Pine Stumpage Price Trends in the US South

As the analyst who is responsible for Forest2Market’s stumpage price database, I work up the numbers for our bimonthly Timber Owner Market Guide. Once the guide was delivered to our subscribers, I took a quick look at historic market prices for both Pine Chip-n-Saw (CNS) and Pine Sawtimber. For this analysis, I looked at volume weighted average prices for these two products from 2006 to year-to-date 2012.

What story did the numbers tell? Since 2009, the market for these products has lacked volatility. After we saw large drops in stumpage prices for both CNS and sawtimber between 2006 and 2009, they began to level off in 2009. As Figure 1 reveals, sawlog prices (both Pine CNS and Pine Sawtimber) appear to have found a new bottom and stayed there.

Stumpage Prices--Pine Sawtimber and Pine Chip-n-Saw

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The West Is Still the High Cost Region for Wood Fiber

Western wood chip prices are declining rapidly in response to an oversupply of fiber. In many areas, timber sellers are having trouble moving pulpwood logs as whole log chippers have a glut of log inventory and chip sales are sluggish.

During much of 2010, chip prices rose dramatically as demand from increased pulp and paper production aggravated chip supply anxiety in the western region. Traditionally, sawmill residuals have been the lowest cost source of western wood chips. Declining sawmill production settled to very low levels in 2009, forcing western pulp mills to rely on costly whole log chips for as much as 50 percent of their furnish. For a deeper look at the numbers, see Daniel Stuber’s containerboard activity report.

Prices for western wood chips retreated sharply in the second quarter of 2012. Softening global pulp and paper demand, a major mill closure, seasonal mill downtime and dwindling Japanese chip imports have backed up the pipeline, leading to large price cuts for residual and whole log wood chips across the West. Continue reading

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Forestry-Related Industry Performance–April 2012

From Forest2Market’s Economic Outlook

The picture on the health of manufacturing is muddled. Manufacturing output had a strong 1Q (+10.4 percent, annualized) despite appearing to run out of gas in March (-0.2 percent relative to February). Forest products industry performance was also mixed in March: Wood Products industrial production rose by 0.3 percent, while Paper output fell by 0.5 percent (see last month’s industry performance report).

In April, several regional surveys of business activity showed slower growth (e.g., Chicago,23 Philadelphia1 and New York) but the Institute for Supply Management’s manufacturing PMI strengthened (to 54.8 percent, from 53.4 in March – where 50 percent is the break point between contraction and expansion).

Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee, wrapped up his comments on the April report by saying, “Sixteen of the 18 industries reflected overall growth in April, and the New Orders, Production and Employment Indexes all increased, indicating growth at faster rates than in March…. Comments from the panel generally indicate stable to strong demand, with some concerns cited over increasing oil prices and European stability.” Table 1 indicates Wood and Paper Products switched roles in April: Paper Products was among the 16 industries reporting growth while Wood Products was one of the two that contracted. Continue reading

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Forest2Market Releases Origins Video

Forest2Market was founded in 2000 by Pete Stewart, who remains the company’s President and CEO. This new video features the story of the company’s inception and its growth through 2012.

VIEW VIDEO

For more information about Forest2Market, visit our website.

Posted in Building Products, Forest2Market News, Forestry, Logging, Lumber, Northeast, Pacific Northwest, Pulp & Paper, Recovered Fiber, Timber Prices, Timberland Owner, US South, Wood Fuel Prices | Tagged , , , , | Leave a comment

Forest2Market Holds First Meeting of Advisory Council for Market2Mill Recovered Fiber Market Reports

Forest2Market convened the first meeting of the Market2Mill Advisory Council on May 9, 2012. The Council, which was formed to provide industry insight and advice to Forest2Market as it makes additions and enhancements to its recovered fiber market reports, discussed industry requirements for the reporting of recovered fiber export prices. As a result of these discussions, Market2Mill will soon include volume weighted average export pricing in two ways: first as a pure export price and second as a combined domestic spot and export price.

