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WhatWood Global Trends Review Global Trends Review, September 09-15, 2013: bio-CHP industry spreading over Europe; bank experts predict merger of UPM & Stora Enso

Global Trends Review, September 09-15, 2013: bio-CHP industry spreading over Europe; bank experts predict merger of UPM & Stora Enso

18 September 2013 ` 07:22  

Fortum company opened a new combined heat and power (CHP) plant in the Latvian city of Jelgava. The new power plant uses biomass as fuel and will provide district heating to the residents and businesses in Jelgava as well as electricity to the electricity market. The new plant covers approximately 85% of the city’s district heating demand.

Area’s CO2 emissions will be curtailed by approximately 44,000 tonnes compared to year 2010. The production capacity of Jelgava power plant is 23 MW of electricity and 45 MW of heat. The technology at the plant provides the possibility to use also other solid renewables, like peat and wood residues. Fortum’s investment in the new power plant and related infrastructure totalled around LVL 50 million or approximately €70 million.

Finnish Centre for Forestry intends to increase the output of energy wood in the country by offering subsidies. Energy wood is to be mobilized especially in young forest stands. As production costs are higher in younger forests, the centre has created an €18 million funding pot of which only a third has already been claimed. The autumn is considered to be the best time for harvesting activities, so promotion has been resumed to boost logging.

Gasum Oy, Helsingin Energia and Metsä Fibre have plans to build a biorefinery in the Metsä Fibre Joutseno pulp mill area in Lappeenranta, Finland. The refinery would produce wood-based biogas from a renewable raw material. The gas would be transferred through Gasum’s gas network to the Vuosaari power plant of Helsingin Energia.

AREVA company is going to build a biomass co-generation power plant in Commentry, France, for €55 million. Using wood chips as fuel, this power plant will enable the reduction of 40,000 tonnes of CO2 emissions per year. It will be able to generate around 15 MW of electrical power and 50 MW of thermal power. AREVA and its partner Leroux & Lotz Technologies will supply all the equipment and services required for the construction and commissioning of the plant, scheduled for the 1Q 2015.

EIG Engineering is going to build two thermal plants in Rovno and Chernigov regions of Ukraine, having the capacity of 20 MW each until the end of 2016. The plants will work on wood chips which are to be procured in state forests within a 150 km range. The project cost is around €66 million. Presently, EIG Engineering is finalizing start-up works at the CHP in Kiev region which will have the capacity of 6 MW.

European woodworking showing signs of optimism

European and Russian birch plywood manufacturers are reporting good sales and have been forcing through price rises, ITTO reported. Finnish birch plywood is selling quite well in Germany and the UK. However, consumption in other parts of Europe has been disappointing and weaker than last year. Demand for Russian and European birch plywood is now coming from markets outside Europe, notably in Russia itself and in the US, the Middle East, and East Asia. Russian manufacturers are increasingly focusing on these markets, with the result that European buyers often struggle to obtain products from Russia at consistent prices for prompt shipment. Lead times for Russian filmed birch plywood is typically over four weeks and may be longer for other grades. Finnish birch plywood manufacturers are also making less volume available to the European market and selling almost exclusively to regular customers under long-term contracts.

In Sweden, the tide seems to be turning towards higher sawmill profitability, Holzkurier journal reported. Some of the positive indicators are upbeat construction industries in the UK (Sweden’s most important lumber export market) and the United States as well as strong demand from Germany and Japan. Many managers are again optimistic about the future, as the results of survey conducted by the Danske Bank suggest. Olle Berg, marketing manager at Setra, expects lumber prices to increase further in the fourth quarter. However, Berg sees three risk factors for Sweden’s export sawmills: the fragile nature of consumption growth, exchange rate fluctuations and political problems in Egypt and the Middle East in general.

According to the Romanian newspaper Ziarul Financiarul, Kronospan Romania is expecting a 15% turnover increase in 2013, although results for the first half of 2013 are relatively similar to those from the same period of 2012. Last year, Kronospan Romania registered a turnover of €104 million, a 38% increase from 2011. “We have continued trade with our traditional partners, but also we have focused our attention to faraway markets,” said Oana Bodea, CEO of Kronospan Romania.


Finnish investment banking experts predict merger of UPM and Stora Enso assets, as Russian Forestry News wrote quoting Their assumption is based on the fact that both companies have recently finalised streamlining procedures, while their shares have appreciated in quite a short term, though there were no changes in the market situation. Handelsbanken analysts predict in their review that the companies will merge their assets, with major shareholding block going to UPM. The company will focus on energy and pulp business, while Stora Enso will allegedly work in the packaging board and pulp sectors. It is likely that the third Finnish forest giant, Metsä Group, will also not ignore this process, analysts say.

Nippon Paper Industries will increase printing and communication paper prices by 10% from October 21, 2013. While the depreciation of Japanese yen trend continues, the prices of raw materials and fuels are in an upward trend, the company explained.

Market players expect the hardwood and softwood pulp prices to head in opposite directions, EUWID reported. The NBSK market seemed strong whereas BEK prices came further under pressure.

Stora Enso and Arauco joint-venture pulp mill project Montes del Plata in Uruguay has been delayed. The mill site is 92% complete and the commissioning of certain areas has already begun. However, the main technology contractors have informed Montes del Plata that they will not be able to complete the work according to the agreed timetable. Initial plans called for start-up of the 1.3 million tonnes per year pulp mill to take place by late March this year.

Meanwhile, Eldorado Brasil plans to expand the capacity of its Três Lagoas pulp mill in the state of Mato Grosso do Sul. A new pulp line will start operation in 2017, bringing the total capacity of the site to 3.5 million tonnes of BEK pulp. On 6 September, the company submitted an application for a €460 million credit line to Brazilian development fund Fundo de Desenvolvimento do Centro-Oeste. The credit corresponds to 20% of the total investment volume which the company has earmarked for a second pulp line with an annual capacity of 2 million tonnes of bleached eucalyptus pulp. Eldorado Brasil’s first facility was commissioned in November 2012 and is meanwhile running at full capacity. Plans of the company’s CEO for 2020 envisage the start of a third pulp line.

DIN, the German member body to the International Organization for Standardization (ISO), and ABNT, the Brazilian member body to ISO, have submitted a proposal for a new International Standard focusing on chain-of-custody requirements for forest-based products.

The proposal has already caused controversy. As WhatWood reported earlier in global trend reviews, PEFC and FSC widely criticised the idea of an ISO certificate in the forest industry. This was the first time the two organizations collaborated and issued a joint statement. They said there are synergies between FSC and PEFC and that they have already long experience of multi-stakeholder standard development.

In turn, ISO members note that FSC and PEFC are wilfully overlooking existing weaknesses in their own chain of custody systems – weaknesses which partly stem from a failure on the part of the two systems to talk to one another. For instance, there is no mutual recognition of the standards.

Scott Poynton, Executive Director of The Forest Trust, criticised FSC and PEFC for more fundamental issues like allowing chain of custody certificates to be issued to companies that have little or no intention of sourcing certified timber, but only want to associate themselves with the certification brands. This process does nothing to transform the industry and instead promotes business as usual while diverting attention and resources from the real issues, Poynton believes. Small trading companies investing in chain of custody certification might spend that money in a more productive way, he adds. “They might consider investing it back into their businesses, perhaps in better equipment and safer working conditions for their employees. They might invest it – if they were wise – upstream to improve stewardship of the forests that supply their raw materials”, says Poynton.

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

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