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Hakan Ekstrom
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Mr. Ekstrom is the President of Wood Resources International LLC . The company is an internationally recognized forest industry consulting firm established in 1987, which publishes two quarterly timber price reports and have readers in over 25 countries. The Wood Resource Quarterly, established... More
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  • Lumber And Log Imports To China Slowed In Early 2014 But Picked Up In The 2Q To Reach Close To Record Highs; Russian Lumber And New Zealand Logs Increased The Most

    Wood buyers in China were more active in the late spring after a slowdown during the winter months. This resulted in increased importation of logs and lumber during the 2Q, reports the Wood Resource Quarterly. The biggest gains were in lumber from Russia and softwood logs from New Zealand.

    A slowdown in the Chinese economy impacted the construction sector in early 2014 resulting in a decline in lumber import volumes by 16% in the 1Q/14 as compared to the previous quarter. The biggest drop was in Canadian lumber shipments, which fell to their lowest levels in two years, according to the Wood Resource Quarterly

    (woodprices.com). The reduced activities in the building sector during the winter months also impacted log import volumes to China, but it was more of a break in the upward trend rather than a decline, with the 1Q/14 imports being about the same as in the 4Q/13.

    Later in the spring the economy picked up steam and the GDP rose by 2.0% in the 2Q, up from 1.4% in the 1Q/14. The annual growth rate is now on target to reach close to 7.5%, which would be slightly lower than in 2013 but still considerable growth compared to most other major economies around the world. Most of the positive news in the 2Q came from the industry and retail sectors, while the real-estate market continued to be weak with housing sales being more than nine percent lower the first half of this year compared to the same period in 2013.

    Despite the reduction in house sales, China increased the importation of both lumber and logs in the 2Q with lumber volumes climbing 19% from the 1Q/14. Russia, which currently supplies about 40% of softwood lumber to the Chinese market, increased shipments by as much as 32% from the first to second quarter this year. The second largest lumber supplier Canada, only shipped two percent more volume quarter-over-quarter. Although Canada and Russia are by far the largest suppliers of lumber to China, other countries are expanding their sales to this growing market. The biggest gains have been in shipments from Chile and Europe.

    Log importation reached an all-time high in the 2Q/14 with New Zealand, the number one supplier, increasing volumes by 15% from the previous quarter. Shipment from the

    US and Canada were also higher, while log supply from Australia and Russia fell about five percent in the 2Q. Much uncertainty hovers over how the Chinese economy will do for the rest of the year but it is not likely that we will see the same bump in wood imports in the third quarter as was the seen in the second quarter. Rather, the short-term forecast is for a flat line, or even decline in log and lumber volumes landed at Chinese ports in the 3Q/14.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 30 1:57 PM | Link | Comment!
  • Log Exports From Canada And The US To Asia Have Increased This Year With The Shipment From The US South Being 130 % Higher Than In 2013

    North America continues to supply China, Japan and other Asian countries with logs for their forest products sectors. Log exports from the US and Canada in the 1Q/14 were up 14% from last year, with shipments from the US South having increased the most.

    North American log exports to Asia over the past several years have boosted profitability for timberland owners while challenging the domestic solid wood sector mainly in northwestern US and Coastal British Columbia. In the 1Q/14, the North American export volume was 14% higher than in the 1Q/13 and 30% more than the same quarter in 2012, as reported by the North American Wood Fiber Review (woodprices.com). Almost 53% of the overseas exports have been shipped from the US Northwest, while 41% was from British Columbia and the remaining share of shipments were split between Alaska, California and the US South.

    There are nine ports that handle breakbulk log shipments along the US West Coast. The Port of Longview in Southwest Washington exports more logs than all the other eight ports combined, according to Jones Stevedoring. In the past five quarters, each of the eight ports shipped an average of one vessel per month, while the Port at Longview loaded one vessel for Asia every three days. The major exporting companies at this location are Chugoku, Weyerhaeuser, Pacific Lumber & Shipping, Sojitz and TPT.

    Coastal British Columbia is also a major supplier of logs to the Asian markets, with a majority of the timber originating from private timberlands on Vancouver Island. Over the past year, shipments have been approximately 1.5 million m3 per quarter, which is up from an average of 1.2 million m3 per quarter during 2011 and 2012.

    Perhaps the most interesting development the past year has been the sharp increase in shipments of logs in containers from the US South. These exports have been mainly to China and India. Although the total volume is still relatively small as compared to the US West Coast export volumes, the US South share of total overseas exports from the US was over six percent during the first five months of this year as compared to only two percent for the same period in 2012.

    Total shipments of southern yellow pine were up 130% for the period January through May this year compared to the same period last year, and volumes are already 70% more than they were for all of 2012. Combined with the first reported bulk shipload departing from the Port of Baton Rouge in May, we are likely to see increased exports of logs from the Southern states in the coming years.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 30 1:55 PM | Link | Comment!
  • US Sawlog Prices Started Falling In The 2Q/14 After A Three-Year Upward Trend, This Due To Lower US Lumber Prices And Weaker Log Export Markets In Asia

    After a healthy 2013 and early 2014, lumber markets in the US started weakening in the spring with lumber prices falling over ten percent so far this year. The reduced lumber prices together with lower demand for US logs in Asia in the second quarter have put downward pressure on US sawlog prices so far this year.

    The sawmilling sector in the US has been in a steady comeback mode ever since the global financial crisis struck in 2008. From 2009 to 2013, production has gone up every year, and the total production increased 28 % over this four-year period, at about the same pace in the South and the West. During the first quarter of 2014, production fell in the South by 1.1% as compared to the same period in 2013, while production was up 2.1% in the West (most in the Inland region).

    Both lumber export from and imports to the US have gone up in the 1Q/14 year-over-year. Export volumes were up 18 % with the biggest increases in shipments to China (+73%) and Mexico (+6%). Importation of lumber increased five percent in the first quarter with Canada (+6%) and Germany (+104%) accounting for the biggest volume gains compared to the 1Q/13.

    The recent price trend for lumber in North America has been downward after sharp increases last summer and fall. Prices in May this year were down between 8-17%, depending on species, from their recent peak in the beginning of the year.

    Healthy log export markets to Asia during the first quarter this year and increased lumber production along the West coast resulted in continued upward price pressure on sawlogs in the US Northwest in early 2014. In the 1Q/14, Douglas-fir log prices reached their highest level since 2006 and prices for hemlock logs were at an 18-year high. The dramatic price swings in Western US the past five years stand in sharp contrast to the US South, where average prices have only moderately adjusted upward from 2009 to the 1Q/14.

    With the demand for logs from both domestic sawmills and the export market in Asia weakening during in the second quarter, sawlog prices started to fall back in both the South and the West after having trended upward for over three years. In May, prices for sawlogs were down between 5-15%, depending on species and region, as compared to the beginning of the year.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jun 27 9:02 PM | Link | Comment!
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