Global Trends Review, April 15-21, 2013: New products for the recovering construction industry

The spring forecast by the Pellervo Economic Research Institute (PTT) in Finland predicts rising softwood lumber exports and higher selling prices for 2013, EUWID Wood reported. The profitability of the Finnish sawmilling industry is expected to ameliorate generally. According to PTT, sawmills are currently profiting from an adequate supply of logs and comparatively good sales opportunities on a variety of sales markets outside Europe. The strength of the Swedish krona is also enabling Finnish works to remain more competitive than softwood lumber producers in Sweden where exports are concerned. PTT is expecting Finland’s output of softwood lumber and its exports to rise by 3-5% this year.

New products for the recovering construction industry

London Softwood Club guest speaker Carsten Kullik told club members that he thought the large exporting mills in Germany were likely to secure their future, despite concerns over industry log availability and several mills being under bank control, TTJ reports. Owner of an international timber agency, Kullik said that sawmilling industry in Germany is under recovery and forecast to increase slightly in 2013, but would still be well below the peak years.

The situation in Japan has developed in the last three months and it is going to be, for a while, a good place to sell timber. In the US, the 2×4 composite price was €130 delivered. But that has increased to €220 ex-mill in the last eight weeks. North American prices are higher every day. The US market was recovering and the big German sawmillers were already shipping to the US, he said.

Mr Kullik said German domestic demand had also picked up. “When combined with the export situation, this makes the whole mood of the industry in Germany very good at the moment. So I think the sawmill industry can get out of the disastrous situation that it had got into in the last five to six years,” he said.

When asked by traders about the viability of the large mills, Mr Kullik said two mills were currently under bank control. He said some prospective buyers were interested in buying one of these, while the other planned to look for a buyer in 2015. “I do not think the sawmills will close – not the big players,” he added.

Preliminary figures in Germany also indicate that manufacturing of HDF rose sharply by 17.8% in the fourth quarter of 2012 to 569,486 cu m, EUWID Wood says. Looking at all four quarters, 2012 ended with a 13.3% hike in HDF production to 2.3 million cu m. Meanwhile, parquet and wood flooring manufacturers belonging to the German Parquet Industry Federation booked another slight decline in output in the fourth quarter of 2012. Production was 0.7% below the prior year at 2.3 million sq m. This came after production increased in each of the first three quarters.

The market situation fosters development and sales of new materials. Anglo Austrian X-LAM Alliance (partnership of B&K Structures and Binderholz) reported turnover for the last financial quarter 50% up year-on-year. “Demand for cross-laminated timber is growing rapidly as the construction sector increasingly recognises its aesthetic qualities and other multiple benefits,” said B&K managing director Nick Milestone. “Last financial year 45% of our projects used CLT. That has increased to 70% in the first half of this financial year.” Two recent X-LAM projects include Furness Academy, its biggest contract to date using 3,000 cu m of CLT, and Cambourne College, comprising 1,000 cu m. The business now has a range of other new projects.

Pollmeier company sets sights on UK with its new beech LVL, according to TTJ. The company, which recently restarted construction work on its €70 million Creuzburg LVL factory following the end of severe cold weather, is also planning a UK campaign targeting architects and specifiers with the product. Pollmeier has developed beech LVL to challenge softwood glulam beams and softwood LVL and give architects an option to use a higher strength timber beam where they might otherwise opt for steel or concrete. “The UK will be one of the first targets,” said Jan Hassan, Pollmeier marketing manager. The UK’s increasing use of glulam was one of the primary reasons for being highlighted, he added. The Creuzburg factory will have a 150,000 cu m finished product capacity when it is completed by the end of 2013 and products will be available by the start of 2014.

The company says its beech LVL has a bending strength almost three times that of softwood glulam and one-and-a-half times that of softwood LVL. “We are quite sure there is no product anywhere on the market that will come close to our product’s strength,” added Mr Hassan. “It will be competitive pricewise with softwood glulam.” He said producing beech glulam was too expensive because of the cost of drying hardwood, but Pollmeier’s highly automated industrial-scale production and drying of 3mm veneer sections for LVL was more cost-effective. Mr Hassan said while the company’s traditional beech markets were OK at the moment, no big growth was envisaged in the foreseeable future.

