June 2013 - Campbell Global

The Campbell Group, LLC
June 2013
Timber Trends
By: Bruce P. Glass, PhD., Forest Economist
Highlights
Inside This Issue
•
Housing affordability in the US remains high, despite rising interest rates and
increasing housing prices.
International Trade 2
Prices 6
•
Less than a million acres of timberland has changed ownership so far in 2013,
counting the Brookfield-Weyerhaeuser transaction.
Pulp and Paper
8
•
The recent sharp drop in North American lumber prices reflects expanding
production in the face of softening end-use demand, however prices are expected
to recover and continue increasing as sawmill operating rates rise.
Supply 8
Demand 11
Announcements 17
18
•
Australia’s consumption of primary wood products is forecast to increase strongly
through 2050.
Timberlands Sales •
Rising lumber imports into China from Chile and the Nordic region increasingly will
compete with imports from North America.
Bioenergy 19
•
India’s market for imported forest products, while growing rapidly off a small base,
is unlikely to achieve its full potential without regulatory reforms targeting its wood
products manufacturing sector.
Background Reading 20
References
21
The Economy in Graphs
Rising House Prices Are Positive For Household Net Worth And US Economic
Recovery
Certification/Environmental 19
Timber Trends
Page 2
International Trade
Exchange Rates
So Far, Other Major East Asian Currencies Show No Sign Of Responding To A Depreciating Yen
Exports
BC Lumber Shipments To China Increase In April1
Lumber shipments to China from British Columbia inched higher in April to 276.4 million board feet (MMbf), up from 261.4
MMbf the month prior, according to BC Stats. April’s figure is slightly higher than the April 2012 figure of 275.1 MMbf.
Through the first four months of this year, lumber exports to China are very near the same as they were over the same
period in 2012--an average of 261.1 MMbf per month last year versus 261.6 MMbf this year.
Log And Lumber Exports From US West Coast Fall Year-Over-Year In 2013Q12
Log and lumber exports from the West Coast plummeted in 2013Q1. Specifically, log exports dropped 33%: from 362
MMbf feet in 2012Q1, to 242 MMbf in 2013Q1. However, the total value of log exports increased more than 27%, from
$232 million to $297 million. Meanwhile, lumber exports dropped by 91 MMbf in the first three months of 2013 compared
with the same time last year.
“The West Coast lumber merchants exported only 143 MMbf of lumber in 2013Q1 compared with 234 MMbf in 2012Q1,”
said Xiaoping Zhou, a research economist with the agency’s Pacific Northwest Research Station. “The value of 2013Q1
exports fetched $153 million compared with $156 million in 2012. This means wood products coming from West Coast
markets are getting more expensive and increasing in value/unit.”
Other highlights include:
•
Total US log exports increased by 11% in 2013Q1. The dollar value also increased by 12% over the 2012Q1.
•
Total US lumber exports increased by 2% (from 731 MMbf to 747 MMbf). The value increased by 8% in 2013Q1
compared with the same time in 2012.
•
West Coast log exports from Alaska, Oregon, northern California, and Washington, totaled about 242 MMbf in
2013Q1. Oregon and Washington supplied 94% of these logs.
•
During this same time period, about 88%, or 136 MMbf of the West Coast lumber export, was from Oregon and
Washington.
Timber Trends
Page 3
Imports
Lumber Imports Rise Sharply In April To Highest Level Since June 20083
Total lumber imports into the US in April were 1.07 billion board feet (bbf), up 39% compared with the same month in
2012, according to the Foreign Agricultural Service. The last time lumber imports were higher than April’s figure was
in June 2008, when imports were 1.10 bbf. In March, imports were 1.02 bbf, which was 27% more than the prior year.
Through the first four months of this year, lumber imports grew 32% over the same period last year.
Trade in Wood Products
Europe
Nordic Lumber Shipments Outside Europe Expand From 27% To 43% In Past Five Years4
Lumber exports from the Nordic countries have changed quite dramatically in recent years. The European market has
become relatively less important than it has been in the past, according to the Wood Resource Quarterly. Just five years
ago, sawmills in Finland and Sweden exported as much as 73% of their total export lumber volumes to countries within
Europe. By 2012, this share had fallen to 57%.
Finnish sawmills currently export over 55% of their shipments to non-European markets, with Japan and Egypt having
become the two largest markets in 2012, ahead of the traditional markets of the United Kingdom, France and Germany.
During the first four months of 2013, Finland was the second largest softwood lumber supplier to Japan behind Canada,
but ahead of Sweden, Russia and the US.
The MENA countries (Middle East and Northern Africa) have become a large and very important region for Swedish
sawmills over the past ten years, with the export value increasing from US$160 million in 2002 to US$730 million in 2012.
This region accounted for 28% of the total export volume (23% of the value) for Sweden in 2012. Even though demand
for lumber has fallen during the first few months of 2013, the MENA countries will continue to be major buyers of wood
products from Sweden in the future.
Another interesting development for shipments from Sweden is that although volumes are still relatively small, exports
during the first four months to China were up 130%. Volumes shipped to the improved US wood market were more than
four times higher this year than in the same period in 2012. China and the US, the world’s two largest lumber-importing
countries, are likely to increase the import volumes of softwood lumber from both Finland and Sweden in the coming years
as the demand for wood products is expected to go up.
Timber Trends
Page 4
Asia
India’s Rapidly Growing Market For Forest Products Imports5
While the Indian market for forest products imports is much smaller than China’s (Figure 1), India’s imports have been
growing rapidly. Over the past decade (2002-2012), the value of India’s imports of forest products has been growing at a
CAGR of 18.8%, roughly double the rate of GDP growth in the country (Figure 2). However, the Indian economy slowed
sharply in 2012 and the rupee weakened against the dollar and most other currencies, and consequently demand for
imports in 2012 was stable from 2011.
Growth in wood products imports has averaged 20.2% over the decade from 2002, while imports of wood pulp have
grown by 15.4% and imports of paper and paperboard have increased by 18.6% annually. By far the fastest rate of growth
has been in imports of wooden furniture, which have grown by 35.6% CAGR over the past decade, although off a smaller
base. In total, India’s forest products imports in 2012 were primarily wood products (39.8% of total value) and paper and
paperboard (34.7%). Imports of wood pulp accounted for another 11.1%, recovered paper made up 8.4% of imports, and
the smallest category was wooden furniture at 6.0%.
One key difference between India and China, which has been commonly cited by economists, is the relative lack of
importance of manufacturing in the Indian economy, compared with China which has become the “world’s factory.” A
classic example of this is in the wooden furniture sector. China is by far the world’s largest exporter of furniture, despite
the fact this has been based largely on imported timber rather than domestic resources.
Why has India not developed its furniture sector like China, using imported timber in combination with an army of low-cost
labor? Much of the explanation is that the furniture industry in
Figure 3
India has largely been “reserved” for small businesses. What
this means is that the vast majority of furniture production in
India is in the “informal sector,” which refers to companies
with fewer than 10 employees which are not incorporated and
typically do not have access to electricity.
Another key problem which has kept India’s furniture (and
other labor-intensive industries) from expanding, and that is the
myriad of “arcane” labor regulations (including 51 central and
170 state labor laws) which impede growth in labor-intensive
industries. This is unfortunate for India, as India’s working
age population is expanding, in contrast to China’s, which will
be shrinking over the next 10-15 years (Figure 3). By 2030,
most population forecasters project that India’s working age
population will be 8% larger than China’s. This should mean
continued long-term growth in demand for forest products,
assuming India’s economy can generate enough jobs to take
advantage of this “demographic dividend.”
