Story by DK Knight,
Co-Publisher/Executive Editor
It’s exciting to hear and read about the rebounding demand for various types of forest products and the bullish outlook for them across the next three to four years. The good news is plentiful, it’s coming from many channels, and involves both domestic and export markets.
Compared with last year, softwood lumber production is up and climbing as mills work extended hours and phase in efficiency and/or production improvement projects, according to a survey completed earlier this year by Timber Processing, companion publication to this one. Other such projects are being planned. On the lower volume hardwood side the story is much the same. Except for perhaps the bloodiest part of the severe recession, the demand for crossties and construction mats held firm, and has since accelerated. Evidently, gas and oil exploration and associated activities never slowed down much. Lower grade pallet lumber is reportedly very hard to come by, leading some pallet producers to add or expand in-house sawmills. I understand that at least a couple of well known pallet producers have even put on logging crews to help them get the logs they need for their sawmills.
For both softwood and hardwood manufacturers, the domestic market is very encouraging, the export trade buoyant. Log exports continue to make the news, with shipments increasing from Atlantic and Gulf ports, destined largely for China and India. Some of these shipments involve pine sawlogs originating in the South. In fact, according to The Beck Group, a forest products consulting firm, annual southern pine exports steadily increased between 2006-2013 and are expected to move up again this year. It will be interesting to see if this development has lasting traction.
Holley’s Remarks
When leaders like Plum Creek CEO Rick Holley speak, people in the audience tend to ignore their buzzing cell phones. For the record, Plum Creek owns about 7 million acres of timberland in 28 states, marketing up to 18 million tons of logs and wood fiber per year. In a lecture series at the Louisiana Tech School of Forestry in early May, Holley said the recent devastating spruce budworm epidemic in the western Canadian provinces has shifted more lumber production (present and future) to the U.S., most notably the South. This, in part, has led to the reopening of a few shut sawmills and prompted Canadian lumber manufacturers to buy additional existing sawmills in the region. Today four Canadian firms own and operate 30 southern sawmills. Expect these companies to add another half dozen or so by the end of the year.
Earlier, at a bioenergy conference-expo in Atlanta, Holley predicted wood-to-energy plants will not disrupt the region’s wood fiber supply chain as a whole, noting that 23 pulp-paper mills have closed in the region since 1998, shutting the market for some 24 million tons per year. Since that time the region’s timber volume has increased by 28%, he said. Holley placed the South’s pulp-paper mill wood fiber consumption currently at roughly 140 million tons per year and estimated the appetite for pellet mills would amount to 20 million tons by 2020.
Wall Of Wood
Since the recession ditched the timber industry around 2007 and kept it there for five or so years, the South has grown a wall of wood, particularly in the small sawlog and above categories. Compared with the rest of the world, the resource is as economical as it is plentiful. Add the fact that the region is friendly to businesses and has the infrastructure in place to move the wood, and you’ve got a real drawing magnet.
In addition to Canadian interests, Austrian-based Klausner is now building large sawmills in north Florida and eastern North Carolina and has announced a third for coastal South Carolina. Its Florida mill is set to begin production in the fall; the NC mill next spring.
Pellets are flowing freely at newly finished facilities in Virginia, North Carolina, Georgia, Alabama and Texas while new construction continues at a brisk pace in Georgia, Mississippi and Louisiana. As well, softwood chip exports seem to be heating up, with a steady stream continuing from North Carolina ports to Turkey and a new trade developing with Chinese buyers via Jacksonville, Fla. There are a few wood-fueled power projects taking wood fiber in Texas, Georgia, South Carolina, Virginia and Florida and a couple of others are in the works.
More Optimism
Tom Trone, Director U.S. and Canada Forestry Sales & Marketing for John Deere’s Construction & Forestry Div., in keynote remarks to the Southeastern Wood Producers Assn. in early June, painted an optimistic scene for the South’s forest products industry for the next few years. Saying “logging is a tough, unique and hidden industry,” Trone suggested “the South is short by 30 mills (building products, paper, paperboard). This is unprecedented, and it bodes well for all of us. There are lots of opportunities ahead.”
All makers of machines that harvest timber had a good 2013 and expect even better numbers this year, assuming they can produce enough machines to fill orders.
The uptick action is not limited to the South. Some sawmills elsewhere, including the West and Northeast, have upgraded and/or expanded, or intend to. Not to be overlooked are recent wood-fired power plant startups in Wisconsin, New Hampshire and New York. Sierra Pacific is considering a new sawmill in the Tacoma, Wash. area. At the Olympic Logging Conference in Victoria, BC in early May, Michael Phillips, a key figure at Hampton Affiliates, a major lumber manufacturer based in Oregon, acknowledged lingering to short-term economic and labor uncertainties at both mill and logger levels, but went on to say that in the near future “it will be very good to be in the lumber and in the logging business.”
Not everybody is benefitting everywhere, but overall the outlook for the timber trade is encouraging. It’s been a long time coming.