All posts by Jo English

Group Lebel

Maibec sells two sawmills to Group Lebel

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Maibec concluded a transaction with Group Lebel of Rivière-du-Loup for their acquisition of the Maibec lumber mills located in St-Pamphile, Quebec and Masardis, Maine. The 315 employees of Maibec that are concerned by this transaction will maintain their employment with Groupe Lebel.

“Maibec will now focus on growing its pre-stained exterior siding’s systems based on lap sidings and shingles manufactured with solid wood or wood-based engineered material. Maibec recently announced the launching of the Maibec Resistech® siding systems manufactured on LP SmartSide® from Louisiana-Pacific,” added François Tardif, president of Maibec.

Maibec inc. is a family owned company from Quebec which has been involved in wood products manufacturing since 1946. Maibec is the most important Canadian manufacturer of genuine wood sidings and also the most important manufacturer of white cedar shingles in the East of North-America.

Group Lebel is a family business that has been working in forestry for over 60 years. Headquartered in Rivière-du-Loup in Lower St. Lawrence, it is deeply rooted regionally in 13 municipalities in Quebec and 2 in Ontario. Once the transaction is complete, the company will employ approximately 950 people through first, second and third transformation activities.

 

Weyerhaeuser

Weyerhaeuser reports 2Q net sales of $2.1 billion

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Weyerhaeuser Company reported 2Q 2018 net earnings of $317 million, or 42 cents per diluted share, on net sales of $2.1 billion. This compares with earnings of $24 million, or 3 cents per diluted share, on net sales of $1.8 billion for the same period last year.

Excluding net after-tax special charges of $15 million, the company reported net earnings of $332 million, or 44 cents per diluted share for the 2Q. This compares with net earnings before special items of $212 million for the same period last year and $275 million for the 1Q 2018.

Adjusted EBITDA for the 2Q 2018 was $637 million compared with $506 million for the 2Q of last year and $544 million for the 1Q 2018.

“I am very pleased with our 2Q financial results, as each of our businesses delivered solid operational performance and capitalized on market conditions to drive strong year-over-year improvement, including the highest Wood Products EBITDA on record,” said Doyle R. Simons, president and CEO. “In addition, we delivered Weyerhaeuser’s highest EBITDA since 2006, when the company’s operations were nearly three times larger than they are today. Looking forward, housing market fundamentals remain strong, and we remain relentlessly focused on driving operational excellence and fully capitalizing on market conditions to drive value for shareholders.”

Weyerhaeuser Company, one of the world’s largest private owners of timberlands, began operations in 1900.

Photo: Doyle R. Simons, Weyerhaeuser  president and CEO.

Rossi

Rossi Group opens new sawmill in Pennsylvania

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Rossi Group LLC of Connecticut has opened its new mill at Emporium in western Pennsylvania, one of the most advanced in America, following the destruction of its sawmill by fire just 15 months earlier. The mill is expected to be fully operational by the end of the year, reports  TTJ.

Production of graded lumber will be sold to domestic and long-standing Rossi customers around the world. President Ted Rossi says the new mill will produce 50% more graded sawn lumber with the same staff and help to secure jobs for up to 250 local families for at least the next 40 years.

NZ log

NZ log market getting ‘nervy’

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New Zealand’s booming export log market is starting to catch the jitters as concerns mount about the impact of US President Donald Trump’s trade war.

Demand for New Zealand logs has been strong over recent years as local sawmills compete with the export market to source logs for local construction, at a time when demand in China has stepped up after Asia’s largest economy clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market. However, trade tensions between the US and China are creating nervousness in the market, as traders fear tariffs will hurt economic growth and dampen demand.

“Positivity has permeated the industry, at least for those selling logs, for upwards of two-years,” AgriHQ analyst Reece Brick said in his latest monthly report on the forestry market. “However, it’s getting a bit nervy all of the sudden. That’s not to say everyone’s panicking, but there are certainly more reasons to frown than we’ve seen for a long-while.