UK timber imports fell 7% in January. Solid wood imports fell by 15%, while panel products were up about 9%. The hardwood sector saw a 31.8% reverse in import volumes during the month, with Germany registering a 42% increase in market share to 10% of total hardwood imports. Hardwood plywood volumes were up by 25.7% to 72,000 cu m, with China taking a 57% share of the imports. Russian and Malaysian volumes were marginally higher but slightly lower from Finland and Latvia.

The UK was the only country among the top six hardwood mouldings importing nations to register an increase last year. The Netherlands saw a 33% reverse in imports, Belgium a 24% fall while France, Italy and Germany recorded 16%, 15% and 11% reductions respectively. Among the top five supplying countries, China was the only nation to register an increase in exports to the EU – 10%. Market leader Brazil saw a 20% fall, while the next largest exporter Indonesia recorded a 29% decrease. Malaysia and Ghana also experienced reductions of 32% and 22% respectively. Overall EU imports of hardwood mouldings fell 20% to 290,000 cu m.

Housing starts in Japan increased by 3% in February 2013, ITTO reported. Despite the decline in the pace of growth, February figures were better than the expected 2% decline. The better than expected numbers were the result of improved consumer sentiment, low interest rates and firm demand as home owners try to beat the planned sales tax increase due next year. Major house builders reported that orders in February rose over 16% compared to February 2012. According to EUWID, in Q1 2013 European softwood-lumber suppliers showed a level of brisk demand unexpected in this form on the Japanese market. This was contrasted by generally limited supply, but recent weeks have seen successive rises in production activity among European consignors.

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German Pellets is further expanding its production capacities in North America. The company is going to construct a mill in Louisiana with rated output at one million tonnes of wood pellets per year. The company’s first US mill is going to start in April in Woodville, Texas. Its rated capacity will be twice as lower. “Pellet consumption worldwide is on the rise, especially in Europe. This means that the construction of large production capacities is necessary,” said German Pellets CEO Peter Leibold. The demand from the European power market for the production of heat and electricity from wood pellets has risen sharply. There is also an increasing demand for wood pellets among private consumers and large-scale users, for example for supplying heat to hospitals, schools, commercial buildings and industrial facilities. The company will deliver goods to Europe through the harbour of Port Arthur on the Gulf of Mexico where it operates storage and loading systems.

Drewsen Spezialpapiere (Germany) raises prices for uncoated woodfree papers as from May 01, 2013, by €25-30 per tonne depending on market segments. A price adjustment has become necessary due to continued increases in pulp pricing as well as higher energy costs, company says.

Metsä Wood launches new cost-cutting programme. In a statement, the company said it would reorganise operations by merging the plywood and building products divisions into a Building and Industry business line, while the timber and “upgrades” divisions will continue in existing form. Metsä said “significant synergies” would be sought from combining operations in the whole company. The Finnish-based company says that the restructuring will result in up to 255 job losses, up to 150 of those could be in the UK. The company identified its UK I-joist and pole processing businesses as well as Finnish glulam operation as non-core and will now subject them to “strategic analysis”. Casteljaloux sawmill in France is also up for sale. If a buyer is not found in two months, the business will be closed.

The latest data on new yuan loans from the People’s Bank of China (Central Bank) indicates that the growth in loan has accelerated suggesting the Central Bank is carefully balancing credit availability to support economic recovery. During March new domestic yuan loans were over $180 billion, well above analysts’ expectations. Asian Development Bank (ADB) said that growth in the Chinese economy will rebound in 2013 but could level off in 2014. The press release says strong consumption and fiscal spending in China will fuel a rebound in growth in 2013, but government efforts to deliver sustainable, quality growth will hinder the pace. ADB’s publication, Asian Development Outlook 2013, says “the PRC, the world’s second largest economy, is set post GDP growth of 8.2% in 2013, and 8.0% in 2014 after expanding 7.8% in 2012,the lowest rate in 13 years. This forecast assumes that the US economy will continue its slow recovery, conditions in the eurozone will not worsen, and the Chinese government will continue to boost public spending”.

Prepared using corporate press releases, Timber Trades Journal, ITTO, EUWID Wood.