Lumber News Archives: May 2012

Lumber News Archives: May 2012

Forestry, Paper, and Packaging ; Madison’s Timber Preview; US Housing Starts ; Wildfires; WorkSafeBC Announcement ; Softwood Lumber Export Tax Reduction Forestry Week ; Canadian Lumber Production, Shipments; Canada Housing Starts, Building Permits ; Housing Starts, Japan; Sawmill Safety Order, Insurance Rates; Sawmill Fires ; Madison’s Timber Preview ; Financial Results ; BC Contractor Fatality Sawmill Accidents ; US New, Pending Home Sales; CMHC Oversight ; Resolute Attempt at Fibrek Takeover ; Japan 2011 Wood Imports BC Timber Supply Projections ; Madison’s Timber Preview ; US Housing Starts, Home Sales; WorkSafeBC Concludes Babine Study ; BC Snowpack Threatens Fraser River ; West Fraser Appoints

May 30, 2012

Forestry, Paper, and Packaging

Further to last week’s coverage in your Reporter of the Pulp and Paper Products Council’s International Pulp Week, this week Madison’s breaks down the PricewaterhouseCoopers annual forestry conference, which took place on May 10 in Vancouver, British Columbia. Over the course of a very long day, which started with a breakfast networking session at 7:00am, analysts, agencies, and company CEO’s gave presentations on a wide range of topics; from log and lumber demand to US housing to a paper industry outlook, and more.

The first session of the day, titled “Financial Performance” included speaker Jock Finlayson, VP and Chief Policy Officer for the Business Council of British Columbia. Finlayson gave a very good presentation at the Council of Forest Industries AGM in Prince George, BC, last September, so Madison’s was excited to hear an update.

“US housing starts will inch up to 700,000 annualized this year, then slowly keep moving higher over the next several years,” Finlayson explained. “Historically there are 1.3 million new households formed in the US per year. For the past several years the figure has been half that. There are currently 1.5 million 18 – 30 year olds in the US, so there could be a surge in demand for homes by 2015.”

In the first afternoon session, Bob Flynn, Director of International Timber at RISI, gave a presentation titled “Global Timber and Solid Wood Market.”

“By 2014 the US will have over 1 million housing starts, due entirely to multi-family building, which doesn’t use as much wood as detached homes do,” said Flynn. “There will be an increase in US softwood lumber consumption, but continued low home building figures mean demand will be below 50 million board feet annually until 2015. As a result, Canadian lumber producers will still be dependent on offshore markets. And China, as a major customer for Canadian wood products, will not go away.”

PwC Global Conference

The final session of the PwC forestry conference was the always well-attended executive panel, which ends with a lively Q&A of the CEO’s. This year the panelists were Ken Shields of Conifex and John Williams of Domtar. Resolute Forest Products’ Richard Garneau was also supposed to speak but at the last minute had to cancel.

The first question from the floor was about a possible threat of fibre shortage. Shields explained that, due to the ongoing contraction in BC’s harvest following the mountain pine beetle infestation, “the sawlog harvest will fall by more than 33 per cent, with a shift to pulp log harvest and biomass salvage. We are coping with degrading quality and a falling Lumber Recovery Factor. The break-even benchmark lumber price has risen $50 mfbm in the past two years, from US$220 in 2010 to US$275 mfbm now.

“At the moment, significant proportions of the timber left roadside is not utilized [due to low quality].”

To another question about challenges in recruiting and retaining talent in the forest products sector, Williams said his company puts a focus on “second division people. We must plan for ten years ahead, we have to give young people real jobs. We have to hire better, and remove people who don’t perform.”

Shields answered that the forest industry is “fishing out of the same talent pool as mining and oil & gas. Over time, market forces will correct and our current concerns will become less intense.”

A question about the impact of the mountain pine beetle infestation on small, forestry dependent communities, and what can be done to mitigate those effects elicited very interesting comments from Shields.