“The export scene, along with the rest of the world, is trying to figure out what the outcomes will be of the tiff between the US and China. Economic growth data, stock exchange indices and foreign exchange rates have all made unfavourable movements in the past month, and there’s little sign that the relations between the two countries is on the mend.”

Brick’s comments about nervousness in the log market echo similar concerns noted by industry watchers in the dairy and wool industries recently, where demand is said to have weakened as buyers are concerned that tariffs on end products will flow back to dent demand for New Zealand commodities.

“If there’s a common enemy for NZ log traders it’s President Trump,” said AgriHQ’s Brick. “Another month of the US and China passing tit-for-tat trade tariffs is creating global economic uncertainty, understandably causing some nerves given log values are highly reliant on macro-economic strength.”

The US and China this month imposed tariffs of 25 percent on US$34 billion of each other’s exports and US tariffs on an additional US$16 billion of Chinese goods are coming soon. The US government also said last week it was readying new tariffs on Chinese goods worth an additional US$200 billion.

Brick noted the latest set of economic data out of China indicates the trade war is already impacting China’s economy, with second-quarter growth slowing to 6.7 percent, its slowest rate of growth in almost two years, and expectations for a further decline in the third quarter.

“The consensus in the market place is that the trade tension between China and the United States could cause an economic downturn,” Brick said. “The International Monetary Fund condemned President Trump’s trade policy and advised governments to bulk up savings. The escalating trade tension may hinder global growth and delay foreign investments worldwide.

“The main issue is the nervousness that is reverberating throughout the globe, slowly rippling into NZ. Sentiment within the NZ market is mixed – the more risk averse are preparing for a drop beyond the short-term, while quite a few others are thinking this is a temporary, storm-in-a-teacup situation. Either way, no-one can be certain.”

AgriHQ’s monthly survey of exporters, forest owners and saw millers showed the average price for structural S1 logs in the New Zealand market edged up to $136 a tonne this month, from $135 a tonne last month, and marking the highest level since 1993. The average price for New Zealand A-grade export logs held steady at a four-year high of US$145/JAS.

Source: BusinessDesk

michelin

Michelin Tires to incorporate elastomers from wood chips

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Wooden tires don’t have the best ring to them, but Michelin firmly believes they’ll be a reality in 2020.

The French tire maker told Motoring in a report published this month of its plans to introduce wood into tires, and it’s all about moving away from oil.

Cyrille Roget, Michelin’s worldwide director of scientific and innovation communication, said the plan is to create more sustainable tires in the future, and experiments with wood waste have provided a solution.

The tire maker will incorporate elastomers from wood chips to replace a tire’s oil content. Today, 80 percent of materials found in tires come from oil. In the future, that percentage will drop to 20 percent by 2048, Michelin believes. And rubber will also be included, which Roget said is also sustainable.

“Trees grow everywhere. So you re-distribute the opportunity for everyone to have local sourcing. And they are renewable,” Roget added.

Much further into the future, Michelin not only foresees tires made from wood, but also a single set of tires for a car’s lifetime. The company believes one day that 3D printing will revolutionize the tire process. Where today drivers must physically change tires after the tread wears down, 3D printers could conceivably “recharge” tread. In layman terms, a 3D printer would print new tread when the tread eroded to an unsafe level. Roget even pictured a day when an electric car charging station also includes a 3D printer to “recharge” tire tread.

3D-printed tires are further down the line, perhaps 15 years at minimum, Roget said, but Michelin hopes to show its first tire made from wood in less than two years.

Linx

Linx Cargo Care to buy Pedersen Group

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LINX Cargo Care Group, and its subsidiary C3 Limited, has announced  that it has been successful in its bid to acquire Pedersen Group, a market leading provider of wood chipping and woodyard management services to pulp and paper mills, and forest owners in Australia and New Zealand.

Pedersen Group handles over 8.3 million tonnes per annum of wood fibre across its operations, in the form of logs, wood chip and hog fuel. The company employs 140 people across Australia and New Zealand and has an existing joint venture with C3 Limited, which provides wood yard management services to customers.