“The goal of these Advisory Council meetings is to promote the ongoing effectiveness of Market2Mill products and services and ensure they address the increasingly complex business issues present in the recovered fiber industry,” said Barbara Hudson, Manager of Forest2Market’s Recovered Fiber Practice and Executive Director of the Council. “We want to thank the founding members of the Council for their willingness and eagerness to step forward and work with us to expand the report. The quality of market analytics for the industry will improve as a result.” Continue reading

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Should I Certify My Timberland?

According to the Southern Group of State Foresters (SGSF), in their November 2011 report, “Forest Certification Programs: Status and Recommendations in the South,” the most common type of certification varies by region.

In the Northeast (a region that includes the Northeast, the Lake States and Appalachia), for instance, Forest Stewardship Council (FSC) certification is most prevalent; 70 percent of all certified forests there are certified to this standard.  Sixty percent of all certified timberland there is certified underSustainable Forestry Initiative (SFI) and 20 percent are certified under the American Tree Farm System (ATFS). Interestingly, 20 million acres in the Northeast are dual certified. As a result, the statistics in the following table exceed 100 percent when added together.

Timberland Certification

Unlike the Northeast, no timberland in the South is dual certified. Another difference is the type of certification that is most common. In the South, just 6 percent of all certified forests are FSC certified. More prevalent in the South are SFI at 55 percent and ATFS at 39 percent of all certified forests.

In the West, 34 percent of all certified forests are FSC certified, 60 percent are SFI certified and 27 percent are ATFS certified. In addition, only 200,000 acres are dual certified.

Timberland owners in the Northeast are also more likely to certify their timberlands; nearly 24 percent of all forests there are certified. In the South, this number is nearly 18 percent. In the West, the number drops to just under 5.5 percent.

As the SGSF points out in the report, forest certification rates are market driven. When consumers demand forest and wood products that are sustainably produced, the makers of those products will source their raw materials from certified timberland. A few examples of consumer demand for sustainably sourced products are taking shape right now: Continue reading

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1Q2012 Containerboard Mill Activity – US South and Pacific Northwest

Containerboard mills in the US South and Pacific Northwest experienced increased raw material costs in 1Q2012. Figures 1 and 2 compare 1Q prices for conifer wood fiber, OCC and DLK with 4Q2011 prices.

Figure 1. Containerboard Mill Raw Material Costs – 4Q2011-1Q2012

Conifer wood fiber[1]costs in the two regions moved in opposite directions during the quarter. US South delivered prices were up 1.2% or $0.91 per bone dry ton (BDT) while Pacific Northwest prices were down $0.21 per BDT, a 0.2% decrease. US South wood fiber prices were 59% ($77.88) of the cost of the Pacific Northwest average of $132.20 per bone dry ton. (For a deeper look at why this happening, see Gordon Culbertson’s report on Northwest chip prices.) Continue reading

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Recovered Fiber: Generation and Recovery

Based on the increased convenience of recycling these days—single stream curbside pickup and adoption of recycling at business parks, schools and public buildings—it seems logical that the supply of recovered fiber would be increasing as well. Because the economy, technology advances and natural disasters all impact fiber supply and generation, however, supply constraints are not uncommon.

The following table illustrates the complexity of the relationship between fiber generation and the economy. The supply of fiber began dropping in 2007, the year the recession officially started. In 2009, the year with the slowest growth during this seven-year period, fiber generation was at its lowest. As a result, though the recovery rate was 63.4%, total fiber recovered was at its lowest—50,036,000 tons. Continue reading

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Housing Market Performance–March 2012

New Residential Construction

Table 1 summarizes the Census Bureau’s March new residential construction report. The number of housing starts fell from 694,000 to 654,000, or 5.8 percent. This represents an improvement of 10.3 percent over March 2011’s level, however. In the South, the number of starts declined as builders there worked on 16 percent fewer homes during the reporting period. The number of starts was stable in the West and higher by 33 percent in the Northeast and 1 percent in the Midwest.

The number of permits issued in March increased by 4.5 percent to 747,000. This is a stunning increase of 30.1 percent over the number of permits issued in March of 2011, and the highest level since September of 2008. The significance of this number increases when compared to March’s forecast, which was 710,000. Continue reading

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SYP Tracker—April 2012 Mill2Market Results

Forest2Market’s composite lumber price increased by 9.1% throughout the month of April. The month began with a continuation of the price decline that began at the end of March; that week (Week 14), price dropped to $289/MBF. A rebound quickly began in Week 15, however, and price increased throughout the remainder of the month ending at $323/MBF, a $34/MBF increase.