“There is an old expression: every shot on the golf course makes somebody happy.”

This brought a hearty round of chuckles from the predominately male, middle-aged audience.

“There is a huge amount of biomass available, which in and of itself amounts to a mitigation strategy. Canadian lumber producers must be released from the 2006 Softwood Lumber Agreement when it expires. British Columbia is no longer the largest, lowest cost lumber producing area in North America.

“The pulp side gets nowhere near its fair share of costs in fibre procurement. BC pulp mills earned $45 per cubic metre of roundwood equivalent of EBITDA, while lumber mills earned $7 per cubic metre of wood processed of EBIDTA. There needs to be a higher value accorded to the non-lumber part of the sawlog. The current model allows harvest of stands that are too dense, which has the effect of upping the Annual Allowable Cut.

“There also needs to be a review of pricing of residual fibre in BC.”

The moderators paused momentarily to allow for more questions from the floor, at which point someone asked Shields a follow-up question: if the fibre left in the woods is around 30 per cent, what changes in the future could make the business more economic?
“There needs to be higher prices,” responded Shields. “Fibre consumers source more fibre from in-forest residuals than from sawmill residuals.

“There must be an increase in price of sawmill residuals, and a change to the log pricing model for the harvest, so pulp mills have an incentive to buy sawmill chips rather than grinding up whole pulp logs [as their feedstock].”

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines the latest quarterly reports for Canadian forest products companies, and looks at recent developments and announcements in their business practices.

Contact us any time for a subscription.

US Housing Starts

The US Commerce Department said Wednesday that housing starts increased 2.6 per cent to a seasonally adjusted annual rate of 717,000 units. March’s starts were revised up to a 699,000-unit pace from a previously reported 654,000 unit rate.
Groundbreaking for single-family homes increased 2.3 per cent. This segment accounts for most of the market. Starts for multifamily homes advanced 3.2 per cent.

Permits to build single-family homes rose 1.9 per cent in April to a 475,000-unit pace. Permits for multifamily homes fell 20.8 per cent to a 240,000-unit rate.

Home Building, US

US Home construction is near a three-year high.

Some economists have noted that a warm winter led companies to move up some hiring and accelerate other activity — including homebuilding — that normally wouldn’t occur until spring. That gave the appearance that the economy had strengthened in January and February and weakened in March.

But Paul Ashworth, chief US economist at Capital Economics. noted that the overall trend in housing starts has been running at roughly the same annual pace — approximately 700,000 — over the past six months, according to Associated Press. That’s 100,000 more on average than the pace for the previous six months.

Ashworth said the higher level suggests demand is increasing and the mild winter had less effect than some economists had thought.

Wildfires

A northern Colorado wildfire grew from 1,000 acres to 5,000 acres Thursday and forced the evacuation of 65 homes, reports The Associated Press. US Forest Service officials said the blaze about 20 miles northwest of Fort Collins had scorched 1.5 square miles of land but rapidly expanded Thursday fueled by erratic winds.

The blaze was one of several burning in the West. A fire in northern Arizona that led to the evacuation of a historic mining town grew to more than 12 square miles even as the outlook improved from earlier in the week.

Authorities ordered evacuations of about 80 homes near Poudre Canyon on Thursday. Residents of about 65 of those homes were allowed to return by early evening, with instructions to be ready to leave again if conditions change.

Meanwhile, The Hewlett fire in Colorado has grown to 7,673 acres, prompting officials Friday to declare an emergency. That fire was 5 per cent contained.

In an executive order, Colorado Gov. John Hickenlooper declared the emergency because of the fire in Larimer County. The move makes US$3 million in state emergency funds available for firefighting.

Fires, Canada and US

Officials in Arizona continue fighting four blazes. The fires grew by about 5,000 acres overnight to about 24,000 acres, according to an updated status report. The fires have been growing throughout the week as officials have had to fight low humidity and gusting winds.

