Global Trends Review, September 23-29, 2013: Asian countries continue to drive demand for European softwood lumber; EU parquet demand declining

Glue-laminated timber was not able to achieve satisfactory profit margin in Central Europe this year, and finally in September, price mark-ups for glulam were made in Italy and Germany, though they did not reach the goal totally, Holzkurier reported.

In Germany, the price increase was implemented by companies at different times, so now reported level is between €421 and €430/m3, which is €14/m3 higher on the average than in August. Most producers in Italy sell at €408-414/m3 (bulk volume, free northern Italy), Holzkurier said at its timber-online.net website. This is €11 higher than in the previous month.

With 3.6 million m3, Germany’s softwood lumber exports between January and July were down 1.1% on last year. Deliveries to European countries slumped significantly: Austria bought 545,000 m3 – 5.3% less on-year; France imported 476,000 m3, down 11%; exports to the Netherlands fell by 16% to 350,000 m3. Just as for the Scandinavian countries, Asia saved the day. From January to July 2013, exports to China reached 127,000 m3, which is four times higher year-on-year. Exports to India in the same period have more than doubled to 118,000 m3.

Swedish producer price index for softwood lumber remained unchanged compared to July’s value (-0.2%), but it is the first time in twelve months that the index exceeded last year’s performance: it stood at 117.6%, compared to 117.0% in August 2012.

Exports of Swedish sawmills were on a negative trend in July. The volume exported reached 843,600 m3, below the figures of July 2012 (862,000 m3). In January-July 2013 the total volume exported is 6.3% lower than in the same period of last year.

As with Germany, export figures to European countries remain behind last year’s figures, although there is a recovery over June in the UK and Germany. The value of deliveries to the UK in July was 4.7% below the prior-year period. Deliveries from Sweden to Germany fell by 10.5% year-on-year. In June, these indicators were 7.7% and 11% respectively, therefore one may say that demand for Swedish softwood timber seems to revive again in Europe.

Meanwhile, Japan increased Swedish softwood lumber imports by 27.5% to 587,400 m3, Chinese deliveries grew by 174%, US deliveries – by 165.4%, although from a very low base. Egyptian deliveries fell by 39.5% to 493,500 m3.

In July 2013, the average statistic value of Swedish exported timber registered a 0.6% increase (from 1917 SEK/m3 FOB in July 2012 to 1929 SEK/m3 FOB in July 2013), but the value for January-July period declined by 2.3%: from 1890 down to 1847 SEK/m3 FOB.

New biofuel projects to come

At the end of August, Viridis Energy started up pellet production at its subsidiary Scotia Atlantic Biomass Company (Canada). By the end of September production is expected to be running on all five presses and the plant should thus achieve its full capacity of 120,000 tonnes per annum. Shipment of the first 25,000 tonnes of industrial pellets to Europe is planned for December. Viridis has concluded an exclusive agreement with Ekman & Co (Sweden), which will take over responsibility for the marketing of 240,000 tonnes of pellets to be produced by Viridis within next two years.

Drax Biomass International has begun construction of two large-scale pellet plants in the US states of Louisiana and Mississippi. The excavation work has been already concluded. At the same time, the company constructs a transit facility at the sea port of Port Allen near Baton Rouge. Launch of the two mills is scheduled for the first quarter of 2015.

Metso will supply Oskarshamn Energi with a complete biomass-fired power plant for combined heat and power production in Oskarshamn in Sweden. The start-up of the plant is scheduled for winter 2015. The value of the order will not be disclosed. The plant will use local forest residues such as bark and wood chips as fuel. “There is great interest in district heating and our customer base since 2007 has grown far beyond our expectations. This has meant that production has increased by 50% and that is one of the reasons that we now invest in a new power plant,” says Jöns Wahlström, Managing Director, Oskarshamn Energi.

Andritz has received an order from energy utility Mjölby-Svartadalen Energi (MSE) to supply a biomass-fired combined heat and power plant for the town of Mjölby, Sweden. Start-up is scheduled for the 3Q 2015. The new biomass power plant will supply renewable energy for the district heating supply to the town of Mjölby (26,000 inhabitants) in southern Sweden.

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The Board of Directors of the European Federation of the Parquet Industry met on 18 September 2013 and discussed the parquet industry situation and recent economic indicators on the European market.

There was some positive news: the latest Economic Sentiment Indicator continued its upward trend, increasing sharply both in the euro area and in the EU. The indicator rose for the fourth successive month in both regions, marking a two-year high in the EU.

Despite some of these more optimistic messages, demand expectations further deteriorated. The information provided by the individual country representatives confirms the past observations, namely that the European parquet producers continue to face significant variations at country level.

In the first half-year, parquet market was not negative only in four countries. In Germany, parquet sales in H1/2013 remained flat in general. The construction sector performs well with an increase in building permits. Flat demand for parquet was also registered in the Netherlands, while Norway and Switzerland showed some growth. In other Western European countries there has been a slump in parquet demand.

Metsä Fibre announced price hike for Botnia Nordic Pine (NBSK pulp grade) in Europe effective from October 1, 2013, up to $900 per tonne (CIF Metsä Fibre’s frequently used European ports of destination). Earlier this month, the company has already raised the price to $880. Södra has also announced the hike of NBSK pulp price to $900 in Europe from October 1. The Swedish company accounted this for improved market fundamentals.

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