Global Trends Review, November 17-30, 2014: North America waits for housing recovery; EU architects presented construction outlook

A slower than forecast recovery in the North American housing sector continued to dampen earnings among some of the continent’s largest timber producers, TTJ reported. Weyerhaeuser’s wood products division expected earnings to fall towards the end of the year after posting pre-tax profits for the third quarter showing a gain of just 3%. The company said that in the fourth quarter of 2014 softer lumber and OSB market is predicted, with volumes also expected to decrease.

West Fraser Timber said improvements in its third-quarter results were largely attributable to reduced costs and productivity improvements, while Plum Creek said timber performed well in a “continuing slow growth environment”. Improved plywood prices, however, boosted panel operations at West Fraser.

Housing construction in Japan reached 737,000 units in the first ten months, Holzkurier reported. The exceptionally strong previous year (799,000 from January to October) is therefore out of reach, but the construction activity returned to the level of 2012 (727,000 units).

Arch-Vision posted its European Architectural Barometer for the third quarter of the year, a regular survey among 1,600 architects in eight European countries who act as a leading indicator for the construction activities. As Fordaq quotes the research company, the British market keeps on improving, although at a slightly slower pace. Arch-Vision predicts a modest growth of the UK market in 2014 (+3%) which will continue in 2015 (+3%) and 2016 (+2%).

From Q3 2010 onwards there has been a steady positive development among the German architects, but as GDP growth rate was negative in Q2 and confidence indicators slipped slightly, only a 1% annual growth is expected for 2014-2016.

The French construction sector is not showing improvement. In Spain, the market seems to have bottomed, and the next two years will show the road to recovery (2015: -1% and 2016: 0%). In Italy, Arch-Vision predicts shrinkage of the market by 7% in 2014, by 4% in 2015 and by 1% in 2016. Poland, Belgium and the Netherlands show positive development. In Belgium, there is a big drop for residential building permits, but a steady increase for non-residential.

***

As of 1 December, Södra is reducing prices for pine sawlogs and small-dimension spruce logs by SEK 20/m3 (€2.16, solid, under bark) and for small-dimension pine logs by SEK 35 (€3.78). The price fall reflects lower market prices for finished goods, as the company says in a press release.

Canadian experts expect there will be dramatically less timber coming from British Columbia’s forests in the future, Holzkurier reported, as annual allowable cut will be reduced. 18 million m3 of beetle-killed timber is one reason for that, another one is the lack of surveillance of forest operations and insufficient forestry data. There is a growing disparity between government’s estimate of the amount of salvageable timber and the actual economically viable timber available on the ground. Earlier this year, two large timber companies, Canfor and West Fraser, were caught overcutting 938,000 m3 of healthy trees in the areas where they were supposed to be harvesting the dead and dying pine, but avoided heavy penalties after they committed to operate within harvest management plans.

UPM invests €160 million into the Kymi pulpmill to strengthen its positions in the growing end-use sectors of the global pulp market, namely tissue, speciality papers and packaging board. Following this investment, Kymi’s annual pulp production capacity will increase by 170,000 tonnes to 700,000 tonnes of bleached northern softwood and birch pulp. The investment at Kymi mill will comprise a new pulp drying machine, modernisation of the softwood fibre line, a new debarking plant as well as improvements in the energy balance of the industrial site.

Latvian plywood maker Latvijas Finieris is planning to start construction of a new veneer production facility in Kurzeme province, as the company’s spokeswoman Jolanta Medne told Nozare.lv business portal quoted by Fordaq. The investment scope and exact location have not been disclosed yet. The mill will be developed by UPB projekti company. The new veneer facility in Kurzeme would be one of the projects included in the regional development investment plan of Latvijas Finieris. Construction of the new facility is to begin in the spring of 2015.

In Rio Grande, Brazil, Tanac company has started construction of a 400,000 t pellet plant, the largest facility of its kind in Latin America. The $60-million project is scheduled to be completed in early 2016, with the first pellets due for exports in mid-2016, Holzkurier said. A long-term agreement for the supply of wood pellets was signed with Drax Power Limited, part of the UK-based Drax Group. Tanac is the world’s largest tannin extract manufacturer from the bark of FSC-certified Acacia mearnsii with a production capacity of 36,000 tonnes a year. The company also manufactures wood chips from the same species. By establishing its own pellet plant, Tanac intends to close the gap in the supply chain as well as broaden the company’s product portfolio offering, customer base and geographic markets.

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