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THE GLOBAL VIEW

Statistics recently released show that demand and output of forest products around the world has increased during the first quarter of 2017.
While some countries have seen zero or minus growth in some product areas for the majority figures have climbed.
Rather than list country by country’s production and demand percentages for each of its products it is fair to say that for most forest product producing and manufacturing nations the following products are doing very well.
The winners: Sawlogs, Biomass, Lumber, pulpwood and Timber,
Doesn’t that cover everything?
We hope that the remaining two quarters continue the trend.

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WALLS AND ECOLOGY

I wonder how many people who are in large scale hydraulic projects or just for replacing garden perimeter fencing have considered if their choice walls are ecologically friendly? You should and the best ecologically sound solution is tropical sheet pile walls.

They tick the ecology boxes for, production, transportation and waste processing.

Now I bet you didn’t know that?

Surely they must be the number one choice.

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US IMPORTS MORE GERMAN SOFTWOOD

We reported some months ago the US were imposing new duties and tariffs on Canadian soft to stop what they perceived was subsidized timber being ‘dumped’ onto the US market. A claim Canada has always deemed. As the initial impact of this move take hold the price of Canadian softwood has meant that it is not commercially viable for US importers.
As a result the price of European timber and in particular German softwood has become attractive to the extent that in the first half of this year the US imported 10 times as much as it has in the previous year.
Demand for softwood from US house builders remains high.

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POLAND: COURT BANS LOGGING

Poland’s Bialovieza forest is not only the best preserved lowland forest in Europe but it is also a UNESCO World Heritage site. It is the home to protected species and habitats as well as communities that depend on the forest for their way of life. As years of pressure from the world’s scientific community and the WWF the European Court of Justice has ruled that logging must stop immediately.
Increased commercial logging activity was shown to be the major threat to this unique environment and not as was argued, by shall we say interested parties, an infestation of Bark Beetle.
This is good news for not only the forest but also the creditability of our industry.

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CHINA: FLOORING OPPERTUNITIES

Interest and demand for timber flooring in China has grown over the last few years. Supply, domestic supply has been the main stumbling point. The rise of consumerism has also meant that companies have to address the concerns of their market. For example: Properly dried and prepared timber, formaldehyde free flooring and flooring that is recyclable as well as being environmentally friendly. These are all concerns that have been addressed in the west. To this end Chinese producers are looking to promote bamboo flooring as the answer to consumer concerns. From a manufacturers point of view it is fast growing and therefore will ease supply worries.

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INDIA: PLYWOOD PRODUCTION SUSPENDED

Manufacturers in the states of Yamunanagar and Jagadhri have suspended, as of July of this year, the production of plywood. For an indefinite period. The reason for this dramatic move is the imposition of a goods and service tax by those two states.

The majority of plywood manufacturers in India are small scale operations and it is argued by their trade association that as a result of this tax only the large scale operations would survive. The problem that has arisen is that in order to cover the cost of this tax plywood prices have risen and product remains unsold.

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EU MOVES AGAINST POLAND

In an unprecedented move the EU has decided to refer Poland to the European Court of Justice because of an increase of logging activities. This is not a trade sanctions issue. Poland has started logging in a protected area, a Natura site, designated to protect centuries old trees for future generations to enjoy. The site in question, the Białowieża Forest offers a vital habitat for rare species.

Our industry prides itself on sustainability and environmental awareness.

We hope this situation gets resolved.

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CANADA WAITS FOR US SANCTIONS

Following on from our report concerning the antidumping tariffs which the US is about to impose we are going to look at the situation as it is now together with the uncertainty. At the moment Canada have a year’s grace before the full impact of duties is felt.
Probably due to the uncertainty of the situation it is reported that sawmill production in British Columbia fell in February but then rose slightly in March. Production has not yet stabilised to the coming situation. It should be noted that during the first quarter of 2017 there was a slight fall in production.

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US IMPOSES DUTY RISE ON CANADA

In an attempt to stop the Canadian lumber industry ‘dumping’ cheap softwood imports into the US the American government has increased its tariff charges to Canadian companies. When fully implemented by the end of the year it is forecast that Canadian companies will see average duties of a quarter to just under a third.

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SOFTWOOD MARKETS RISE

2016 saw a record high for globally traded softwood. The U.S., UK, China, Japan and Germany were the big importers. If we break the global trade into regions we find that in North America production rose in the southern states and eastern Canada. In Northern Europe Sweden was the big exporter. Imports into China continued its rise that started in 2016. In japan demand for imported as well as domestic softwood remains high. The price of Russian exports rose during 2016 and the first part of 2017.

The region that includes Egypt, Algeria, Saudi Arabia and Morocco was the only one where demand fell.

Rising global softwood markets prices

Global softwood lumber prices trended upward in early 2017 with prices in North America hitting a 13-year high, Chinese import prices increasing 13% in 18 months and Japanese prices moving modestly higher in the 1Q/17.
Global Lumber Trade
According to the Wood Resource Quarterly, globally traded softwood lumber reached an all-time high in 2016. WRI estimates that 118 million m3 of lumber was traded last year, or 10 percent more than in 2015. Imports to the US account for about one-third of globally traded lumber and have almost doubled in five years.

China accounted for about 17% of import volumes in 2016, followed by the United Kingdom, Japan and Germany. The biggest declines in imports globally from 2015 to 2016 were to the MENA region, where demand for lumber fell in all the major markets, including Egypt, Algeria, Saudi Arabia and Morocco.

Lumber markets – North America
Lumber production in North America in 2016 was up six percent from the previous year, reaching its highest level since 2007.

The biggest rises in production occurred in the US South and Eastern Canada, while the increases in western Canada and the western US were more modest. Prices for lumber in the US have jumped during the first four months of the year to hit a 13-year high in April. Many of the commonly traded grades surged in price by more than 20% from April of 2016.

Lumber markets – Northern Europe
Sweden exported 12.9 million m3 of softwood lumber in 2016, which was the highest volume exported since 2006. The increase from 2015 was a modest 1.5%, with shipments to Denmark, Japan, China and France rising the most.

Domestic lumber prices in both Finland and Sweden continue to be close to their lowest levels in ten years in US dollar terms, as reported in the Wood Resource Quarterly.

Lumber markets – China
Prices for imported softwood lumber to China have been in a steady upward trend during 2016 and 2017 with the average import price in March 2017 being 13% higher than 18 months earlier. The biggest change in pricing over the past two year has been that prices for Russian lumber are no longer substantially cheaper than those for lumber from other supplying regions, but instead are rather close to the average import price.

Lumber market – Japan
Total housing starts were up 3.2% in Japan in the 1Q/17 as compared to the same quarter in 2016, and the economic outlook for the coming year is slightly more optimistic than that for last year. Prices for domestic and imported lumber have remained practically unchanged for almost a year in Yen terms. With the Yen strengthening against the US dollar during the first four months of 2017, lumber prices have increased so far this year in US dollar terms.

Lumber market – Russia
After a substantial decline in softwood lumber export prices during 2014 and 2015, Russian lumber prices have trended upward for most of 2016 and early 2017. Average export prices in March 2017 were 12% higher than in the same month last year, and prices for wood going to China have gone up even faster over the same time-period. Export volumes to China in the 1Q/17 were unchanged from the previous quarter, holding steady at the second highest level on record.

Global softwood lumber prices trended upward in early 2017 with prices in North America hitting a 13-year high, Chinese import prices increasing 13% in 18 months and Japanese prices moving modestly higher in the 1Q/17.

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