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Hakan Ekstrom's  Instablog

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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  • Global Trade Of Softwood Lumber In 2013 To Reach Its Highest Level In Five Years

    With demand for lumber being in recovery mode in a number of countries in the world in 2013, global trade of both lumber and logs were on track to reach their highest levels since before the global financial crisis in 2008, reports the Wood Resource Quarterly. The biggest increases in overseas lumber trade have been from Canada to China and from the Nordic countries to Japan.

    Global trade of both logs and softwood lumber was higher in 2013 than it was in 2012 with both products reaching their highest levels traded since before the global financial crises in 2008, as reported in the Wood Resource Quarterly (WRQ). The total value that was traded in 2013 was estimated to be over 50 billion dollars (based on data for the period January-October), with almost two-thirds of the value being that of softwood products. Although shipments of logs have increased faster than shipments of lumber the past five years, the total value of traded lumber is still more than double that of logs.

    Softwood lumber is, by far the most commonly shipped wood product worldwide and the US continues to be the major destination for internationally traded lumber, with Canada currently supplying almost 96% of all imports to the country. Lumber shipped by break-bulk vessels or by container ships accounted for more than half of the total volume of lumber traded in the world in 2013. The largest overseas trade flows were between Canada and Asia, followed by shipments from Sweden to the United Kingdom and Northern Africa (see detailed trade data in the latest issue of the WRQ).

    The biggest changes in overseas lumber trade in 2013 have been a continued increase in exports from the Nordic countries to Asia (mainly Japan) and from North America (mainly Canada) to China, while there has been a decline in trade within Europe and in shipments from most supplying countries to Northern Africa, according to the WRQ (woodprices.com). The unrest and uncertain political situation in Egypt has left supplying sawmills searching for alternative markets and many lumber companies in Europe and Russia have found new opportunities for increased sales in Asia over the past 12 months.

    There has been an unprecedented increase in demand for softwood lumber in Asia the past few years, with the three major importing countries: Japan, China and South Korea together importing more than twice as much lumber in 2013 as compared to five years ago.

    With a strengthening lumber market in the US it is likely that Canadian sawmills in the western provinces may redirect some of their current shipments that are currently going to Asia into the American market in the coming year. As a consequence, opportunities would rise for European and Latin American lumber producers to expand exportation to both Japan and China.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 21 12:56 PM | Link | Comment!
  • Wood Fiber Costs For Hardwood Pulp Producers Have Fallen 17% In Two Years And In The 3Q/13, Were The Lowest They Have Been Since 2009

    Wood fiber costs, which account for about 60% of the production costs when manufacturing pulp, have been in steady decline in many parts of the world for the past two years, reports the Wood Resource Quarterly. In the 3Q/13, the Hardwood Fiber Price Index (HFPI) had fallen 17% since 2011, while the Softwood Fiber Price Index (OTCPK:SFPI) was down 10% over the same period.

    The wood costs for the global pulp industry have trended downward in a majority of the pulp-producing regions of the world the past two years, according to the Wood Resource Quarterly (WRQ). This has mainly been the result of lower prices for market pulp but also because of reduced pulp production and increased supply of wood fiber in some regional markets.

    As the costs of energy, labor and chemicals have changed relatively less than those of wood fiber the past year, the wood cost as a percentage of the production costs when manufacturing pulp have fallen. In the 2Q/13, wood fiber costs accounted for just over 59% of the production costs on a worldwide basis, down from approximately 63% in the 2Q/12 but up from 51% in 2006, according to Fisher International.

    Although wood fiber prices have trended downward for most of the past few years, softwood fiber prices were actually up from the previous quarter in the 3Q/13 in most countries worldwide with just a few exceptions including Sweden, Brazil, and Australia. The largest price increases were seen in the US South, Germany, France and Spain.

    The Softwood Fiber Price Index (OTCPK:SFPI) edged up to $97.94/odmt in the 3Q/13, as reported by the WRQ (woodprices.com). This was $0.19/odmt higher than in the previous quarter but over 10% lower than two years ago.

    The Hardwood Fiber Price Index (HFPI) fell for the fourth consecutive quarter to $98.15/odmt in the 3Q/13. This was down 2.3 % from the previous quarter and the lowest level since the 2Q/09. The biggest price declines have been in Asia and Latin America, while wood costs in Europe, Russia and North America have continued to be relatively stable the past year. In just two years, the HFPI has fallen by almost 17%.

    Note. The Global Wood Fiber Price Index is a weighted average of delivered wood fiber prices for the pulp industry in all regions tracked by the publication Wood Resource Quarterly. These regions together account for 85-90% of the world's wood-based pulp production capacity.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 21 12:54 PM | Link | Comment!
  • Increased Production Of Lumber In The US, Lower Prices And Higher Importation From Overseas In The 1H/2013

    Higher lumber consumption in the US has resulted in both increased domestic production and a rise in importation of lumber in 2013, reports the Wood Resource Quarterly. Total production in North America was up almost seven percent from January through July this year compared to 2012, and imports from Canada and overseas jumped 18% during the same period.

    North American lumber production was up 6.7% during the first seven months of 2013 as compared to the same period in 2012, with all regions on the continent showing higher production this year, according to the latest WWPA data. The biggest increases occurred in the Canadian provinces of Quebec and Alberta, and in the Northwestern states of the US. Lumber production levels in the US and Canada have gradually gone up since 2009 and lumber shipments are currently back up to the same levels as in 2008, just after the beginning of the global financial crises, as reported in the Wood Resource Quarterly. There has been an over 35 percent increase in production the past four years, with the biggest gains on the US west coast.

    After the sharp increase in lumber prices in 2012 and early 2013, prices for the common species; Douglas-fir (US West coast), South pine (US South) and spruce-pine-fir (Canada) fell approximately 25 percent from March, which was a eight year peak to June because of weaker demand and healthy supply during most of the spring and summer months. During the summer and early fall, lumber prices have recovered somewhat, but are still substantially below the levels reached in the 1Q/13.

    Despite falling lumber prices during the second quarter, the improved housing market in the US, attracted more interest from a number of countries overseas. The importation of softwood lumber over the first seven months this year has been the highest since 2008, which was just after the collapse in housing market.

    Canada is still, by far, the largest lumber supplier to the US with a market share of over 96 percent by volume and 92 by value of total imports. However, overseas lumber suppliers in Chile, Sweden, Brazil and Germany have all increased shipments to the US in 2013. Importation in the 2Q/13 were up 13% from the 1Q/13 and as much as 24% higher than in the 2Q/12. For the first half of 2013, the largest increases year-over-year have been in shipments from Sweden (+250%), Germany (+63%) and Chile (+48%), according to the WRQ. With continued weak demand for lumber in Europe, the Middle East and Northern Africa it is likely that lumber shipments from European sawmills to the US will continue to increase in the 4Q and into 2014.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Dec 21 10:32 AM | Link | Comment!
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