Meanwhile north of the border, Southern Manitoba and northwestern Ontario have the most extreme risk of forest fires in the country, according to Natural Resources Canada’s updated fire danger map.

A blaze burning near Lodgepole, AB, about 175 kilometres southwest of Edmonton, was “being held” after firefighters spent days battling the blaze, which had put residents in that area on evacuation notice. As of Monday afternoon, that fire destroyed about 140 hectares, said Whitney Exton, a wildfire information officer with Alberta Sustainable Resource Development.

Residents of a dozen homes in the Forsythe Lake area are under a voluntary evacuation order, Bonnyville RCMP said late Monday afternoon, as shifting winds changed the direction of a nearby wildfire.

Officials said the fire, about 275 kilometres northeast of Edmonton, is threatening homes about four kilometres north of Moose Lake.

A massive fire near Grassland is currently 1,000 hectares and burning out of control.

Alberta’s forested regions from Waterton Lakes National Park to north of Fort McMurray are under a fire ban.

WorkSafeBC Announcement

British Columbia’s worker safety agency, WorkSafeBC, has issued a statement about some similarities discovered between the Babine Forest Products’ sawmill explosion in Burns Lake, BC, in February, and the Sinclar Group’s Lakeland stud mill explosion in Prince George, BC, last month.

Sawmill Safety

Says the WorkSafeBC announcement, “These are observations; no final conclusions have been reached with respect to cause and underlying factors.

In both investigations, the ignition sources appear to have been located at the conveyor level, where electrical and/or mechanical equipment was in operation in areas contained by walls and equipment. These areas are at the basement or lower level of both of the mills under investigation.”

WorkSafeBC is telling mills not to use compressed air to clean up, for fear it might actually trigger the explosion the cleanup is designed to prevent.

In a conference call with industry leaders Monday, Director of investigations Jeff Dolan said sweeping, vacuuming, and wetting down the sawdust are recommended cleanup strategies that will lessen the risk of explosion.

Dolan explained to Madison’s in a phone interview Thursday, “Investigators think it is significant that the point of origin for both mills was in the conveyor level, in the basement. Due to the catastrophic damage at both sites, our staff used engineering and site drawings to learn that at both mills these conveyor areas would have been closed in either by walls or by large pieces of equipment. This circumstance would have provided containment, which is one of the factors needed in an explosive event.

“While sawdust is a possible fuel source, so are natural gas and propane. Industry is directed to pay special attention to these areas and to check whatever fuel source there may be.”

Softwood Lumber Export Tax Reduction

Jones & Jones Customs Brokers and Trade Consultants sent out a reminder to clients this week about the timing of loading lumber in advance of the reduction in the 2006 SLA export tax coming on June 1.
Michael Jones, President, explained in an email, “In order to take advantage of the reduction exporters will not be able to pre-ship and position loads close to the border for “crossing” on the 1st, but, must not load the lumber on a rail car or trailer for shipment to the US until after June 1st. In other words, if the “ship date” precedes the June 1st effective date, and even though the lumber is entered and crosses into the US on or after June 1st, it would still be subject to the May Export Surcharge rate. Shipments to reloads are captured by the date they leave the last reload prior to direct delivery to the US, not the date they leave the mill or reman.”

May 23, 2012

Forestry Week

The Pulp and Paper Products Council and PricewaterhouseCoopers held their annual forestry and paper conferences this week in Vancouver, BC. Concurrently, the Wood Markets Group held its Global Softwood Log and Lumber Conference. Stakeholders, investors, and analysts from the solid wood, pulp, and paper industries gathered to network and hear presenters from around the world.

The keynote speaker at the PPPC’s Pulp Week was Patrick Moore, of Greenspirit Strategies and original founder of Greenpeace. Reporter readers will remember that Moore also delivered the keynote address at the Truck Loggers Association AGM in January. He is a dynamic speaker with an excellent overall viewpoint on resource management, specifically in forestry.