Timber Trends
Page 5
China
Wood Chips
China’s Demand For Log And Lumber Imports
Recovers In First Four Months Of 20136
Steady Increase In Global Trade Of Wood Chips The
Past Ten Years7
Chinese demand for lumber and logs has had a
resurgence, with imports during the first four months of
2013 being over 10% higher than the same period in 2012,
reports the Wood Resource Quarterly. The total value of
North American imports was up 30% from 2012.
Wood chips are one of the few forest products commodities
that have seen a steadily increasing trend in globally traded
volumes the past decade. With the exception of 2009,
when global production of pulp fell by about 10% and the
demand for wood fiber was down, international trade of
wood chips has increased every year from 2000 to 2011, as
reported in the Wood Resource Quarterly.
China’s hunger for wood was less acute in 2012 than in
the previous year. In particular, imports of softwood logs
fell substantially from the record levels of 2011. Imports
of lumber were also lower in 2012, but the decline was
much less than that of logs. The biggest changes in log
and lumber imports between 2011 and 2012 were the
sharp decline of Russian log volumes crossing the Chinese
border and the reduced lumber shipments from the US to
Chinese ports. During the first four months of 2013, import
volumes of both logs and lumber picked up and were
12% and 19% higher, respectively, than in 2012Q1. The
housing sector, a major consumer of imported lumber, has
been strong in early 2013, and prices for new houses in 70
cities rose on average by over 4% in April, up from 3.1%
in March, 2013, according to national statistics. So far this
year, the housing construction sector has outperformed
better than the manufacturing, trade, investment and
personal consumption sectors.
North America is a major supplier of softwood products to
China, with the market share for lumber and logs in the
2013Q1, accounting for 51% and 23%, respectively. In
2012, Canada and the US exported logs and lumber valued
at just over US$3 billion, which was down 23% from 2011.
During the first four months of this year, the import value
for softwood logs and lumber from North America totaled
US$940 million dollars, an increase of over 30% from the
same period in 2012.
New Zealand’s log-exporting companies continue to
expand their presence in China. In 2012, New Zealand
was the only country that expanded shipments when total
Chinese log imports fell by 15%. Russia has for many
years been the major log supplier to China, but in 2013Q1,
Russia and New Zealand both had a market share of close
to 33% after year-over-year shipments were up almost 50%
from New Zealand and down by 18% from Russia.
The biggest change in the Chinese buyers’ sourcing of
lumber has been the doubling of imports from Chile and
the almost tripling in shipments from Sweden and Finland.
Although these three countries still account for less than
10% of all imports, it is likely that their presence in China
will expand in the coming years.
From 2009 to 2012, global chip trade increased by 6.5
million tons to just over 31 million tons, valued at over
US$5 billions, slightly below the all-time high reached
in 2011. Much of the increase in chip imports has been
because of the expansion of MDF production capacity in
Turkey and due to major investments in pulp capacity in
China.
The top ranking of chip-importing countries has changed
quite considerably the past five years. Although Japan is
still, by far, the largest chip importer in the world, import
volumes have declined from a record-high of almost 15
million tons in 2008 to just over 11 million tons in 2012.
China, on the other hand, has gone from being a net
exporter of chips less than ten years ago to become the
second largest importer of wood chips in the world. With
the expansion of pulp production capacity in China and
the lack of domestic fiber sources, it is likely that China will
surpass Japan as the world largest chip importer within 2-3
years. Japan and China are the two dominant consumers
of globally traded chips. Their dominance is particularly
accentuated for hardwood chips, where they imported 83%
of the world’s total imports in 2012.
Pulp mills in Finland, the third largest chip importer, have
for a long time relied on residual chips from Russian
sawmills with close proximity to the border and on chips
from the Baltic States. This trade has increased in recent
years. The fourth on the import ranking list for 2012 is
Turkey, which has become a major chip destination in just
the past few years.
It is likely that global trade of wood chips will continue to
grow in the coming years for two main reasons because 1)
there are limited forest resources in some of the countries
which are expanding industry capacity and 2) some forest
companies are making the strategic decision to diversify
their supply sources and import wood chips rather than
procure marginal fiber supplies locally.
Timber Trends
Page 6
Prices
North American Lumber
TD Economics Forecasts Lumber Prices Will Rise 30% By End Of 20148
A new report from TD predicts the recent slump in lumber, which has seen prices drop 25% in the past two months, will
reverse course by next year. North American lumber prices reached a nine-and-a-half year high in mid-April, boosted by
increasingly more optimistic numbers from US housing. But several factors this year have conspired to wipe away most
of the price gains seen in the past 12 months. “While several commodities have been in the spotlight in recent months,
lumber has not been one of them,” said Dina Ignjatovic, an economist at TD Economics. “However, some light should be
cast on the market given that prices have been tumbling quite rapidly over the past nine weeks.”
North American lumber was one of the hardest hit commodities during the 2009 recession, given its dependence on the
US housing market. But a rebound in building there, combined with ongoing demand from China, helped prices recover
in 2012 and through to 2013. The recent price crash, said Ms. Ignjatovic, is not due to macro-fundamentals, and that’s
why she expects prices to rebound soon and continue their upward climb next year. “The sharp drop in lumber prices
seen over the past two months has been largely due to market-specific fundamentals, in contrast to the global and
macroeconomic-induced decline seen in industrial commodity prices,” Ms. Ignjatovic said.
The recent run-up in prices has increased output at many lumber plants, but that has coincided with a sudden drop in
demand. Bad spring weather in many regions of the US delayed a number of housing projects, causing a drop in singlefamily housing starts in March and April. That has combined with softening demand from China, which has sought lumber
elsewhere as higher North American prices have made the commodity less attractive to import.
The trends, however, should start moving back into lumber’s favor later this year. “Demand for lumber is likely to spring
back in the coming months, particularly in the United States,” Ms. Ignjatovic said. “The housing market south of the border
is expected to continue to gain traction, with new home starts reaching a seasonally adjusted annualized rate of 1.3
million units by the end of 2014. Similarly, demand in China is expected to bounce back, as inventories are worked down
and construction activity picks up in the second half of this year and in 2014.” Ms. Ignjatovic expects that as Chinese and
US demand bounce back from their seasonal lows, lumber prices will steadily climb to the end of next year, gaining 30%
in the process and hitting new multi-year highs.
Commodity Lumber Prices Are Displaying Substantial Volatility Around An Upward Trend
Timber Trends
Logs
West Coast
Declining Lumber Prices Will Flow Through To Log Prices, Absent Surging Export Log Demand
US South
Signs For Price Recovery In The US South Look Encouraging
Page 7
Timber Trends
Page 8
Pulp and Paper
Pulpwood and Chips
Pulpwood Prices Are Re-Aligning As More Sawmill Residuals Become Available In The PNW
Supply
US Lumber Production
US Lumber Output Up 7.2% Through Q19
US lumber production totaled 7.530 bbf through March, up 7.2% compared with the first three months of 2012, according
to the Western Wood Products Association. Through the first quarter, output in the West was up 10.4% compared with
a year ago; production in the South was up 4.4%. Nationwide, production in the month of March totaled 2.476 bbf, up
1.8% from February and 2.0% higher than the March 2012 total.
