pnw - timbermeasure.com .pdf · april 7, 2016 coeur d’ alene, idaho ©2015 forest2market®, inc....
TRANSCRIPT
PNW Wood Markets: A Closer Look at our Domestic and
Export Timber Economies
Timber Measurements SocietyCentral MeetingApril 7, 2016
Coeur d’ Alene, Idaho
©2015 Forest2Market®, Inc. 2
Today’s Topics
• US housing and the forest industry• The future for building with wood• “Softwood Lumber Agreement”• US regional production trends• The Log Export business• Canadian lumber production• Conclusion and some predictions
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About Forest2Market
4
Forest2Market serves industries that consume wood raw materials.• Wood products, pulp and paper products and lumber manufacturers
• Bioenergy, biofuels and biochemical producers
These industries rely on Forest2Market’s market price reports, performance benchmarks, resource studies and supply chain expertise to make high value decisions and measure the results.
Forest2Market ‐Worldwide
5
2017
Helsinki office
Curitiba, Brazil office
Charlotte, NC Corporate
Eugene, OR andCoeur d’ Alene, ID
Building with wood in the US
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US housing drives NA production
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Source: US Census & Forest2Market
0
500
1,000
1,500
2,000
2,500
A shallow recession looms due to global economyReal wage growth is stagnant – part time jobsHome prices and rents increasingHome equity loans from subprime era lingerConservative outlook
0
500
1,000
1,500
2,000
2,500
Total starts Single family Linear (Total starts) Poly. (Single family)
Changing demographics of housing
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1993 87% single
Source: US Census
2015 61% single
New horizons building with wood
Framework, a twelve story retail, office and housing project using cross‐laminated timber (CLT) and other engineered wood products to be constructed in Portland, Oregon
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BC Forest Industry
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0.75
0.85
0.95
1.05
1.15
1.25
1.35
1.45
1.55
1.65
0
5000
10000
15000
20000
25000
MMBF lumber shipments C$toUS$
B.C. softwood lumber imports to US
©2015 Forest2Market®, Inc. 11Source: WWPA & Bank of Canada
SLA enacted
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
BC prod BC imports East Canada prod East Canada imports
Canadian lumber production has peaked
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BC prod falling
Eastern Canada US imports
Source: WWPA
Billion board feet
Slow Chinese demand = increased US domestic supply
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0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Volu
me
cubi
c m
eter
s
China lumber imports by selected country
Russia USA CanadaSource: China Customs
Softwood lumber agreement• Adopted in 2006; resulting from a disagreement over whether
Canadian stumpage pricing process constituted an unfair subsidy that disadvantaged the US lumber industry
• SLA expired in October 2015 • What has changed? Mountain pine beetle infestation in BC,
Canadian producers supply China’s demand for wood products, Canadian industry now owns a large stake in US lumber production
• Strong US $ makes Canadian lumber imports attractive• As demand from China falls, US producers have been concerned
about a “wall of wood” from across the border• Canadian producers see new trade restrictions as an unnecessary
intrusion on free trade, an effort to prop up values of US private forests and fear further duties could be retro‐active
• Negotiations began with PM Trudeau’s White House visit last month
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US industry outlook
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Source of US Softwood Lumber
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0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
West South Other Imports
Source: WWPA
Billion board feet
Key Economic IndicatorsTable 4. Performance Overview of Selected Industries in February 2016 (Source: ISM)
Manufacturing Services
Categories Index Wood Products Paper Products Index Real Estate Construction Ag. & Forestry
New Orders
Production
Employment
Slow Supplier Deliveries
Inventories
Customers' Inventories
Prices
Backlog of Orders
Exports
Imports
Growing at a faster rate Increase
Growing at a slower rate No change
No change Decrease
Contracting/Slowing at a slower rate
Contracting/Slowing at a faster rate
©2013 Forest2Market®, Inc. 17ISM: Institute of Supply Management
US Pacific Northwest
