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WhatWood Global Trends Review Global Trends Review, April 08-14, 2013: Housing market drives capacity changes

Global Trends Review, April 08-14, 2013: Housing market drives capacity changes

15 April 2013 ` 23:44  

Since April 15, 2013, WhatWood launches English version of Global Trends Review, as announced earlier.

Sawlog prices in Europe were generally lower in 2012 than in 2011 because of lower log demand from the sawmilling sector, as reported in WRI’s Wood Resource Quarterly. Many sawmills on the continent have been forced to reduce production as a result of the weak lumber market. Log prices fell the most in the Nordic countries, while prices in Eastern Europe were steady or even slightly higher toward the end of 2012.

Wood price trends in Europe

Sawlog prices have trended downward in most major markets in Western Europe the past two years in US dollar terms, but this trend was broken in the 4Q/12 when prices increased slightly mainly as a result of a weakening US dollar. In the local currencies, log prices were practically unchanged in the 4Q/12. The biggest price declines have been seen in Sweden where pine sawlog prices fell over 15% from the 4Q/10 to the 4Q/12 in both the local currency and in US dollar terms. Spruce log prices have declined over 25% during the same time period. In Finland, Germany and Norway, prices have dropped a more modest 5-10% over the past two years. Sawlog prices fell during 2012 because sawmills were cutting back production in response to the weaker demand for lumber throughout Europe.

While log prices have fallen in both US dollar terms and local currencies the past two years in Northern and Central Europe, prices for sawlogs in the 4Q/12 in Eastern European countries, including Estonia, Latvia and the Czech Republic, were generally higher than in 2011. This development has mainly come as a result of the relatively strong lumber export market which kept the log markets healthy. The only major market in Eastern Europe where log prices have fallen has been Poland. From the 2Q/11 to 4Q/12, average prices have fallen over 20% and the country has now some of the lowest conifer sawlog prices in Europe, according to the Wood Resource Quarterly.

As a consequence of slowing lumber production, log trade declined in Europe during 2012, which also had a dampening impact on log prices on the continent. Net log imports to Western Europe fell from over 14 million m3 in 2011 to an estimated 10.8 million m3 in 2012. Much of the decline in imports was those from Russia and the Baltic States. Sawlog prices might be close to the bottom in the 1Q/13, and they are likely to remain at these levels as long as the European demand for lumber continues to be weak.

During the second half of 2012, the volume of purchased coniferous logs in Latvia has diminished by 9%, The Baltic Course reported. The largest sawmills faced rather difficult situation in respect to the provision of coniferous tree sawlogs. Supplies were clogged because truck movement on small roads was encumbered. As a result large volumes of timber were not transported away from the felling areas, thus obstructing further activities of the loggers.

Meanwhile, small sawmills admitted that the supply of round timber is sufficient. Some enterprises in Kurzeme region even limited reception of supplies because of the large stock of round timber.

Currently in Latvia, due to the low purchase prices of pulpwood, coniferous tree cutting areas are felled less, resulting in insufficient availability of coniferous tree sawlogs.

Average price of pine pulplogs in the second half of 2012 in Latvia amounted to 27.55 LVL per cubic meter. Middle-sized sawlogs cost 39.77 to 43.55 LVL, while large sawlogs – 44.85. For spruce, the corresponding prices were 30.07, 41.58-45.09 and 46. Middle-sized birch sawlogs cost 36.4 LVL, large ones – 39.1, A-category veneer logs – 44.5 LVL.

Housing market drives capacity changes

Over the next few years Georgia-Pacific intends to invest $400 million in the modernisation and expansion of its plywood plants and sawmills. The objective is to improve productivity and timber yields by optimising the existing production lines and installing additional equipment. Georgia-Pacific intends to improve the production capacities for plywood and lumber by a total of 20% as a result of these measures.

The investments are to be implemented mainly at locations in the south and south-east of the USA. The locations and the precise measures are to be stipulated within the context of the project planning which is just commencing. The individual investment projects, according to Georgia-Pacific, will get underway during the course of the second half of 2014. The precise schedule will depend on such factors as the choice of location and the rate of progression in handling the approval procedures required.