Western Lumber Production
Hiring Surge Underway At Weyerhaeuser Co.’s Longview Facilities10
Fueled by an upswing in the nationwide housing market and rising consumer demand for paper products, Weyerhaeuser
Co. is in the midst of hiring 100 new workers in Longview, WA, company officials said. The company has hired 54 new
employees at its Longview sawmill since last year and 16 at the log yard this year. By the end of this year it will hire 20
entry-level workers and four salaried managers at its pulp mill, at least 10 more workers in the log-export yard and an
undisclosed additional number at the sawmill and Norpac newsprint mill, company spokesman Anthony Chavez said. By
the end of 2013, Weyerhaeuser will have about 1,500 workers in Cowlitz County. “The recovery is well underway, which
is good news,” Chavez said.
The recovery bodes especially well for Longview, home to Weyerhaeuser’s largest West Coast lumber mill. Chavez said
the company expects to continue its strong sales in wood products through the current quarter, largely because housing
demand and prices are increasing. According to the Associated Press, nationwide home prices jumped about 11% in
March compared with the previous year, the largest 12-month increase in seven years.
Timber Trends
Weyerhaeuser’s log exports remained strong, with Asian
demand rising, Chavez said. About three-quarters of all
Weyerhaeuser exports go to Japan, and 17% to China.
Company officials say they expect log prices to remain high
and support additional workers at its Longview export dock,
which is the largest on the West Coast.
Canadian Lumber
High-Tech Mills Help Manage Post-Beetle Supply Drop11
BC’s Interior forestry industry is counting on cutting-edge
sawmill technologies to soften the blow of the heavily
reduced annual allowable cut anticipated in the wake of the
mountain pine beetle infestation. “The worst-case scenario
is that the [annual allowable cut] might drop as much as
30% to 40%,” said Doug Routledge, acting president of
the Council of Forest Industries (COFI). Routledge said
the sector hopes to reduce that number to 5% or 10%
by harvesting trees in the right order--using affected pine
trees first, for example--and reforestation. But he said that
improvement would be impossible if companies hadn’t
also invested heavily in technology that allows them to
process wood that would have previously been viewed as
worthless.
“There really isn’t an aspect of our business in BC that
we haven’t focused on and either applied a strategy or a
technology to utilize the mountain pine-beetle logs,” said
Ray Ferris, vice-president of wood products at West Fraser
Timber. Ferris said his company has spent between $3
million and $10 million to update the technology at each BC
sawmill it operates. Stephen Mackie, director of business
optimization for Canfor, said his company has likewise
invested in mills throughout the province, in both beetle and
non-beetle areas.
High-tech scanning technologies can now detect cracks
in wood, and saw blades can do a better job of following
the grain of a twisted log. Since dead wood tends to have
more cracks and to twist more, it means mills can extract
more value out of beetle-killed wood. Humidity sensors help
make kiln drying more exact, a part of the sawmill process
in which pieces of wood are straightened by heat.
West Fraser Timber has also invested in equipment to
handle timber more gently. “The logs and lumber easily
break apart in the mill and create more broken pieces
and more dust and debris,” said Ferris, adding that mills
have also had to invest in dust-mitigation measures.
“Mechanically, every mill has spent millions of dollars in
additional handling equipment to better handle shorter,
smaller pieces of lumber.”
The technology has helped the company produce both
more high-quality lumber, usually destined for the Japanese
market, and lower grades, more likely to be sold to China.
“We’re able to adjust our processing to produce a wider
range of products,” said Ferris, “to focus more on certain
Page 9
product widths and lengths, and specifically around
markets like China.”
While the beetle infestation is winding down, Routledge
said the technology and methods that had been developed
in response to the crisis would help the industry in the
future. “Some stands that may have been [unsellable] at a
certain market level could now be merchantable with a lot
of this new technology,” said Routledge, adding that it could
make it possible to get usable lumber out of fire-damaged
or dead trees.
Logs
Canada
BC Interior Sawlog Harvest Projected To Fall By A
Third12
Damage from the mountain pine beetle is projected to
reduce the sawlog harvest in the British Columbia Interior
by roughly a third by 2018 and will constrain the industry’s
ability to ramp up lumber output. That’s according to
updated figures from an ongoing analysis by Murray Hall
and his associate Jim Girvan, who project the annual
sawlog harvest in the BC Interior will fall from the pre-beetle
level of 50 million m3 to 33 million m3 in 2018.
The projected decline follows a period when forestry
officials have sharply increased the annual allowable
cut (AAC) to remove beetle-killed trees from BC Interior
forests. From 1980 to 2000, the AAC in the BC Interior
averaged about 50 million m3, including Crown and private
lands. Officials raised the AAC to a peak of about 68 million
m3 in 2005 before starting a decline to its current rate of
about 59 million m3. Hall and Girvan project the AAC will be
lowered to about 40 million m3 by 2018, which will generate
about 33 million m3 of sawlogs. “Now the sawlog supply is
becoming limited because the beetle has killed a large part
of the interior forests of British Columbia,” said Girvan.
The reduced harvests will lead to additional mill closures,
he added. Girvan said Hall’s 2010 projection of 16 BC
sawmills closing by 2018 remains on track, noting that nine
have already closed and two were destroyed by fires. They
project lumber production in the BC Interior to drop from 15
billion board feet in 2005 to just over 9 billion board feet by
2018.
“The ability of the BC Interior wood products industry to
ramp up and meet demand is going to be limited, for the
first time in history, by sawlog supply,” Girvan said. “That’s
when you’re going to see supply and demand push prices
higher.” An increase in the allowable cuts in Eastern
Canada would mitigate some of the supply constraints in
BC. However, Girvan said, the prospect of that happening
is unlikely.
Timber Trends
Asia/Oceania
Japan’s Lumber Industry Working To Become SelfSufficient13
Government efforts to make the Japanese softwood lumber
industry more self-sufficient are gaining momentum as
subsidies improve profitability in domestic log harvests.
With more subsidies in the works designed to encourage
Japanese builders’ use of domestic species, traditional
offshore suppliers are monitoring how these developments
may impact Japan’s dependence on imported lumber.
Domestic stock supplied 18% of Japan’s wood needs in
2002. The nation’s wood self-sufficiency rate has increased
to 27% this year. The government’s goal is to reach a
50% sufficiency rate by 2020. If that goal is reached, US
softwood lumber suppliers could lose as much as $1 billion
in export revenues to Japan between now and 2020, some
observers say. Other traditional suppliers to Japan, such as
Canada and Europe, would likely be affected to a similar
degree.
Japan began an extensive reforestation program shortly
after World War II and has maintained tree planting
programs ever since. Roughly two thirds of Japan is
forested, and a large percentage of the trees have reached
maturity. The vast majority of those forests, however, have
received minimal maintenance over the years. Ownership
is spread over millions of people, primarily in one- or
two-hectare blocks. Most owners live nowhere near their
forestlands, and costs associated with timber harvests
far exceed prospective proceeds. As a result, individual
landowners have had little incentive to manage or maintain
their forests. Japanese Cedar (Sugi) is the primary species
along with Japanese Cypress (Hinoki). Insect infestations
and health concerns associated with the heavy amounts
of pollen produced by Sugi trees add to the incentives to
increase harvests.
