 20-26, 2013: J-grade demand to decline slightly in Q3; high prices may cut Chinese deliveries of Canadian lumber in mid-term

Global Trends Review, May 20-26, 2013: J-grade demand to decline slightly in Q3; high prices may cut Chinese deliveries of Canadian lumber in mid-term

28 May 2013 ` 02:34  

Weaker lumber prices may hinder any further sawmill start-ups in North America, as reported by International Wood Markets. Until prices in North America stabilize, buyers in China and Japan are likely to act defensively, buying only fill-in quantities. Steady demand for softwood J-grade in Japan and limited supply have left prices flat, but producers expect a moderate downward trend in the third quarter, given recent market developments in North America.

China’s goal now is to become a middle-class society within the next 10-20 years. During these times a mass of people equivalent to the entire population of the U.S. will move from rural to urban areas. This will create ongoing demand for both new housing and infrastructure, as predicted by political scientist Wenran Jiang of the University of Alberta at the Wood Markets Global Softwood Log and Lumber Conference held on May 8 in Vancouver.

Lumber importer and distributor Chuck Chen of United Forest Products, Shanghai, reported at the event that even with the rise in prices Canadian softwood lumber will probably continue to enjoy its lead for the next two to three years. However, if price growth continues beyond a certain threshold, Mr. Chen believes competition from cheaper Russian, New Zealand and domestic wood will emerge to edge out higher-priced Canadian lumber, especially if U.S. market prices soar, as predicted.

It was also reported that Russian investment capital, mainly from government banks, is replacing the funding gap left by declining direct foreign investment. While log exports have dropped off, softwood lumber exports (particularly to China) have been growing. Russia also has a captive market in some of the eastern CIS countries due to a monopoly on rail access and as such is able to get better returns on its exports.

Twelve companies are listed in the “one billion board feet club” of softwood lumber producers developed by International Wood Markets. Given the strong potential for rising demand in the U.S., as well as Asia, North Africa and the Middle East, more companies should be added to the 2013 list, WM predicts. These are mostly European companies, some of which are past members of this list: SCA Timber, Mayr-Melnhof Holz and Moelven, as well as Western Forest Products. The list presents both nominal-size and net-size evaluation, as North American companies tend to evaluate lumber sales on nominal size, while other mills sell on a net count that may under-report total nominal production by up to 35%.

# Company Country 2012 Volume (bln bf,nominal) 2012 Volume (mln m3,net) Number of sawmills
1 West Fraser Canada




2 Canfor Canada




3 Weyerhaeuser USA




4 Stora Enso Timber Finland




5 Tolko Canada




6 Sierra Pacific Ind. USA




7 Hampton Affiliates USA




8 Resolute FP Canada




9 Interfor Canada




10 Georgia Pacific USA




11 Arauco Chile




12 Ilim Timber Industry Russia




  Total Top-12




  Total globally



European forest industries posted negative Q1 results

Swedish production of paper and paperboard fell by 2.4% in the 1Q 2013, while pulp output increased by 0.7% to three million tonnes in the 1Q 2013 on-year. Production of newsprint decreased by 12%, printing papers fell by 3%, while other paper and paperboard grades increased slightly.

Holmen has set the date for the planned machine closures in Sweden. The company reported it would shut down PM3 at the Hallsta mill and PM51 at the Braviken mill towards the end of September. Furthermore, Holmen plans to temporarily reduce its available capacity in Sweden by 10% during the third quarter due to conversion and adaptation to the new structure. When explaining the decision, Holmen pointed to considerable losses in the business. “The extensive capacity cuts announced will gradually lead to a better market balance in 2013,” said Henrik Sjölund, head of Holmen Paper. PM3 at the Hallsta mill has an annual capacity of 140,000 tonnes of SC paper, with the closure of PM51 at Braviken, Holmen reduces its newsprint capacities by 200,000 tonnes. The company reportedly intends to increase the focus of its Swedish operations on specialty paper grades.

Finnish paper and paperboard production came to 2.7 million tonnes in the 1Q 2013, up 2.8% from the corresponding period of 2012, Finnish Forest Industries Federation announced. 750,000 tonnes of paperboard were produced in January-March, up almost 17% on-year. Graphic paper production came to 1.6 million tonnes, down 3.4% from January-March 2012. Export prices have been falling since last autumn. The situation remains extremely difficult in the market for printing and writing papers as the structural change continues. Q1 pulp production amounted to 1.8 million tonnes, up 3.7%, with domestic deliveries growing and export falling by 20.5%. The market price of pulp has been increasing since last autumn.

Lumber output in Q1 in Finland reached 2.5 million cubic metres, up about 10% from the previous year. Around 270,000 cubic metres of plywood were produced; this is 8% more than in the corresponding period of 2012. Plywood demand has been showing signs of recovery and plywood mills have been calling off layoffs. A recent report on the construction industry of Finland estimates that Finnish building activity will continue to decline by 3% in the current year. Growth is not expected before 2014.

The Finnish forest industry purchased 6.7 million cubic metres of timber in January-March, up about 7% from the corresponding period of 2012. Sawlog purchase volumes increased to 2.9 million cubic metres and pulpwood procurements to 3.6 million cubic metres. Stumpage prices rose.

Meanwhile, European output of particleboard, MDF/HDF and OSB all fell last year, according to EUWID Wood. Preliminary figures released by the European Panels Federation (EPF), which include EPF member countries apart from Turkey and Russia, show that European particleboard production slipped another 5% to 28.5m m3. Some 66% of the particleboard made last year was used in furniture production, 23% in construction applications and 11% in other areas. MDF/HDF production also dipped by 6% to 11m m3 last year after growing slightly in 2010 and 2011. OSB output was down 2.3% compared with the previous year to stand at 3.6m m3. Total output of all three products thus decreased 5% to 43.1m m3.


The US Department of Commerce imposed preliminary anti-dumping duties after an investigation into hardwood plywood imports from China was launched at the end of September 2012, EUWID said. Preliminary countervailing duties (CVD) were also authorised back on 27 February. The US Department of Commerce will make a final ruling about whether to impose anti-dumping and countervailing duties on 15 July. In late February, there was speculation that this decision might be delayed. If the Department of Commerce does decide to impose duties, the International Trade Commission will make its final verdict on the duties on 27 August. The dumping brackets determined by the Department of Commerce and the resulting anti-dumping duties range from 22.14% to 63.96%. Minimal dumping ranges of 0.62% and 1.83% were put forward for two companies. These companies were exempted from the anti-dumping duties under de minimis rules.

Unbleached kraftliner has become more expensive in the UK in May, reported EUWID Paper. Buyers and manufacturers confirmed that prices had jumped by £25/t with effect from 1 May or 15 May. The market was described as largely balanced in May. One company is already planning to raise prices again by £15 or €20 for both the UK and mainland Europe in May or June. Negotiations about charging more for white-top kraftliner were less successful. With rising demand, prices still did not edge higher in May.

Prepared using corporate press releases, International Wood Markets, ITTO, EUWID Wood and EUWID Paper.

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