The company is also starting OSB mill in South Carolina, purchased from Grant Forest Products, as ForestTalk reported. The company spent $30 million on the Clarendon facility in 2011 to upgrade it with state of the art equipment, but didn’t announce its intentions to start operations until late in 2012. Now that Georgia-Pacific needs to increase their OSB production to meet rising needs of the US home construction industry, the Clarendon facility will become operational. Because of the new equipment, the entire production line is automated and computerized so just 25-27 employees will be required on each shift, for a total of 130 employees.

The British sawmill company BSW Timber commissioned a new sawing line at its Fort William site on 12 February, TTJ said. The HewSaw SL250 Duo line from the Finnish plant manufacturer Veisto boasts annual sawing performance of 500,000 m3 of roundwood and according to BSW will be subject to a gradual start-up in the coming weeks. The plant is to reach full-capacity operation during the course of the second quarter. In addition, BSW is planning to set up a new roundwood sorting line in Fort William and relevant negotiations are currently being conducted with suppliers. Orders for the new line are to be placed within the next six months.

Meanwhile, UPM has set the date for the PM closures at the Rauma and Ettringen mills. The two SC paper machines will be shut down by the end of this month. UPM will permanently shut down its graphic paper machines PM 3 in Rauma, Finland and PM 4 in Ettringen, Germany by the end of April. UPM furthermore reported that negotiations concerning the streamlining of the Paper Business Group and global functions had been concluded in Finland but were still on-going for global functions in other countries.

The PM closures are part of UPM’s plan announced in January to shut down 580,000 tpy of graphic paper capacity in Europe. Against the background of structural changes and overcapacity in European graphic paper markets, the company pointed to declining demand for the affected paper grades and the necessity to reduce supply. PM 3 in Rauma in Western Finland can produce 245,000 tpy of SC paper. The total capacity of the mill amounts to 1,210,000 t of LWC and SC paper. PM 4 in Ettringen has an SC paper capacity of 175,000 tpy. With currently two production lines, the site can produce 460,000 t of uncoated magazine paper. The selling processes for the Docelles and Aigrefeuilles plants in France are still on-going. In January, UPM said it intended to either sell or close its Docelles mill with a capacity of 160,000 tpy of woodfree uncoated paper. The company had also announced to part with its further processing business within its Timber division in France and to sell a sales office in Lagord as well as its Aigrefeuille plant as a result. The site in Aigrefeuille d’Anuis has a capacity of 45,000 m3 of planed products.

Finnish wooden building manufacturer Tammiwood Ltd has bought the real estate and machinery at UPM’s recently-closed Aureskoski further processing mill. Tammiwood, part of the Tammiston Puu Ltd timber garden products manufacturing group, aims to start production at the Parkano-based Aurekoski mill in the autumn. “Aureskoski mill complements our production network and enables a wider product range,” said Markku Heinonen, Tammiwood’s managing director. The UPM mill, which produced interior wood panels, closed last December. The sale price has not been disclosed.

Norwegian book paper producer Hellefoss AS, its affiliate, pulp producer Vafos AS, and their parent company Hellevad AS filed for insolvency on 5 April, managing director Trond Lindborg confirmed to EUWID. Both mills were presently offline, but the company was working urgently to resume production as soon as possible, Mr Lindborg said. However, the company first needs to come up with financing. Mr Lindborg said that the firm was currently exploring any and all options to get production up and running again. Talks were under way with potential investors. The creation of a new company to maintain production was not being ruled out, either.

Hellefoss AS is an integrated manufacturer of book paper from mechanical pulp. Its paper machine has a capacity of 50,000 tpy, the mill has been in existence since 1898. Vafos AS solely makes unbleached mechanical market pulp and has a capacity of 75,000 tpy. Founded in 1889, the company started struggling after it lost a major customer at the start of the year. However, Vafos is currently working to land new customers and strengthen its presence in markets outside Europe, noted Trond Lindborg. Vafos also wants to offer new types of bleached mechanical pulp in the future. Development work has been very promising to date, he continued.

Wepa is going on with its cost and capacity cutting initiative in Italy. Wepa Lucca, the Italian subsidiary of the German tissue and paper products manufacturer Wepa Group, has sold the Piano della Rocca tissue mill to the Italian tissue company Roto-cart. A corresponding agreement had been signed on 29 March, closing of the deal was expected by the end of April, Wepa said. Financial details of the transaction were not disclosed. Piano della Rocca is one of the two tissue mills in the Lucca province that had been put on sale in 2012 as a part of Wepa’s capacity restructuring programme in Italy. Piano della Rocca runs one machine with an installed capacity of 29,000 tpy of tissue and employs 33 people.