Government subsidies implemented over the past three
to four years that pay for harvesting costs, including
labor, road construction in mountainous terrain, and
transportation, have spurred logging. The government also
is subsidizing costs for modernizing sawmills. Fewer than
9,000 sawmills currently operate in Japan; most are small,
often employing four or fewer workers. Japanese builders,
however, have been hesitant to substitute domestic stock
for imported Douglas-fir, or European Redwood. They cite
concern about its strength and quality compared with the
imported species.
The Forestry Agency recently released a draft of the
“Wood Use Points Program” that would pay homebuilders
¥300,000 to use domestic species in wooden post and
beam houses. The program was originally scheduled for
implementation in April, and is tentatively slated to begin
in July. The program is part of the government’s ongoing
effort to expand the use of domestic wood in construction,
including in public buildings.
Page 10
Some observers and wood products agencies have
expressed concern that the proposed Wood Use Point
Program, as currently written, may violate World Trade
Organization rules. The WTO prohibits its members from
using subsidies to provide an advantage for domestic
species over imported products. Several US wood products
associations have indicated that they are exploring this
issue further, or plan to in the near future.
Supply Issues
Supply Of Raw Materials May Not Sustain Rapidly
Expanding Pellet Industry14
A report from the Hardwood Review Express indicates
that there may be too little forestland to supply the rapidly
expanding wood pellet industry currently growing in the
Southern US, especially as the construction industry
recovers. According to Biomass Magazine in May 2013, the
121 operational US pellet plants produce a combined 8.3
million tonnes of pellets per year. Another 16 pellet plants,
with a combined output of 6.45 million tonnes, have been
proposed.
While small-scale operations can sustain themselves using
logging and mill residues, once an operation reaches
an annual output over 500,000 tonnes, it needs to use
commercial thinnings and pulpwood harvests, according to
Hardwood Review. This means competition for pulp, paper,
OSB and other traditional forest product producers.
Hardwood Review estimates that national forests could
handle the increase in demand; however, 97% of pellet
production capacity is in the South. Using US Department
of Agriculture (USDA) data, the Review found that “Feeding
the [proposed Lawrenceville,] Virginia plant would require
147% of the volume of trees currently harvested in
commercial thinnings within the mill’s procurement zone. In
other words, there are not enough thinnings in the counties
around Lawrenceville, VA, to support this mill on thinnings
alone. If supplied exclusively with pulpwood from final
harvests, on the other hand, this single mill would consume
22% of the existing pulpwood harvest.”
This would mean an aggressive new competitor seeking
raw materials. While the Review concedes that more
demand might draw more timber into the market and take
up the market share vacated by the paper industry, pellet
mills may struggle to compete as new home building
increases demand for traditional forest products.
Another issue facing the pellet industry is the limited
amount of certified-sustainable forests in the US. The
main market for pellets is European energy companies,
which, because of the new EU Tiber Regulation, can only
import wood that has been certified sustainably and legally
sourced. The Review reports that a plant like the one
intended to be built in Lawrenceville, VA, would only be
able to source 10% of its materials from certified forests.
Timber Trends
Page 11
Demand
US Housing
Existing Home Sales Rise In May15
Total existing home sales in May rose 4.2% to a seasonally adjusted annual rate of 5.18 million units, their highest
level since November 2009, according to the National Association of Realtors. The May 2013 figure is 12.9% higher
than May 2012. Sales have stayed above year-ago levels for 23 months, while the national median price shows
15 consecutive months of year-over-year increases. The national median existing home price was $208,000 in
May, up 15.4% from May 2012. Total housing inventory at the end of May rose 3.3% to 2.22 million existing homes
available for sale, representing a 5.1-month supply at the current sales pace, down from 5.2 months in April.
Timber Trends
Page 12
May Housing Starts Rise16
US housing starts in May were at a seasonally adjusted annual rate of 914,000 units, 6.8% higher than the revised April
estimate and 28.6% higher than the May 2012 rate, according to the Census Bureau. Single-family starts in May were
at a SAAR of 599,000 units, 0.3% above the revised April figure. Housing units authorized by permits were at a SAAR of
974,000 units, 3.1% below the revised April rate but 20.8% above the May 2012 estimate.
Size Of Typical New US Home Rises 50% From 1973 To 2,306 ft2 17
America’s families may be shrinking, but our houses never got the memo: They’re moving in the opposite direction. Fresh
Census Bureau data show that the size of new homes keeps rising even as Americans over the past two generations
have had fewer children. At 2,306 ft2, the typical new home is about 50% larger than its 1973 counterpart while the typical
family is 10% smaller and the typical household 15% smaller. The Census Bureau defines a family as two or more people
living in the same home who are related by birth, marriage or adoption. A household consists of anyone living in a home
regardless of their relationship.
If trends in new home sales hold, the next year or so could bring a key shift: The three-bedroom home that has dominated
the housing landscape since the Census Bureau began tracking it in 1973 could be knocked off its perch for the first time
by a bigger model. Industry observers say plus-sized houses fill an increasingly important role as smaller families come to
expect more of their home and as multigenerational families proliferate, with aging grandparents, adult children and even
friends added to the household mix. “Suddenly that three-bedroom home got really, really tiny,” says Stephen Melman, an
economist for the National Association of Home Builders.
Three-bedroom homes are still No. 1 in total housing: 47% of buyers of new and used homes picked three-bedroom
models last year, while 26% bought four or more bedrooms, according to the National Association of Realtors. Data for
new homes tell a different story. The share of new homes with three bedrooms dropped from 53% in 2009 to 46% in 2012.
New houses with four or more bedrooms snagged 41% of the market last year, their highest share ever. Smaller houses-two bedrooms or fewer--accounted for slightly more than one in 10 new homes in 2012. Even among homebuyers without
kids, about 20% want a house with four or more bedrooms, the Realtors’ group found last year.
Homeowners also are increasingly turning bedrooms into multimedia rooms so family members can watch different TV
shows or use the Internet away from the din of the family room, Lautz says: “We’re a multimedia generation.”
Timber Trends
Page 13
Rising Interest Rates And Higher Home Prices Lessen Home Affordability In April18
US housing affordability dropped in April as prices reached their highest point since August of 2008, according to the
National Association of Realtors. Mortgage rates ticked up another notch as they have done each month since their
December 2012 bottom, adding more downward pressure on affordability. While mortgage rates are still lower than a year
ago and incomes are higher, home prices increased again keeping affordability down. From one year ago, affordability is
down in all regions except the Northeast. The West had the biggest drop in affordability because it had the biggest price
gain, at 17.5%.
US Home Prices Including Distressed Sales Increase 12.1% Year-Over-Year In April19
CoreLogic released its April CoreLogic HPI report showing home prices nationwide, including distressed sales, increased
12.1% on a year-over-year basis in April 2013 compared with April 2012. This change represents the biggest year-overyear increase since February 2006 and the 14th consecutive monthly increase in home prices nationally. On a monthover-month basis, including distressed sales, home prices increased by 3.2% in April 2013 compared with March 2013.
Excluding distressed sales, home prices increased on a year-over-year basis by 11.9% in April 2013 compared with April
2012. On a month-over-month basis, excluding distressed sales, home prices increased 3% in April 2013 compared with
March 2013. Distressed sales include short sales and real estate owned (REO) transactions.
