Global Trends Review, October 07-13, 2013: EU lumber prices growing, Japan seems oversaturated, South Korea emerging

According to Fordaq, first-class lumber on ex-works terms in France costs €240-245 in October, second-class squared timber – €187-193, so generally lumber is 1-3% more expensive than in January 2013. The French sawyers doubt whether the upward trend will go on, after they have discovered in the course of the summer an improved volume of orders and increased prices for softwood timber.

In September, lumber has also continued price growth in Austria by about €1-2 per m3. Squared timber of standard dimensions cost €211-218 ex-works, while edged and rough boards were on a slight downward trend: €231-243 and €229-239 respectively.

Holzkurier reports that Japan starts to be oversaturated, and Austrian and Romanian lumber producers who enjoyed heavy growth in exports are now feeling that it is over. Through retailers, even small and medium-sized sawmills had the opportunity to benefit from the booming demand and price increases associated with it this year. Stora Enso and Holzindustrie Schweighofer who have traditionally been Austria’s main suppliers to Japan are having bad times there. Prices in September fell by €30-40/m3.

Meanwhile, South Korea has become a new promising softwood lumber market for Central European sawmills. The pace of growth is remarkable: from January to July, Austria shipped 18,000 m3, which is four times higher on-year, while Germany increased Korean sales five times to 78,100 m3. Drivers of this trend appear to be pine sawmills: for instance, German pine volume exported to South Korea in Jan-Jul 2013 amounted to 52,000 m3.

Due to the steady improvement of the lumber market, Canadian company Eacom is going to prepare re-launch of its lumber mill at Ear-Falls in the 1Q 2014, starting with establishment of sawlog stocks.

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Together with the research institute Innventia, ifoodbag – a spin-off from KTH company – is developing a food bag made of paper packaging that can refrigerate and freeze provisions for up to 24 hours. The concept entails simpler and cheaper transport of refrigerated goods, less food waste, increased quality of foodstuffs and less need for additives.

Asia Pulp & Paper Group loaned $1.8 billion from China Development Bank for the construction of Indonesia’s largest pulpmill. The total investment in the new mill, located in South Sumatra, is $2.6 billion. Indonesian government intends to become the fifth largest pulp and paper producing country by 2025, in line with the Indonesian Economy Acceleration and Development Expansion Masterplan. The mill will be constructed in an under-developed part of South Sumatra province and will have a projected annual capacity of 2 million tonnes of pulp and 500,000 tonnes of tissue. The company will only use plantation wood for its raw materials, and is committed to zero deforestation in its supply chain.

Norske Skog announced in a press release that it has agreed to sell its Singburi newsprint mill in Thailand to a Thai company for $33 million. The Singburi mill has a total newsprint production of approximately 125,000 tonnes, and is the sole producer of newsprint in Thailand. Back in July, Norske Skog sold 51% shares of its Pisa mill in Brazil to Papeles Bio Bio S.A., which is controlled by Group BO/Pathfinder, a consortium of Chilean investors. The purchase price was $41.3 million. Norske Skog reported weak results in the second quarter of 2013. The company’s revenues were influenced by lower selling prices and volumes, which determined an almost 50% decrease in gross operating earnings (EBITDA).

In August 2013, Latvia’s wood and wood products exports increased by 15.2% over July, says HD FestForest. Sawnwood exports grew by 24% compared to July, with top destinations such as the UK (€12.8 million), Germany (€4.2 million) and Egypt (€3.5 million). As wood products have a major importance in Latvia, the rise registered in August contributed to an overall 6.6% increase in the value of goods produced in Latvia and sold in international markets.

As of October 1, trucks with a total weight of up to 76 tonnes are allowed on Finland’s roads. Thus, the 60 tonne-limit which had been valid previously was now raised by 20%, Holzkurier says quoting online industry magazine NTT. Sweden will probably follow the suit. The managing director of the Swedish wood industry association said that the measure would reduce fuel costs by 10%. In addition, the number of trucks required would be reduced by a fifth. The actual reason for the truck weight increase in Finland is the sulphur directive. As of 2015, no fuels with sulphur content higher than 0.1% may be used on the Baltic Sea. This measure significantly increases the cost of water transport. Enhancing the truck weight limit was intended to compensate for the additional costs, but it is not without controversy. The Finnish Transport and Logistics Association Skal has issued a statement saying that a weight limit of more than 64 tonnes would wear out the infrastructure too much.

For the first time since 2008, FSC has increased its fee paid as part of annual FSC certification audits. FSC said it hoped the changes, driven by increased demand for its services, would be well received by stakeholders. It needs to channel more funds into local market development, building capacity locally, regionally and internationally, as well as growing its focus on risk management in insecure markets. The Timber Trade Federation (TTF) in United Kingdom has produced a breakdown on fee increases for members, saying it understood that there would be concerns at the rate of the increase in the current tight trading conditions. The largest UK timber companies (£100-500 million annual turnover) with multi-site chain of custody (CoC) certificates and which have processing operations will see their annual fee rise by 34% to £2,930, while “traders” (FSC-certified companies who buy and sell certified products without making any changes to them) in the £5-25 million turnover and single site CoC certificate category will incur a 33% hike to £249.

WhatWood’s reviews are prepared using corporate press releases, Holzkurier, Timber Trades Journal, Fordaq, EUWID Wood Products, ITTO, ForestTalk, and EUWID Paper.