Conferences

Morning presentations on Monday were kicked off by Donna Zhang, CEO of Vinda International Holdings, a major Chinese personal care products manufacturer. Zhang’s presentation, “Perspective on the Chinese Tissue Market“, explained that — as the world’s second largest tissue producing country — China’s macro-economic conditions continue favourable, and that trend is expected to remain.

“From 2010 to 2011, China’s tissue market grew by 22 per cent while tissue exports dropped by almost 4 per cent,” said Zhang. “As manufacturing and sales centres move inland, the tissue industry will become more consolidated. From our pulp suppliers, consistent quality is critical, then second is the need to keep costs stable.”

Robert Wilson, Director at AMEC Forest Industry Consulting, gave a forecast of the “Pulp and Paper Industry in 2035 to 2050: Making the Right Choices Today.”

Echoing sentiments expressed by all presenters, Wilson focussed on future demand for paper products in emerging markets.
“Emerging economies are not necessarily consumer-driven,” explained Wilson. “There are issues of resource scarcity, particularly in the areas of fibre, energy, and water. For example, oil usage is approximately 1-5 barrels per capita per year in the developing world, whereas it is 10-20 barrels in developed countries. There is huge demand for energy coming, but increasing difficulty to extract that fuel, which is going to increase costs.

“Operations with high energy costs; old plants or those with old boilers, are most at risk of pain. These operations will be unable to get the energy contract they have made in the past, and will be unable to switch to renewable and alternative fuel sources, or put in waste-to-energy components. For example, two-thirds of the aluminum industry in Europe will soon be shutting down due to high energy costs.”

Wilson maintained that the future is in oil replacement, in bioenergy, biomaterials, biochemicals and biotechnology.
“Currently, prices in renewable energy markets are artificial because they are based on targets,” continued Wilson. “The realities are that European industry will require a US$50 billion investment to meet that region’s standards for 2020. Likewise in the US, investments to the tune of US$80 million will be needed by 2022.

“It is not possible to sustain these legislated targets with current global forests. By 2030, the cost of cellulosic ethanol will come close to that of ethanol and petrogas. In fact, I think this will happen sooner than 2030.”

Tuesday morning started with the always excellent analyses provided by PPPC staff.

Paul LeClair, PPPC Vice President and Chief Economist, talked about the paper side.

“Printing and writing paper demand for 2011 was 94 million tonnes, this is down from the 2007 peak of 105 million tonnes but up from the low in 2009,” began LeClair. “We forecast demand to grow by 0.7 per cent per year to 2014. Declining demand in the industrial world will be offset by growing demand in emerging markets. Capacity, meanwhile, will grow by 0.9 per cent per year to 2014. There is a high likelihood for more capacity being taken out, which will balance the new production coming onstream this year and in the next couple of years.

“China has been so aggressive in pushing paper exports, especially in the coated wood-free grades, that the US and EU are imposing trade barriers in the form of duties.”

“The big story is in tissue,” continued LeClair. “Global tissue demand will rise by 3.5 per cent. The rate of growth for tissue capacity will be between 4 and 5 per cent in 2012 and 2013, which is approximately 3.1 million new tonnes. This will be mostly in the emerging markets.

“Due to the probable decline in printing and writing paper demand, even with the growth of tissue usage we see a slowdown for market pulp coming.”

Next Emanuele Bona, VP of Europe for the PPPC, provided an update on global pulp.

“In 1Q 2012 there was the highest global demand for NBSK (northern bleached softwood kraft) pulp in history,” Bona started off. “This was driven by increased demand from China, which had a 30 per cent rise in demand for that quarter.

“There is still not solid data on consumer stocks in China, but there are some things we do know. Information provided by shipping companies, some of which is admittedly anecdotal, tells us there has been on average approximately 400,000 to 500,000 tonnes of market pulp stores in China either in transit, stored in warehouses at the ports, or stored in warehouses inland. However currently, our information is that there is approximately 900,000 tonnes. This is of course an estimate. Regardless, it suggests historic high levels.