Percentage Of ‘Underwater’ US Homeowners In 2013Q1 Falls To 25.4%20
The national negative equity rate fell in the first quarter, to 25.4% of all homeowners with a mortgage, according to the
first quarter Zillow Negative Equity Report. But another 18.2% of homeowners with mortgages, while not technically
underwater, likely do not have enough equity to afford to move. Slightly more than 13 million homeowners with a mortgage
were in negative equity, or underwater, at the end of the first quarter, owing more on their mortgage than their home is
worth. But when including homeowners with less than 20% home equity, the “effective” negative equity rate at the end
of the first quarter was 43.6%, or a total of 22.3 million homeowners. These homeowners likely cannot afford a down
payment for a new home, tying them to their current homes and contributing to inventory shortages.
A homeowner technically reaches positive equity as soon as the market value of their home exceeds their outstanding
loan balance. But listing a home for sale and buying a new one generally requires equity of 20% or more to comfortably
meet related costs.
Timber Trends
“Reaching positive equity, even barely, is an important
milestone. But things like real estate agents’ fees and
a down payment for the next home traditionally come
out of the proceeds from the prior home’s sale. Without
enough equity, these costs will instead have to come out
of a homeowner’s pocket, leaving many still stuck,” said
Zillow Chief Economist Dr. Stan Humphries. “Looking at
the effective negative equity rate could explain why recent,
healthy declines in the number of underwater borrowers
haven’t yet translated into more homes for sale. The
only cure is patience, as rising home values continue to
build equity to the point where more homeowners can
realistically sell.”
New-Home Sales Grow In April While The Supply
Remains In Check21
Sales of new single-family houses in April 2013 were at
a seasonally adjusted annual rate of 454,000, up 2.3%
from the revised March rate of 444,000 and 29.0% above
the April 2012 estimate of 352,000, according to the US
Census Bureau. The median sales price of new houses
sold in April was $271,600, up from $250,700 in March.
The average sales price was $330,800 in April, up from
$286,700 the month prior. The seasonally adjusted
estimate of new houses for sale at the end of April was
156,000, representing a supply of 4.1 months at the current
sales rate, which is the same as the month prior.
Europe
EOS Forecasts 2013 Decline In Timber Demand22
European sawn softwood production and consumption
is forecast to decrease in 2013 by 1.1% and 2.2%
respectively, a large gathering of sawmillers in Vienna
has heard. Members of the European Organisation of
the Sawmill Industry (EOS), meeting for the EOS general
assembly, also heard that sawn hardwood production was
predicted to increase by 1.2% this year, despite demand
forecast to decline by 2%.
“The European sawmilling sector continues to face
challenging times,” said the EOS. “Market conditions have
been challenging, apart from some exceptions, not really
improving since the beginning of the first half of 2011.”
The EOS attributed the situation to the general economic
climate, low construction level activities, low consumer
confidence and tight wood availability with high raw
material costs.
Page 14
Sawn softwood production declined by 4.5% in EOS
countries to 75.7 million m3, with exports of logs to outside
the EU hitting the results. Romania and Belgium reported
production growth (1.4% and 3.4% respectively), whereas
Austria, Germany and Sweden all reported decreases
ranging between 3.7-7.9%. UK sawn softwood production
comprised a 4.1% share of total EOS production, while
the UK consumed 12.9% of the total production--third after
Germany and France.
Sawn hardwood production in 2012 grew by 8.2%, with big
variations from country to country. Volumes grew by around
5% in Austria, France and Italy, with 9% in Belgium and
an even bigger increase in Romania. Romania remains
comfortably the largest EOS sawmiller, producing 34.8%
of EOS production. Sawn hardwood consumption in
2012 increased 2.9% to around 6.4 million m3. Romania
is the biggest market for sawn hardwood with the EOS,
consuming 21.4% of the total EOS consumption.
China
China Construction Update23
New construction continues to lag behind property sales in
China, leading to weak heavy industry growth and declining
steel prices. Property sales did decelerate to 28% yearover-year in May from 40% in April, and a much higher
base in 2012H2 means they will slow further. But if sales
volumes do not collapse, full-year growth is still likely to
reach high single digits.
In this context the supply crunch looks overdone: property
completions fell 12% in March-May, dragging YTD growth
down to 5% (after double-digit growth in 2011-12). Very
weak construction starts since late 2011 mean we expect
further falls in completions.
So while we do think demand in smaller cities will remain
weak, the outlook is not all negative. In particular, the
combination of healthy sales and slowing completions
means that the market is set to tilt from oversupply to
undersupply in coming months.
In addition to the falls in completions, the volume of unsold
housing stock also keeps falling. Housing inventories in 10
large cities have dropped 15% from their peak in January
2012, according to Soufun data; two-thirds of that reduction
occurred in 2013H1. Inventory levels are now close to eight
months of sales, the lowest level for more than two years.
As more inventories are sold off and new supply does not
replenish them, developers will need to start building again-good news for heavy industry.
Timber Trends
Page 15
Australia
A Sore Lesson From Housing History24
It is often said those who fail to understand the mistakes of the past are bound to repeat it. In one area, this holds
spectacularly true: the residential real estate market. History has shown time and again the fortunes of Australians are
closely linked to the housing sector, with bricks and mortar generating a great deal of prosperity and despair. Long-term
trends in property prices provide for a fascinating understanding of the housing cycles that have occurred since the 1880s.
The longest data series pertaining to housing prices was produced by Nigel Stapledon, a former chief economist of
Westpac bank who now teaches in the economics department at the University of New South Wales. The index is a
weighted composite of inflation and quality-adjusted Melbourne and Sydney housing prices, used as a proxy for the rest
of Australia as both cities comprise a majority of Australia’s households and price movements very closely track that of all
other cities.
Probably the most interesting cycle was the colossal land boom of the 1880s, followed by the equally large bust of the
1890s, a period of euphoric and very irrational expectations. A speculative mania spread like wildfire among Australians,
centered in Melbourne. A bubble in commercial land prices formed, feeding into the residential property market. From
1887 to the peak in 1891, housing prices increased by 32%, only to collapse by 31% over the next half a decade. The
bursting of this enormous land bubble resulted in the worst depression in recorded history.
Prices remained stagnant until the early 1920s before lifting by 25%, only to fall once more during the Great Depression.
The housing market again stagnated, tracking the rate of inflation. Price and rent controls were introduced later in 1942
during the Second World War, leading to the single largest annual escalation when they were lifted in 1949, of 111%.
Housing prices then fell by 26% as the market later readjusted and stabilized.
It took until the late 1960s for the FIRE (financial, insurance and real estate) sector to reassert itself after its devastation
during the Great Depression, laying the groundwork for a simultaneous commercial and residential property bubble.
Housing prices increased by 70% from 1961 to the peak in 1974, then fell by 16% to 1979 during the midst of a recession.
Melbourne was the primary contributor to the bubble, with Sydney playing a smaller role.
The 1980s was a turbulent period, experiencing five asset bubbles: two smaller residential, one colossal commercial, later
feeding into another residential, and also the stock market bubble and collapse in 1987. Housing prices escalated by 39%
from 1987 to 1989 on the back of the well-known commercial bubble, again resulting in an economic downturn during the
bust. The early 1990s recession was the culmination of the worst financial collapse since the 1890s depression.
Timber Trends
Page 16
The residential property market stumbled along for several years, and then quickly accelerated into the largest boom on
record. From the trough in 1996 to the apparent peak in 2010, housing prices increased by 123%. This run-up in prices
is what has generated the debate over whether the market is either overinflated (a bubble) or based upon fundamental
factors: a housing shortage, growing population, restrictions on land supply, rising household incomes, etc.