LINX Cargo Care Group is delighted to enter into a purchase agreement with Pedersen Group and take the next step in the evolution of both companies, which is expected to be completed mid-August.

Pedersen Group CEO Gavin Hudson said the conditional agreement reached this week will provide the Pedersen Group with an aligned and committed long-term owner, which will enable Pedersen Group to continue to focus on providing critical services to its customers.

“We are delighted to finalise this agreement with LINX Cargo Care Group. The acquisition of Pedersen Group by LINX Cargo Care Group will provide long-term stability for our employees and customers, and the operational and financial capacity to allow our business to pursue its growth aspirations”, Mr Hudson said.

Anthony Jones, Group CEO for LINX Cargo Care Group and Chairman of C3 Limited said the acquisition of Pedersen Group brings a complementary service offering to customers, including a highly skilled workforce who specialise in wood chipping and woodyard management.

“LINX, C3 and Pedersen share a long and rich history in the forestry industry. Our combined expertise and experience will provide an enhanced customer offering, further access to capital, and the opportunityto collaborate and collectively grow into the future,” he said.

“We are very excited to welcome Pedersen Group to LINX Cargo Care’s group of companies. Pedersen’swill enable our organisation to grow its services to forest owners and wood processing businesses. In addition, Pedersen’s capabilities and services complement C3’s existing customer offering and willextend our reach to a customer base in diversified global markets.

“The synergies and strategic alignment between Pedersen’s and C3’s forestry business is significant. Importantly, our company values are closely aligned, and we very much look forward to welcomingPedersen’s talented and highly skilled workforce to the team,” Mr Jones said.

Pedersen Group will continue to operate independently under the Pedersen brand following the completion of the acquisition, and all Pedersen employees will be retained by the new owner.

Media Contact: Kate Carulli 0458 458 863 or k.carulli@linxcc.com.au
Photo: Anthony Jones, Group CEO for LINX Cargo Care Group

Indian log

NZ – Indian log market activity update

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The Indian log market has reached China price parity with ‘A’ longs now selling for USD 159-160/JASm3. While volumes delivered to this market are 14% down year on year to May 2018, it has been a steady market and exporters still expect an increase in demand in Q4.

There is an increased schedule of ship arrivals from NZ over the next six weeks, so this will be a good test of this market. Containers of logs are also arriving from Germany, South Africa and southern yellow pine from the USA.

The labour shortage mentioned in previous Wood Matters continues, but some labour has returned to the mills from agricultural work. Log stocks are about 120,000m3 in Kandla and 30,000m3 in Tuticorin. The cash flow of log buyers is still tight after the introduction of GST and the increased scrutiny on bank lending compounding the weakening of the Indian Rupee against the US dollar.

Source: PF Olsen Wood Matters

Log Market

NZ Log Market – July

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Log Market Summary

July’s At-Wharf-Gate (AWG) prices for logs delivered to ports around New Zealand are relatively unchanged from June prices. However, some exporters have strategically changed some prices of various grades and lengths, but the overall average price remains unchanged. There has been the usual seasonal slow-down in log demand as the weather heats up in China and log stocks have recently risen by an average of 50,000 m3 per week to a current level of 3.7Mm3. Some log exporters are concerned the falling stock market and the weakening Chinese currency is denting confidence in the Chinese construction industry, but other log exporters are not so pessimistic on the Chinese log market.

The domestic market is still relatively flat for structural sawn timber and there are a few mills around the country reducing production slightly by undertaking maintenance etc. Sales of clear-wood timber are still relatively strong, with stable domestic demand and very strong demand from export markets.

The PF Olsen Log Price Index remained at $132 for July. While prices for pruned logs decreased in a couple of regions around the country, this was balanced by an increase in sale prices for structural logs, as well as pulp logs in the CNI. The index is currently $11 above the three-year average.

Domestic Log Market
Pruned

Mills report that their markets are the same as last month with good demand for clear-wood sawn timber. Domestic demand has been steady and export markets have been very stable with increasing demand due to strong construction figures in both Europe and the USA. Some mills are actually oversupplied with pruned logs and are having to limit log supply, as many forest managers have scheduled winter harvesting in the flatter blocks with easier access that tend to be pruned.

