Global Trends Review, July 08-14, 2013: improvement on the construction market; second biofuel generation coming

UK, Germany and the US have reported positive housing statistics recently. The UK’s largest builders group – the Federation of Master Builders (FMB) – says its latest state of trade survey shows the net balance for workloads, expected workloads and enquiries in the second quarter was positive across most of the UK for the first time since 2007, as TTJ said. Construction Products Association’s own latest state of trade survey indicates that construction product sales recovered in the second quarter, principally due to a bounce following the Q1 slump.

Swedish company Södra managed to reduce its operating losses considerably, from SEK 202 million to SEK 29 million in the first half of 2013. It cited an improvement in lumber production volumes and prices, as well as more advantageous dollar and euro rates against Swedish krona. Södra produced 772,000 m3 of sawn timber in the first half, up 52,000 m3 on last year. The Värö mill will increase production to three shifts in October.

Norwegian Moelven recorded an operating profit of NOK 11 million, which is significantly better than the first quarter. “Better prices and a stronger euro are two significant contributors,” company CEO Hans Rindal said. “At the same time, there have been improvements in operations in several areas. The development appears to continue in the third quarter.” However, lower levels of new construction in Sweden have resulted in fewer deliveries of glulam for private homes.

Softwood lumber prices in Austria in June were growing. Comparing to May 2013, prices have generally increased by about one euro per cubic metre. Year-on-year, square timber appreciated by around €5/m3, while 23-mm board price increased by €3-4/m3.

From 2011 to 2012, laminated timber production grew by 8.6% to 432,000 m3. For the first time since 2008, growth remained single-digit, as Holzkurier said in its market review. The industry is currently taking a deep breath between two investment waves. New major productions such as Stora Enso’s (60,000 m3/year) did not go online. The most important start-up was the one of Hasslacher Norica Timber in Carinthia. Yet there is much speculation and rumour about new projects going on. In the first quarter, many manufacturers complained about the prices. As a result, start-ups of several completed new lines were postponed.

The CLT sector of this market is highly concentrated, Holzkurier notes. The top three manufacturers (Stora Enso, KLH, Binderholz Bausysteme) will provide more than 50% of the total production in Central Europe this year. A survey conducted by the Technical University of Graz predicts CLT production to be around 600,000 to one million m3 in 2015. By then, at the latest, CLT will be a common-place commodity product and its manufacturing shouldered by a greater number of producers. At the time, Austria’s supremacy on the CLT front remains unchallenged: 360,000 m3 will account for more than 70% of European production this year.

Second biofuel generation coming

The energy company RWE will shut down its biomass power plant in the UK due to low electricity demand and electricity prices. The 750-megawatt plant in Tilbury, located east of London, on the River Thames, will now be closed at the end of October, the company said. Substantial investment would have been needed so that the plant could operate for longer, said a company spokesman. The company must reduce its spending because of high debts, mainly caused by the acquisition, in 2009, of the Dutch Essent utility for €7 billion. The Tilbury plant was established in 1969, operating as a coal-fired plant. Since 2011 it was completely converted to biomass to reduce CO2 emission. It is the largest biomass power plant in the world. The annual consumption of wood pellets of the plant is around 1.3 million tonnes, mostly coming from own production in Georgia, USA (750,000 tonnes) and British Columbia, Canada. Other power plant closures may be announced once the 2Q/2013 results are published.

At the same time, another biogas study is being implemented. Bavarian researchers are working on feeding wood biogas into the public natural gas grid, as Holzkurier reported. The Institute for Energy Research (Autark) started cooperation with Agnion Energy in early June. The aim is to develop a catalytic gas cleaning system for the Heatpipe-Reformer (HPR). In addition to generating electricity and heat this would open a gateway to producing methane gas from wood and biogenic, solid waste which is pure enough to be fed into the public grid. The high degree of purity is reached by downstream catalytic gas cleaning which removes contaminants such as sulphur and hydrocarbons from the synthesis gas.

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Double A enters the dissolving pulp market in response to significant growth of this market and global demand at many enterprises. The company has invested $6.1 million to upgrade its pulp production line in Thailand to supply the world’s textile industry. The machine will commence commercial production at the beginning of 2014 with 175,000 tonnes annual capacity. The first 100,000 tonnes output will be exported to China.

In 2012, global demand for dissolving pulp, a viable alternative for cotton, has reached 6 million tonnes. The favourable trend is expected to continue in the next two years with an annual growth rate of 9%, Double A said. Global demand is projected at 6.9 million tonnes in 2014. China is the world’s largest production base of viscose fibre. In 2012, 60% of world’s total viscose fibre output was produced there. Asian and especially Chinese demand for dissolving pulp will remain strong, which is due to the limited domestic supply of fibre, increased production of garments and the short supply of cotton. The company therefore regards China as the major sales market.

The duty-free quota for softwood plywood imports into the EU is almost depleted, EUWID Wood Products reported. According to the DG Taxation and Customs Union, only 16,503 m3 of the total volume of 650,000 m3 were left at the end of the previous week; another 3,443 m3 have already been registered for allocation. More than 4,000 m3 of the quota were filled every workday since the start of July.

FSC and PEFC fight plans for “third” global certification standard, TTJ said. The two organisations issued a joint statement calling on members of the International Organisation for Standardisation to vote against a proposal for an ISO standard to be developed for certified forest products. While FSC and PEFC have previously been involved in some of the same initiatives and working parties, and co-operated during the London Olympics, this is the first time the two have acted together. They account for 98% of the world’s certified forests and chain of custody certificates. “Both PEFC and FSC strongly believe that an ISO chain of custody standard would not add value to global efforts to promote sustainable forest management through forest certification,” the statement said.

Prepared using corporate press releases, Holzkurier, Timber Trades Journal and EUWID Wood Products.