Historically, every boom in prices has been followed by a downturn, either reverting to mean or undergoing a partial
adjustment. Not every bust, however, has fully reverted to the mean, which explains the gradual upswing in the index from
the late 1940s onwards.
By examining the long-term trend in the housing market, we can come to one of two conclusions. The first, unpopular
conclusion is residential property is in bubble territory and ready to burst--a pattern repeated continually in Australian
economic history. This position is considered a fringe perspective today, and is most notably advocated by economist
Steve Keen and yours truly, among a handful of other public commentators. The majority view among government, the
FIRE sector and property owners, however, is prices are based upon fundamental factors, meaning a substantial fall or
crash will not occur.
Steady As She Goes Forecast For Australian Housing25
The housing construction industry in Australia
will experience no growth in the volume
of new work coming in this year, a leading
industry lobby group says. In the autumn
2013 edition of its National Outlook report,
the Housing Industry Association (HIA)
says it expects the number of new starts
in residential construction to contract from
an estimated 147,610 in 2012 to 147,390
in 2013--the second lowest level on record
in the past decade. While the HIA expects
activity to bottom out this year, it expects only
modest growth of 2.5% and 2.8% in 2014
and 2015 respectively meaning activity is
expected to remain at historically low levels
for some time.
Housing Industry Association chief economist Harley Dale says the sector is being held back by a combination of
consumer caution and tight household credit on the demand side and tight credit conditions for residential development as
well as ‘disproportionately high and inefficient taxation’ and ‘excessive regulation on new housing’ on the supply side.
Outside of new housing, levels of investment in renovations of existing homes are expected to remain subdued by historic
standards after dropping to ten year lows last year following several years of above normal activity levels. The negative
housing outlook comes in spite of recent positive data regarding both new home sales and new housing finance--both of
which have been trending upward in recent months.
Products
US Wood Molding Market Update26
For the US molding market, 2012 was the turnaround year after five consecutive years of declining molding consumption.
With the improvement in new residential construction, and steady growth in repair and remodeling activity, US molding
consumption saw an appreciable lift in 2012. For the first time since 2009, molding consumption trended higher in 2012,
recovering to a level equivalent to 54% of the size of the market in 2006.
The effect of over 50% of demand disappearing from 2006 to 2010 had an obvious decimating impact on domestic and
offshore molding producers. However, offshore producers took the bigger hit during this time frame as US producers
actually saw their share of a shrinking market improve from below 40% in 2006 to 47% in 2008. Low prices and
unfavorable exchange rates forced many offshore producers to curtail operations and/or redirect production to other
markets.
Timber Trends
US producers, on the other hand, stayed focused on their
domestic market, taking advantage of their closer proximity
to the market. In comparison to offshore producers, US
producers could offer faster cycle times, supply smaller
order quantities in a broad array of product offerings, and
deliver highly mixed loads to multiple locations per truck.
Demand has been building since late 2011, yet US
producers have found their ability to grow with the market
restricted by a lack of affordable fiber. Volumes of imported
blocks, blanks and shop lumber have been kept tight as
offshore producers have developed alternative export
markets in Asia, Europe, the Middle East/North Africa, and
Latin America. As a result, US molding producers have had
to pay global prices for their fiber despite molding prices not
always keeping pace.
With domestic molding supply constrained by a shortage
of affordable raw material, molding prices trended higher
in 2012. Attracted by higher prices, offshore suppliers
cautiously increased their molding shipments in 2012 by
12%, lifting total imports to 2.5 billion lineal feet. Two-thirds
of this increase came from Brazil, the largest supplier to
the US (+185 million lineal feet to 1.0 billion). Second-place
Chile’s volumes were essentially unchanged at 850 million
lineal feet, and third-place Mexico increased its shipments
by 86 million lineal feet to 300 million. In fourth spot was
Argentina, which saw its volumes decline by roughly 25
million lineal feet to 100 million. The other noticeable event
among imports was that China grew its molding shipments
to the US by 22 million lineal feet, giving it a fifth-spot tie
with New Zealand at 80 million lineal feet.
Molding demand in 2013 will benefit from the continuing
recovery in housing starts: forecasters are calling for
starts to grow by more than 20% (to +/- 950,000 units),
and for repair and remodeling expenditures to expand by
more than 10% in 2013. The challenge over the next few
years will be to rebuild molding capacity to keep pace with
demand.
Page 17
Announcements
Weyerhaeuser Upgrades Alberta Sawmill27
Weyerhaeuser has allocated $C23 million in production
upgrades over the next 18 months at its dimension sawmill
in Drayton Valley, Alberta. The enhancements include
upgrades to the facility’s sawmill and drying operations.
The company anticipates that the improvements will allow
for a 35% increase in production capacity.
Canfor Agrees To Acquire Scotch & Gulf Lumber28
Canfor Corp. has entered a phased purchase agreement
with Scotch & Gulf Lumber, LLC. Headquartered in Mobile,
AL. Scotch Gulf’s primary operations consist of sawmills
in Mobile, Fulton, and Jackson, AL, producing Southern
Pine dimension lumber. The operation has a combined
production capacity of 440 MMbf. The transaction involves
the phased purchase by Canfor of Scotch Gulf over a
three-year period. The transaction is subject to standard
closing conditions, and is expected to close in the third
quarter.
New Arizona Sawmill Ramps Up Production29
Vaagen Brothers Lumber, headquartered in Colville, WA,
is now operating a new sawmill in Eager, AZ. Four Corners
Forest Products utilizes timber from wildfire salvage and
fuels reduction projects in northeast AZ and northwest
NM, according to Forest Business Network. The mill can
produce 100,000 board feet of lumber per shift. It employs
15 to 30 people directly, and another 25 to 50 in logging
jobs.
New Plywood Mill For Louisville, MS30
Governor Phil Bryant joined officials from Natron Wood
Products to announce the company locating a plant in
Louisville. According to Bryant’s office, the company will
open new operations in an existing 265,000 ft2 facility.
Natron will produce specialty plywood products, such as
overlay panels commonly referred to as Medium Density
Overlay and High Density Overlay. The panels are used
primarily in large vertical and horizontal concrete structures
and other residential and commercial construction
applications. The facility will also produce high-grade
marine plywood and sanded plywood products.
Royomartin-Martco To Add Production Line To Chopin,
Louisiana Plywood Facility31
RoyOMartin-Martco Ltd. Partnership will invest $20 million
to modernize and expand its plywood facility in Chopin,
LA, according to Area Development Online. The firm plans
to upgrade drying equipment, add a production line and
create 24 jobs.
Timber Trends
Page 18
Timberlands Sales
Less Than A Million Acres Of Timberland Has Changed Ownership So Far In 2013, Counting The BrookfieldWeyerhaeuser Transaction
Weyerhaeuser Hoping Longview Timber Purchase Opens New Markets32
Weyerhaeuser Co. officials said they expect to boost business at their Longview, WA, log export dock and sawmill with
their pending purchase of Longview Timber. Officials with the Federal Way-based company said they were happy to
acquire 645,000 acres of prime timberland in Oregon and Washington that is mostly adjacent to their current holdings.
“Timberland located West of the Cascades in the Pacific Northwest is perhaps the most valuable timberland in the nation,”
Weyerhaeuser CEO Dan Fulton said in a conference call with investors.