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Forest2Market Adds Sorted Office Paper Grade to Market2Mill Recovered Fiber Reports

Market2Mill, Forest2Market’s recovered fiber price report and benchmark, will begin reporting Sorted Office Paper (SOP) prices and market trends in June 2012.

According to attorney James R. McGibbon, who rendered the anti-trust opinion that paves the way for the addition, the inclusion of SOP prices in Market2Mill will have significant impact on the industry: “There is very little transparency in sorted office paper pricing at present due to the lack of market reporting, and it seems quite possible that there are gross and unjustified discrepancies in prices of what are essentially commodity products. Improved pricing data to both sides in a competitive market should lead to more accurate pricing based on economic factors of supply and demand, thus improving market efficiency.”

Launched in April 2011, Market2Mill has already undergone several expansions. While the initial reports covered DLK and OCC, Forest2Market quickly accumulated enough data to split OCC prices into two categories: those traded under contract and those traded on the open market. The addition of SOP to the reports follows quickly on the heels of last week’s announcement that Mixed Paper pricing and trends will soon be added to the report. Continue reading

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Forestry-Related Industry Performance–March 2012

Industrial production at the total manufacturing level rose by 0.3 percent in February; Wood Products followed suit with a 0.1 percent increase, while Paper jumped by 0.7 percent.27 Those figures are likely to hold in March as well, since the Institute for Supply Management’s (ISM) 1.0 percentage point rise (to 53.4 percent) in PMI showed the pace of manufacturing growth sped up slightly in March. Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee, observed that, “Of the 18 industries included in the survey, 15 are experiencing overall growth. Comments from the panel remain positive, with several respondents citing increased sales and demand for the next few months.” Both Wood Products and Paper Products showed improved performance in March (Table 1). Continue reading

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Forest2Market Adds Mixed Paper Grade to Market2Mill Reports

Market2Mill, Forest2Market’s recovered fiber price and mill benchmark reports, will begin reporting Mixed Paper prices and market trends.

The impact of this addition is significant. “There is very little transparency in Mixed Paper pricing at present due to the lack of market reporting, and it seems quite possible that there are gross and unjustified discrepancies in prices of what are essentially commodity products,” said attorney James R. McGibbon, who paved the way for this product expansion with a favorable anti-trust opinion. “Improved pricing data to both sides in a competitive market should lead to more accurate pricing based on economic factors of supply and demand, thus improving market efficiency.”

Launched in April 2011, Market2Mill was the first transaction-based market pricing service for recovered fiber, offering both monthly reports and quarterly mill benchmarks to buyers and sellers of high value recovered fiber grades. It remains the only product on the market that reports volume weighted average prices derived from actual transactions submitted by subscribers. Continue reading

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Stan Parton to Speak at International Biomass Conference

Stan Parton, Forest2Market’s new bioenergy practice manager, will speak at the 2012 International Biomass Conference and Expo on Wednesday, April 18 at 10:30 a.m., during a session entitled, Measured Project Development Considerations for Emerging Pellet Producers: Continue reading

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Forest2Market Welcomes Stan Parton, Bioenergy Practice Lead

Forest2Market announced today that Stan Parton, formerly of The Parton Group, has joined the company. In his new role, Stan will lead Forest2Market’s bioenergy practice.

Parton will be responsible for the expansion of Forest2Fuel, the company’s suite of services for buyers and sellers of renewable energy fuels, and for managing product evolution and derivative product development. These services include biomass supply availability studies, tipping point analyses, site selection studies, wood fuel indexing for supply and off-take agreements and a price benchmark that buyers and sellers of wood fuel use to compare their performance to, and improve their positions in, the market.

Before coming to Forest2Market, Stan was principal in The Parton Group, a company he established in 2001. A provider of project development support services for the renewable energy and forest products sectors, The Parton Group conducted dozens of studies, including technology options analyses, plant evaluations, and many of the same services offered by Forest2Market. Continue reading

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