As far as regards the 18,000 tpy Fabbriche di Vallico tissue mill, Wepa said the mill was still up for sale, but the company declined to provide further details on the sale process. Production at the Fabbriche di Vallico site had been idle since mid-2012 with 25 employees temporarily laid off or transferred to one of the other sites in the region, the company explained.

In the liquidation procedures for the Spanish chipboard manufacturer Tablicia and the affiliated MDF manufacturer Inderpanel, underway since mid-December 2012, the responsible commercial court in Lugo has set an initial deadline for the submission of offers. The bidding phase began at the beginning of March and ends at the end of April for Tablicia and at the beginning of May for Interpanel. The insolvency administrator would prefer to sell the two companies as a package. The sites have been set on a combined selling price of at least €21 million, comprising roughly €9m for Tablicia and around €12m for Interpanel. This is the sum required to satisfy at least the claims of the senior debt holders and pay outstanding wages and salaries.


Nippon Paper Industries Co., Ltd. has decided to implement a biomass power generation project using 100% unused woody materials, making it the first project of its kind in Japan. New wood biomass power generation facilities will be constructed at the Yatsushiro mill and launched as a new energy business from spring 2015. The wood biomass power generation facilities will be newly constructed at the site. To achieve sustainable growth into the future, Nippon Paper Industries is working to transform its business structure as a comprehensive biomass company by pursuing the development of businesses other than paper manufacturing. This biomass power generation project using 100% unused woody materials will leverage Nippon Paper Industries strengths, among them long-developed techniques for operating power generation facilities, expertise in forest operations such as the management of company-owned forests, and technologies for producing woodchip of consistent quality.

The contract with one of the world’s leading speaker manufacturers comes shortly after UPM said it wanted to extend the reach of ForMi in the furniture and construction industries. Finland-based Genelec said ForMi – made from raw pulp and 50% virgin plastic – was easy to mould, had excellent acoustic features and environmental credentials and did not require grinding or surface treatment, enabling a more efficient production process. Genelec will produce two M series speakers using ForMi. UPM predicted this material would soon replace chipboard as the main raw material in Finnish kitchen unit frames, while the company is also targeting the construction sector, with 3mm ForMi sheets touted as a possible replacement for 12mm chipboard.

Andritz Group will upgrade board machine #2 and the related stock preparation systems for Kartonsan Karton Sanayi ve Ticaret A.S. in Izmit, Turkey, and thus increase duplex and triplex board production from 100,000 to 160,000 t/a, company said in a statement. The start-up is scheduled for the second quarter of 2014.

US softwood plywood imports and exports headed in opposite directions last year. Figures from the Foreign Agriculture Services (FAS) show that imports fell 11 % to 384,970 m3, while exports grew 13% to 468,379 m3. The value of these imports stayed almost unchanged at $169.8m despite the sharp drop in volumes; the value of exports surged 17 % to $184.0m. The overall drop in plywood imports can be traced back solely to the 32% year-on-year fall in South American shipments to 232,221 m3.

The Malaysian Timber Industry Board (MTIB) has since February 2013 been conducting a test run for the Malaysian Timber Legality Assurance System (MYTLAS). Malaysian exporters can apply to participate in the test run on the internet site of the MTIB and are then granted an MYTLAS licence by the MTIB. The MYTLAS licences are to ensure traceability of timber exports from Malaysia and thereby serve to document the legality of felled roundwood. The MYTLAS was developed on the basis of the Timber Legality Assurance System drawn up as part of the negotiations on a Voluntary Partnership Agreement (VPA) between the EU and Malaysia. However, it has not yet been possible to conclude the VPA negotiations. As long as the Malaysian VPA is not signed and does not come into force, European importers still have to continue to conduct obligatory due diligence checks for timber deliveries with MYTLAS licences.

Prepared using corporate press releases, Timber Trades Journal, ITTO, Wood Resources International, ForestTalk, EUWID Wood, The Baltic Course and EUWID Paper.

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