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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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  • Softwood Lumber Prices Have Trended Downward In The US, Russia And Japan This Fall, While They Have Gone Up In China And The Nordic Countries

    Prices for softwood lumber imported to China increased this fall, while they fell in Japan as the housing market weakened. In the US, lumber prices were moving downward in the 3Q, while still being close to their highest levels in ten years, reports the Wood Resource Quarterly. In the Nordic countries and Russia, lumber exports have increased because of higher demand for wood in key markets in Europe and the MENA countries.

    Demand for softwood lumber has been steadily increasing on a worldwide basis since the great recession. The higher consumption of lumber has resulted in a rise in the global trade of lumber with shipments in 2014 on pace to be the highest since 2007, according to the Wood Resource Quarterly (WRQ). Following is a brief excerpt from the newly released WRQ regarding of the developments in key markets during the fall of 2014:

    Lumber market - the US

    After lumber prices peaked in the US in the late summer, prices have trended downward during the fall and November prices were about ten percent below those in August with the biggest decline in prices being for southern yellow pine. The Random Lengths Price Index, a composite of 15 common lumber grades in North America, has also fallen this autumn. Despite the recent decline, the Index is nearing higher levels than we have seen in over ten years.

    Lumber market - Northern Europe

    Lumber prices in both Sweden and Finland have been trending upward since early 2012, and in the 3Q/14 they were at their highest levels in 3 1/2 years. Swedish lumber exports have increased by as much as seven percent over the first eight months of the year and total lumber shipments in 2014 are projected to be at their highest level since 2008. The markets in Egypt, the United Kingdom and Denmark in particular have grown this year.

    Lumber market - Russia

    Benefiting from a weakening currency, Russian lumber exporters have increased export volumes during the summer and fall this year with the 3Q/14 shipments reaching a record high. The biggest increase in exports has been to China, the largest market for Russian lumber, where the shipments for the first nine months this year were 11% higher than the same period last year. The average value for lumber exported during the 2Q/14 and 3Q/14 has fell slightly.

    Lumber market - Japan

    The housing market in Japan took a hit this year when the economy was impacted by the increase in the country's sales tax in April. The reduced activity in the construction sector has impacted demand for lumber, with domestic lumber production falling and lumber import volumes declining 16%. Prices for both domestic and imported lumber have declined this fall compared to the first half of the year.

    Lumber market - China

    Despite the reduction in house sales, China has increased the importation of softwood lumber by five percent during the first nine months of this year as compared to the same period in 2013, reports the WRQ (woodprices.com). The 3Q/14 import volume was actually the second highest quarterly import volume on record. The average import prices for softwood lumber have trended upward for almost five years and were close to record highs 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.

    Dec 17 11:52 AM | Link | Comment!
  • Wood Pellet Exports From North America To Europe Plateaued During The 1H/2014

    Pellet shipments from the US and Canada to Europe have gone in opposite directions in 2014, with the shipments from the US South being up ten percent from the 4Q/13 to the 2Q/14, and Canadian volumes declining 25% during the same period, according to the North American Wood Fiber Review. The new expanding markets for pellet producers in Western Canada have instead been Japan and South Korea.

    Total shipments of wood pellets from North America to Europe plateaued in 2014 after almost four years of continuous increases. During the first two quarters of 2014, exportation from Canada and the US were just over 1.3 million tons in each of the two quarters. This was down from the all-time-high of almost 1.4 million tons in the 4Q/13.

    Pellet volumes shipped out of Canada to Europe have actually fallen by almost 25% from the 4Q/13 to the 2Q/14, while volumes leaving the ports in the US South did go up ten percent during the same time period.

    Practically all wood pellets produced in British Columbia since the first major pellet plant was built over 15 years ago have been consumed by energy companies in Europe. However, since late last year, there has been a shift in direction for some of the pellets manufactured in the province; rather than being sent on the 16000 kilometer long journey to the United Kingdom or the Netherlands, they are being shipped to markets in Asia, a trip that is only about half as far.

    South Korea and Japan together imported about 100,000 tons of pellets from British Columbia in the 2Q/14, which accounted for 17% of the total exports from the province that quarter. This can be compared to a quarterly average of only 30,000 tons during the period 2010-2012. This shift to markets in Asia is likely to continue because demand for biomass is rising in this region. The reduced shipments to Europe from Western Canada can be expected to benefit other supplying regions to Europe, including the US South, Eastern Canada and Northwestern Russia.

    There are multiple factors which are likely to increase pellet shipments from the US South to Europe in the second half of 2014. These factors include continued interest from governments in Europe in shifting from fossil fuels to renewable energy sources, the approaching winter, with its increased demands for fuel to heat homes, and the soaring tensions between Ukraine and Russia, which have implications for energy security for Europe.

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

    Dec 17 12:20 AM | Link | Comment!
  • Wood Fiber Consumption By The Japanese Pulp Industry Was Up Six Percent In First Half Of 2014

    Pulp production in Japan has picked up in 2014 as compared to 2013, with wood fiber consumption being six percent higher during the first six months of this year as compared to the same period in 2013, according to the Japan Paper Association. The increase in demand was practically the same for softwood fiber as for hardwood fiber, but the overall volume of the total virgin fiber consumption is still split at approximately 68 % hardwood and 32 % softwood fiber.

    To meet the higher wood fiber needs, domestic fiber sourcing from the domestic sawmills has increased by two percent and import volumes have gone up nine percent year-to-date. In the 2Q/14, importation of softwood and hardwood chips was up by as much as 17% and 14%, respectively, as compared to the same quarter last year.

    Despite the substantial increase in import volumes, average prices for imported hardwood chip prices in Japan declined by about 17 dollar per odmt from 2Q/13 to 2Q/14, as reported in the latest Wood Resource Quarterly (WRQ). Average prices for softwood chips were one dollar higher in the 2Q/14 as compared to the same quarter in 2013, but as much as 13 dollars higher than in the first quarter this year.

    The general trend the past four years has been that prices for imported chips have gone up in the local currency due to a weakening Yen against the US dollar, and that prices for domestically sourced chips have fallen slightly. In the 2Q/14, prices for imported softwood chips were on average 65% higher than residual chips from domestic sawmills, while imported hardwood chips were just over 20% higher than locally sourced hardwood chips, as reported in the WRQ (woodprices.com).

    The biggest change in fiber sourcing this year has been a sharp increase in softwood chip imports from the US and record high import volumes of hardwood chips from Vietnam. Other developments include higher volumes imported from South Africa, Brazil and Indonesia, while shipments of hardwood chips from Chile and Australia have continued to decline in 2014. With the recent pick-up in hardwood fiber imports to Japan, the total import volume for this year could very well reach its highest level in six years.

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

    Dec 16 12:31 AM | Link | Comment!
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