With the Longview Timber purchase, Weyerhaeuser will increase its Pacific Northwest timber holdings by 33% to 2.6
million acres. Company officials said the acquisition will put their West Coast operations, including properties in Cowlitz
County, in a better position to meet rising foreign and domestic demand. The Longview sawmill accounts for one-third of
Weyerhaeuser’s West Coast production capacity. Company officials said their newly acquired timberlands could supply
the lumber mills to meet rising housing demand in California. “Given the growing strength of the housing recovery in
California and the strong and stable export market driven principally by Japan, the demand for high-quality US West Coast
timber is strong. And by increasing our high-value Douglas-fir holdings, we will have more flexibility to meet this demand
going forward,” Tom Gideon, executive vice president, told analysts.
Weyerhaeuser’s log export dock in Longview is the company’s largest on the West Coast, loading timber on vessels
headed for Japan. Longview Timber primarily exports to China and South Korea, so the acquisition could open Asian
markets to Weyerhaeuser, company officials said.
Timber Trends
Certification/Environmental
Adopting A Single Certification Standard Would
Destroy Jobs, Hurt Regional Economies33
While some activist environmental groups push for a
monopoly, a new study released today found that a Forest
Stewardship Council (FSC) monopoly on forest certification
in the US could destroy tens of thousands of American
jobs and hurt forest economies in the South and the Pacific
Northwest. The study also found that a FSC monopoly
would significantly reduce wood flows in the US, resulting
in substantial economic losses for landowners and job
loss for direct employees such as foresters, loggers, and
millworkers.
The new research represents the most comprehensive
economic analysis done on forest certification standards,
and was prepared for EconoSTATS at George Mason
University by Brooks Mendell, PhD, and Amanda Hamsley
Lang at Forisk Consulting. “Creating a FSC forest
certification monopoly will destroy jobs, decrease local tax
bases, and hurt the environment,” said Wayne Winegarden,
PhD, contributing editor to EconoSTATS. “American
businesses and consumers rely on forest certification
standards to ensure that their wood products come from
sustainably managed forests. This study shows that
healthy competition among credible certification programs
guarantee sustainable wood products and avoid higher
costs and job loss in the forest industry.”
The study, ‘Comparing Forest Certification Standards in
the US: Economic Analysis and Practical Considerations’
can be found at http://econostats.org/comparing-forestcertification-standards-in-the-u-s-economic-analysis-andpractical-considerations/
Bioenergy
Dogwood Alliance Launches Campaign Against
Biomass Energy34
Southern forests are being burned for electricity, and a
new campaign aims to put an end to it. Dogwood Alliance
and the Natural Resources Defense Council (NRDC) have
launched “Our Forests Aren’t Fuel” to raise awareness of
rapidly-growing practice of logging forests and burning the
trees as fuel to generate electricity. “This rapidly expanding
trend of burning trees for energy will both accelerate
climate change and destroy forests,” said Danna Smith,
Executive Director of Dogwood Alliance. “Southern forests
not only protect us from climate change, but protect our
drinking water, provide habitat for wildlife and contribute
to our quality of life. We need these companies to stop
burning trees for electricity and embrace a clean energy
future that helps to protect, rather than destroy forests.”
Page 19
At the forefront of burning trees logged from Southern
forests for electricity are some of Europe’s largest utility
companies, including Drax, Electrabel, and RWE. Rising
demand by these companies has resulted in the rapid
expansion of wood pellet exports from the Southern US.
The American South is now the largest exporter of wood
pellets in the world. Recent analyses indicate there are
twenty-four pellet facilities currently operating in the
Southeast, and sixteen additional plants planned for
construction in the near-term. Market analysts project that
annual exports of wood pellets from the South will more
than triple from 1.3 million tons in 2012 to nearly 6 million
tons by 2015. All of the South’s largest domestic utilities,
including Dominion Resources and Duke Energy, are also
beginning to burn wood with plans for expansion in the
future.
“With the advancement of clean, renewable energy
alternatives, the growing practice of burning trees for
electricity is a major step in the wrong direction,” said
Debbie Hammel, Senior Resource Specialist of the Natural
Resources Defense Council. “Our Forests Aren’t Fuel
lets the public know about the extent of this ecological
devastation and calls on utilities to end the practice. It’s an
even dirtier form of energy production than burning fossil
fuels, it destroys valuable southern ecosystems, and it isn’t
necessary.”
Energy from burning trees--or biomass--has been widely
promoted as a form of renewable energy along with
technologies like solar, wind, and geothermal. Over the
past two years, however, mounting scientific evidence has
discredited biomass from forests as a clean, renewable
fuel. Recent scientific reports document that burning whole
trees to produce electricity actually increases greenhouse
gas pollution in the near-term compared with fossil fuels
and emits higher levels of multiple air pollutants. This fact,
combined with the negative impacts to water resources
and wildlife associated with industrial logging have
discredited whole trees as a clean fuel source. But current
European and US renewable energy policies and subsidies
encourage the burning of trees as a “renewable” source of
energy for power generation, helping to facilitate the rapid
increase in demand for trees from Southern forests to burn
in power plants.
Consequently, a new industry is spawning in the South.
Companies like Maryland-based Enviva, the South’s largest
pellet manufacturer, are grinding whole trees into wood
pellets to be burned in power stations in Europe while
also supplying wood to domestic utilities like Dominion
Resources. New evidence that Enviva may be relying
at least in part on the harvesting of wetland forests has
recently emerged. Georgia Biomass, a wholly-owned
subsidiary of the German utility RWE Innogy, is also
manufacturing millions of tons of wood pellets annually to
be burned in European biomass facilities.
Timber Trends
Full case studies for companies driving the biomass
industry can be found on the “Our Forests Aren’t Fuel”
website, http://www.dogwoodalliance.org/campaigns/
bioenergy/ along with recommended actions for those
concerned about losing southern forests for electricity, and
a list of more than 70 supporting environmental groups.
Background Reading
How ‘Forest Bathing’ Can Heal35
The World Health Organization considers health to be a
state of complete physical, mental and social wellbeing.
This places responsibility for health on a wider range
of institutions and people than simply the medical
establishment. A large and rapidly growing body of
evidence suggests that people benefit in many ways
from being exposed to trees and forests. This research,
largely done in East Asia, Europe and Australia, concludes
that being in forests, particularly walking and exercising,
reduces stress, boosts immunity and calms aggression.
Being in forests also produces positive effects on a range
of disorders including obesity, mental health imbalances,
social isolation, diabetes, violent behavior, substance
abuse and even suicide.
Known as “salim yok” in Korean, or forest bathing, doctors
have recognized the numerous health-boosting effects of
being in nature. In contemporary times, The Korean Forest
Research Institute has found that chemicals from conifers
(specifically Torreya nucifera), phytoncides, are associated
with positive health effects. Packaging and proliferating
phytonicides in workplaces and elsewhere have been
shown to increase productivity. This complements research
conducted in Finland, which found that when people
spent time in nature it decreased sick days from work and
increased productivity.
As early as 1968, the architect Erwin Weckemann designed
Switzerland’s first “parcour”-- an exercise track, usually
three to four kilometers long and located in a forest, with
fitness equipment designed for a variety of strength and
flexibility exercises. Insurance companies such as Vita
and Zurich have sponsored these tracks because they
are convinced of the health benefits. The advantages
of outdoor settings have been shown to be greater than
similar exercises undertaken inside a gym. What’s more,
the 500 parcours in Switzerland are free.