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US log exports to Asia drop 25% in 2015
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0
200
400
600
800
1000
1200
1400
Volu
me
MB
F sc
ribne
r
Northwest Log Exports to Asia - Breakbulk Volume
Japan Korea ChinaSource: US Dept of Commerce, courtesy of Jones Stevedoring
Hemlock logs to China
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• Chinas economy continues to decelerate while seeking stability
• GDP is slowing, credit risk is stabilizing
• US Logs outpriced due to USD, devalued Yuan, softened building effort due to structural oversupply
• Property is still viewed as a favorable investment
$0
$100
$200
$300
$400
$500
$600
$700
$800
Hemlock C‐sort logs $/MBF
Delivered cost ‐ Source: Forest2Market
Douglas Fir Exports to Japan• DF retains its
market share due to its value as a coveted building material
• Strong Yen spurs spending before upcoming tax increase
• Japanese housing starts just under 1MM
• Tenuous times amidst market turbulence
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Domestic Production
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Pacific Northwest industry margin
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$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
D‐Fir GRN/SRF STD & BTR Doug fir log cost Linear ( Doug fir log cost)
Source: Forest2Market and WWPA
The northwest is timber supply constrained and volatile
Oregon – Washington harvest and log value
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0
100
200
300
400
500
600
700
800
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2008 2009 2010 2011 2012 2013 2014 2015
OR/WA harvest Log exports Douglas fir average $/MBF
Billion board feet and $ / MBF
Sources: Jones Stevedoring, Forest2Market, State Stats
US Southern Pine
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Southern Pine industry margin
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$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
Southern Pine lumber composite Southern pine log cost Linear (Southern pine log cost)
Source: Forest2Market
Log supply is abundant, growing and accessible
Southern Forestry and Agriculture
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Canadian investment in Southern pine sawmills
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$0
$100
$200
$300
$400
$500
$600
$700
$800
Jan‐08
Apr‐08
Jul‐0
8Oct‐08
Jan‐09
Apr‐09
Jul‐0
9Oct‐09
Jan‐10
Apr‐10
Jul‐1
0Oct‐10
Jan‐11
Apr‐11
Jul‐1
1Oct‐11
Jan‐12
Apr‐12
Jul‐1
2Oct‐12
Jan‐13
Apr‐13
Jul‐1
3Oct‐13
Jan‐14
Apr‐14
Jul‐1
4Oct‐14
Jan‐15
Apr‐15
Jul‐1
5Oct‐15
Jan‐16
DF to SYP Log Pricing
DF Westside Domestic SYP MBF Linear (DF Westside Domestic)
Source: Forest2Market
Canadian forest industry moves south
• The Southern US pine region has abundant, low cost timber from productive, well managed private forests
• Canfor, West Fraser and Interfor; leading Canadian forest products companies hedge their bets, moving out of Beetle kill, into more lucrative business environment
• 35 SYP sawmills in Texas, Arkansas, Louisiana, Mississippi, Alabama, Georgia, South Carolina, North Carolina and Florida are now owned by these three companies
• 4.5 billion board feet of production capacity. Mostly framing lumber. Studs remain a NW and Northern product due to strength characteristics.
• Roughly half of 2015’s housing starts were in the South.
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Concluding thoughts• Slow but steady recovery for the US housing market• Low interest rates, cheap fuel and sluggish economy – watch pallets• Potential for multi‐level building with wood• Watch for mill closures and consolidation to continue as PNW log
supply is constrained• British Columbia production and imports are declining• Major growth for Southern US pine industry underway• Strong US $ influence on wood imports & exports• Less demand for NA wood products for China = less competition for
domestic wood supply• Squaring off with competitive Southern hemisphere industry:
productive plantations, modern pulp and panel mills; China demand and strong US $ ?
• PNW harvest levels will be flat in near‐term. Housing and exports
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Forest2Market: The highest quality wood raw material analysis available
Greg FrohnManager, PNW Market Sales
(360) 477 [email protected]
Forest2Market®15720 Brixham Hill Avenue, Suite 550Charlotte, NC 28277
www.forest2market.com
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Thank You!
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