“In chemical pulp, last year there was negative growth. So far this year demand is growing, with China again taking the lead. In 1Q 2012, demand for chemical pulp from China was up 18 per cent compared to the same time last year. There is a question however: if this is due to stockpiling. Is demand reflecting consumption? We ask this because from 2000 to 2008, the average growth of chemical pulp demand was 11 per cent, then in 2009 to 2011 it was 30 to 35 per cent.

“We don’t believe this is based on actual demand, for several reasons. First of all, there were a huge amount of printing and writing, and tissue, machines started up in China in the past couple of years, all of which had a one-time need for start-up inventories. Secondly, there was a lot of speculative buying in 4Q 2011 due to low prices. And third, there is a time lag between paper production and shipments, so we are still waiting for data on that.

“In the end, we can say for sure that global demand for pulp capacity was up in 2011, and will not be up by as much this year,” concluded Bona. “We predict moderate growth in 2012, then more substantial growth in 2013 and 2014, which will be focussed almost entirely in Russia, Latin America, and China.”

Canadian Lumber Production, Shipments

February 2012 lumber production by Canada’s sawmills increased 4.6 per cent from January, to 4,675.9 thousand cubic metres, said Statistics Canada Friday. Compared with February 2011, lumber production increased 8.6 per cent.

In February, sawmills shipped 4,424.6 thousand cubic metres of lumber, a 6.5 per cent increase from January 2012.

Canada Housing Starts, Building Permits

In April, Canadian housing starts rose to the highest level since September 2007 on multiple-unit projects, to an annual pace of 244,900, a 14 per cent jump, Ottawa-based Canada Mortgage & Housing Corp said Tuesday. That compares to 214,800 starts in March.

Housing Starts and Permits, Canada

The seasonally adjusted annual rate of urban starts increased by 18 per cent to 226,200 units in April. Urban single starts increased modestly by 0.6 per cent in April to 67,700 units. Meanwhile, multiple urban starts increased by 27.4 per cent to 158,500 units.

April’s seasonally adjusted annual rate of urban starts increased by 56.5 per cent in Quebec, by 12.2 per cent in Ontario, by 6.3 per cent in the Prairies and British Columbia, and by 2.6 per cent in Atlantic Canada. In each region, the increase was mainly due to multiple starts, particularly in Quebec and Ontario. Meanwhile, single-detached starts decreased in April in all regions, with the exception of Ontario, up 7.9 per cent.

Rural starts were estimated at a seasonally adjusted annual rate of 18,700 units in April.

Meanwhile, in March, contractors in Canada took out building permits worth $6.8 billion, up 4.7 per cent from February following a 7.6 per cent increase the previous month, said Statistics Canada Monday. The gain was the result of higher construction intentions for both institutional and commercial buildings, mostly in Ontario.

In the non-residential sector, the value of permits rose 13.9 per cent to $2.9 billion, following a 37.7 per cent increase the previous month. This was the highest level since June 2010, said StatsCan. Increases in the institutional and commercial components more than offset declines in the industrial component. Most provinces posted advances, with Ontario accounting for most of the growth.
The value of residential permits declined 1.3 per cent to $3.9 billion, the third monthly decrease in a row. Decreases occurred in six provinces, led by Ontario. Alberta posted the largest increase, followed by Nova Scotia.

The value of single-family dwelling permits declined 1.7 per cent to $2.3 billion, the third consecutive monthly decrease. Gains in six provinces, led by Alberta, were not enough to offset decreases in the remaining provinces. The largest decline was recorded in Ontario, followed by Newfoundland and Labrador and New Brunswick.

The value of multi-family dwelling permits fell 0.7 per cent to $1.6 billion.

Housing Starts, Japan

March new home building in Japan increased by 5 per cent compared to March 2011, to 66,597 units, according to the Japan Lumber Reports. The seasonally adjusted rate was 848,000, a 5.7 per cent drop from February.