Researchers have found that children taught in forest
environments concentrate better, and the symptoms
of Attention Deficit Hyperactivity Disorder (ADHD) are
significantly reduced. In the U.K., youth with behavioral
problems and criminalized youth have responded positively
to training programs that include woodland management,
green woodworking, permaculture gardening and so on.
Page 20
Perhaps the best example of the potential benefits comes
from Scotland, a country that has focused on forests as
a health strategy. The health sector and the Forestry
Commission have collaborated and provide a range of
forest-based activities, including not only parcours but
a range of opportunities for those suffering from mental
health concerns. Hospital grounds are being re-designed
to include more trees and green space because of the
recognition that people heal more quickly when exposed
to trees. People also heal faster when they have access to
windows overlooking trees and other greenery, rather than
overlooking concrete. Special efforts are being made to
increase access to forests among disadvantaged groups,
such as those with mental health concerns.
Two messages are clear. Firstly, when we ensure that
forests in the vicinities of our communities are wellmaintained they provide multiple benefits, including better
health. Secondly, significant evidence exists for health
improvements based on visiting forests, so physicians
around the world (Asia, Europe and elsewhere) are
increasingly recommending that patients exercise or spend
time amongst trees. Obviously, not all health problems can
be solved in this way, but better forest management and
conservation promise to yield great potential for population
health improvement.
Australia
Plantation-Grown Logs Account For 81% Of Australia’s
Total Harvest In 2011-201236
For the first time in Australia in 2011-12, the volume of
logs harvested from hardwood plantations has exceeded
the volume harvested from native hardwood forests.
Executive Director of the Australian Bureau of Agricultural
and Resource Economics and Sciences (ABARES), Paul
Morris, said plantation logs (both hardwood and softwood)
now comprise 81% of Australia’s total log harvest,
compared with 56% in 2000-01. “The volume of logs
harvested from the hardwood plantation estate has grown
at an exceptional rate since 2000-01, increasing from
975,000 m3 to 5.2 million m3 in 2011-12,” Mr. Morris said.
“This growth was historically driven by strong overseas
demand for Australian woodchips.”
Hardwood plantations continue to be grown predominantly
for pulpwood in Australia, with 98% of logs harvested from
these forests used for paper manufacturing and woodchip
exports in 2011-12.
Overall, the supply of logs harvested from both hardwood
and softwood plantations in Australia was 19.2 million m3
in 2011-12, compared with 4.5 million m3 harvested from
native forests. “Although exports of most wood products fell
in 2011-12, woodchips remained Australia’s largest wood
product export by value, but at the same time recorded the
largest decline in export value,” Mr. Morris said.
Timber Trends
While the value of wood product exports declined by
around 10% in 2011-12, the value of imports also fell
by 4.8%, with declines in sawnwood and paper imports
offsetting a rise in wood-based panel imports. Australia’s
trade deficit in wood products remained around $2.0 billion,
and has not changed significantly over the past decade.
The report ‘Australian plantation statistics 2013 update,’ is
available on the ABARES website.
Australia’s Consumption Of Primary Wood Products
Forecast To Increase Strongly By 205037
The consumption and import of major wood products
in Australia is forecast to increase solidly out to 2050,
according to the Australian Bureau of Agricultural and
Resource Economics and Sciences (ABARES). Executive
Director of ABARES, Paul Morris, said the models and
forecasts developed in Preliminary long-term forecasts of
wood product demand in Australia provided a timely outlook
for long-term demand of major wood products in Australia.
“The report forecasts sawnwood consumption to increase
from about 5 million m3 in 2010-11 to 6.5 million m3 in
2049-50,” Mr. Morris said. “These trends in demand for
sawnwood are influenced by housing activity--particularly
by the number of dwelling commencements which is driven
principally by population increases.”
Wood-based panel consumption is forecast to increase
from about 2 million m3 in 2010-11 to 4.3 million m3 in 204950. The demand for wood-based panels shows a strong
relationship with the value of renovations and the number
of new multi-dwellings commenced in Australia.
Page 21
FWPA Launches Softwood Timber Survey For Sales Of
Plantation-Grown Softwood Lumber38
Forest and Wood Products Australia’s (FWPA) new
Statistics and Economics Program has launched its first
service--the Softwood Timber Survey (STS). The survey
tracks monthly sales volumes by product categories for
Australian plantation softwood lumber products from
participating companies. Participating companies log
into the survey portal each month to upload their sales
volumes. Companies can then view their figures against
the aggregate for each product category and download
reports. Summary aggregate data are publicly available
for plantation softwood product sales volumes by year and
product category dating back to 2002.
Work is progressing on providing a similar service for
Hardwood Timber Products and Industry production and
Inventory data.
References
1. RISI, 6/5/2013
2. USFS via ForestWeb, 5/24/2013
3. RISI, 6/5/2013
4. WRI, 6/21/2013
5. RISI, 5/20/2013
6. WRI, 6/5/2013
7. WRI, 6/13/2013
Paper and paperboard consumption is forecast to increase
from around 4 million tonnes in 2010-11 to 7.1 million
tonnes in 2049-50. This forecast is influenced, in part, by
increased demand by the manufacturing sector as well as
some growth in demand for other uses, such as printing
and writing paper. Increased use of electronic information
sources may have some moderating effect on demand for
paper in some uses, such as newsprint.
8. Financial Post via Tree Frog News, 6/13/2013
ABARES also released its latest statistics on Australia’s
current plantation areas. The Australian plantation statistics
2013 update report finds that the plantation estate
remained virtually unchanged between 2011 and 2012, with
increases or no change recorded in each of the National
Plantation Inventory regions, except Western Australia and
Central Gippsland.
14. hardwoodfloorsmag.com via Tree Frog News, 6/3/2013
The report, ‘Preliminary long-term forecasts of wood
product demand in Australia’ is available on the ABARES
website.
19. PR Newswire via ForestWeb, 6/4/2013
9. Random Lengths, 6/11/201
10. TDN.com via Tree Frog News, 5/31/2013
11. Business Vancouver via ForestWeb, 5/29/2013
12. Random Lengths, 5/31/2013
13. Random Lengths, 6/5/2013
15. Random Lengths, 6/20/2013
16. Random Lengths, 6/18/2013
17. USA Today via ForestWeb, 6/10/2013
18. ISI, 6/10/2013
20. Press release via ForestWeb, 5/23/2013
Timber Trends
Page 22
21. RISI, 5/23/2013
22. Tree Frog News, 6/1//2013
23. GavKal Dragonomics, 6/17/2013
24. Philip Soos, Business Spectator, 6/11/2013
25. DesignBuildSource via Friday Offcuts, 5/31/2013
26. WOOD MARKETS via Friday Offcuts, 5/31/2013
27. Random Lengths, 6/11/2013
28. Random Lengths, 5/31/2013
29. Random Lengths, 5/28/2013
30. Clarion Ledger, 5/21/2013
31. RISI, 5/21/2013
32. Longview Daily News via Jones Stevedoring, 6/18/2013
33. PRNewswire via CFA, 6/21/2013
34. Press release via RISI, 5/29/2013
35. TheTyee.ca via Tree Frog News, 6/6/2013
36. ABARES via ForestWeb, 6/7/2013
37. ABARES via ForestWeb, 5/31/2013
38. Press release via ForestWeb, 5/24/2013
One SW Columbia Street
Suite 1700
Portland, OR 97258
Phone: (503) 275 9675
Fax: (503) 272 9667
Email: bglass@campbellgroup.com