Non-pruned

The domestic demand for structural timber is still flat. Actual housing starts in New Zealand seem to be about 20% behind consents granted. Market commentators aren’t too sure of the reason(s) why this is the case. Many mills in NZ aren’t “busting a gut” with production and some are taking extra days off for worker rotation and maintenance etc.

Overseas, the prices for lumber in Maine, USA have doubled in the last six months. The US construction industry has rebounded with pent up demand for new houses and renovations after the recession and rebuilds and renovations required after recent hurricanes and other weather events that require. This surge in demand has coincided with a restricted supply of lumber. This restricted supply is caused by a combination of some significant forest fires in western Canada last year that caused some mills to close for two months, the trade dispute between the United States and Canada, and a shortage of railcars and trucks to move the product.

The European Organisation of the Sawmill Industry (EOS) held its Summer General Assembly in Oslo in June. Their softwood sawn-wood markets were in general described as ‘rosy’ due to healthy construction in Europe and lively demand from importers with the two main markets being the US and China. Collectively their main concerns were around log supply (Sound similar to NZ?). This lack of raw supply is even more pronounced for hardwood mills as hardwood logs are exported to China. (As an example, in 2013 the EU exported 200,000m3 of oak logs to China, and in 2017 exported 600,000m3). These factors indicate there is unlikely to be any significant increase in production and export to countries to which NZ sawmills export sawn timber. European sawmills actually see a window of opportunity to supply the US.

Exporters of NZ sawn timber have not yet seen any reduction in demand from China due to the weakening of the Chinese Yuan (CNY). The chart below shows the deprecation of the CNY against the YSD over the last month.

Report: Scott Downs Business Development Manager PF OLSEN

https://nz.pfolsen.com/market-info-news/wood-matters/2018/july/log-market-july/

Södra

Södra: 2Q consolidated net sales rose 26%

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Södra reported sustained strong operating profit of SEK 1,318 million ($149 million) for the 2Q, the best quarterly result ever. The market trend was positive for all of the company product categories and completed investments, efficiency improvements and restructuring are reflected in the result.

Consolidated net sales for the 2Q rose 26% year-on-year to SEK 6,626 million ($751 million), and the operating margin strengthened to 20%. For the first half-year, operating profit totalled SEK 2,257 million ($256 million) – the strongest half-year figure in Södra’s history. Return on capital employed rose to 26% and the equity ratio was 57%.

In the Södra Skog business area, operating profit totalled SEK 49 million ($5.6 million) for the period. The result was impacted by continued weather challenges. Following a cold and snowy winter that made transportation difficult, the dry conditions of recent months have increased the fire danger and significantly impacted forest operations.

In the Södra Wood business area, operating profit totalled SEK 210 million ($23.8 million) for the period, mainly reflecting the positive price level for sawn timber but also the ongoing restructuring process. The result refers solely to the sawmill operations, since the Interior Wood segment has largely been discontinued and is now reported under Other segments.

In the Södra Cell business area, operating profit totalled SEK 1,196 million ($136 million) for the 2Q. The profit trend was mainly attributable to the high price level, a favourable USD exchange rate and the higher volumes enabled by expansion of the pulp mill at Värö.

Mato Grosso

Brazil: Mato Grosso to double forest management area by 2030

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In the State of Mato Grosso, Brazil, there are some 3.2 million hectares of sustainably managed forests and this is expected to rise to 6 million hectares by 2030, as ITTO reports.

In all 44 municipalities in Mato Grosso the domestic economy is driven by the forestry sector which ranks 4th amongst all economic sectors. In 2017 the forestry sector contributed more than R$47 million ($12.6 million) in taxes and over R$16 million ($4.3 million) towards the State Fund for Transportation and Housing (FETHAB).

Forest management in Mato Grosso is very complex and involves compliance with numerous regulations. In addition, authorisations and supervision of forestry activities, including harvesting, transportation and trade, involves several government agencies and the Brazilian Federal Highway Police making management overly bureaucratic.