Condominium building drove the increase, with over 10,000 new condo units started per month for three straight months. Units built-for-sale and condo starts together were up 20 per cent compared to February.

Japan Housing Starts

Japan’s detached units built for sale in March were up 4.1 per cent, says the Japan Lumber Reports.

New starts for wood-based units were 35,612, up 0.4 per cent from February, and to a 53.5 per cent share of total starts, a 0.5 per cent increase over February.

Starts in the earthquake and tsunami-damaged prefectures showed the most gains; up 77.7 per cent in Miyagi, 17.8 per cent in Iwate, and 21.3 per cent in Fukushima.

For Japan’s fiscal year 2011, which ended in March 2012, total new units were 841,246, a 2.7 per cent rise over 2010. Units built-for-sale, having increased for two consecutives years, were 239,086, up 12.7 per cent, and condominium starts were 120,092, a 22.8 per cent jump over the previous term.

Wood-based units were 466,434 at fiscal year end 2011, a 0.5 per cent increase, to a 55.4 per cent share of total starts said the Reports.

Sawmill Safety Order, Insurance Rates

The British Columbia Safety Authority (BCSA) Tuesday issued a safety order relating to regulated electrical equipment ordering sawmills to verify that they have valid operating permits in place, that proper maintenance procedures are being carried out, and that incidents are being reported as per existing BCSA directives.

This measure is precautionary and part of the BCSA’s ongoing investigation into the recent explosions and resulting fires at two BC sawmills that resulted in fatalities and serious injuries to workers. This safety order supports a directive order issued last week by WorkSafeBC.

Meanwhile, the mill explosions, three months apart, have put insurance brokers, underwriters and customers on edge. Uncertainty intensified after April 30, when the Lumbermen’s Underwriting Alliance – which had already served notice that it was getting out of the Canadian market – told clients it was cancelling their policies, according to the Globe and Mail.

Another Sawmill Safety Order in BC, Insurance

While the BCSA safety order is specific to owners and operators of sawmills around electrical equipment, other regulated technologies are also still under investigation at Babine Forest Products, including propane and natural gas. The BCSA is not yet prepared to rule out propane or natural gas as either an ignition or fuel source at Babine while the investigation is ongoing.

The investigation related to the Babine incident is currently in the analysis phase with no predetermined end date. A BCSA team is supporting the Lakeland investigation, which is in the information gathering stage. In both the Babine Forest Products and Lakeland Mills investigation, WorkSafeBC has taken the lead on site control and incident investigation.

Insurance options for BC sawmill operators have been shrinking since at least 2010, when LUA, a major insurer headquartered in Boca Raton, FL, announced plans to scale back its Canadian operations.

Last year, LUA said it was getting out of the Canadian market altogether, and would wind down its operations by the end of 2012.
The LUA decision affected about 48 sawmills across Canada, about 35 of those in BC, said Larry Grant, vice-president of national forestry practice with Hub International, a Chicago-based insurance broker, to the Globe and Mail.

After the notice, insurance might remain in effect for 15 or 30 days, depending on whether LUA was the lead insurer on a given policy, said Mr. Grant.

The industry turmoil means sawmills are likely to face higher premiums based on factors that include location, previous insurance claims, equipment and the age and structure of plants, he said.

“To see a 100-per-cent increase on a good, clean sawmill operation isn’t going to be unheard of,” he said.

May 16, 2012

Sawmill Fires

Yet two more sawmill fires have occurred, this time in the US, since last week’s horrific explosion at Sinclar Group’s Lakeland stud mill in Prince George, British Columbia.

These in addition to two big mill fires in Ontario, and six in the US since the beginning of
2012, as mentioned in last week’s issue of your Madison’s Lumber Reporter.
On Friday night, ten fire departments battled a blaze at Post Hardwoods in Hamilton,
MI, according to the Holland Sentinel. The fire was reported to 911 by a passer-by about
11 pm Friday. No one was injured. as employees had gone home hours before the blaze
was discovered. Hamilton Fire Department Chief David Haverdink was on the scene
Saturday morning, April 28, with firefighters investigating what caused the blaze in six
interconnected buildings at the lumber mill. Haverdink estimated the losses at US$3
million.

“We’ve got fire load all over,” he said referring to the logs and wood as firefighters
looked for hot spots in the crumpled buildings and charred machinery at the sawmill in
Heath Township, said the Sentinel.

Haverdink told reporters he suspects the fire began in a debarking machine though
the cause is still under investigation.

Stimson Lumber Company employees at the sawmill near Hagg Lake, OR, extinguished a small fire in the mill’s powerhouse Tuesday afternoon, said the Gaston Rural Fire District to OregonLive. The blaze started when a spark ignited sawdust, which powers the plant’s boilers, said Ken Bilderback, a Gaston fire spokesperson. Stimson employees broke open parts of the wall and put out the blaze, Bilderback said. Fire crews,
using a thermal imaging camera, made sure the fire did not extend farther into the wall.
Stimson employees had extinguished the hot spots, says OregonLive.

Combustible Dust

Meanshile, WorkSafeBC this week released a preliminary report
on the ongoing investigation into the cause,
or causes, of the tragic explosion and fire at
Hampton Forest Products’ Babine sawmill in
Burns Lake, BC, in January of this year. As
an interim report, the
new release did not
provide a definitive
cause for that fire, however it did shed light
on circumstances and also ruled out several
possible ignition sources.

Natural gas and propane were two of the
potential fuel sources being investigated, as
was sawdust. WorkSafeBC said possible factors in the explosion include: production level
records; type of wood being milled prior to
the incident; exhaust and ventilation systems
and schedules for the mill; effect of cold
weather in the days preceding; effect of cold
on water pipes and misters; and, sawdust accumulations.

The possible ignition source also remains
unclear. Investigators have ruled out arson
and lightning strikes, and WorkSafeBC said
it continues to examine ignition sources such
as hot surfaces and electrical components.
In addition, sawdust samples have been
sent to a US lab for particle size and to test
the Minimum Explosive Concentration.

Roberta Ellis, Vice-President at WorkSafeBC, explained to Madison’s in a phone interview Tuesday that this is a live investigation,
an ongoing legal process. When asked about
the examination of production level records,
Ellis said, “It is one of the possible factors,
whether production levels had an effect. Was
the mill running two shifts, or three? How
time-consuming were these shifts? What was
the quantity of wood that was milled? WorkSafeBC will look at recent information vs. historic to see if there is any correlation.

“Same thing for the ventilation systems
and schedules; we will look at administrative
issues, and scheduling of mechanical, cleaning, and delivery shifts. Scheduling is significant.”

Ellis could not speculate on whether a
“change in scheduling could cause an accident.
“Very often in cases like this it is a combination of factors. It is very usual for the cause
of an accident like this to be more than one
thing.”

When asked about the reference to temperature, Ellis explained, “There were some
extraordinarily cold temperatures, which is
not necessary that unusual in the north, but
-41 degrees Celsius for several days is colder
than the north of BC has seen for a couple of
decades. WorkSafeBC is looking at the effect
on water pipes and misters. There are some
similar issues between the two mill accidents

[at Burns Lake and Prince George], but also
the mills were in very different environments. At the Burns Lake plant, material had been
snowed on, then water from the firehoses
froze everything.”

In terms of an update on the previously-issued sawdust cleanup order, Ellis said,
“That was a general order, a guideline.
Safety inspections will be carried out at all
341 mills in this province. WorkSafeBC has
officers in the field, who will be following
up on the orders. The inspections will be
unplanned. Inspection reports on each facility will be filed, and will be made available for the public.”
A .pdf of the WorkSafeBC interim report
is available here: http://tinyurl.com/cu6dwds

Unfortunately due to a standard non-disclosure agreement, Ellis was not able to
tell Madison’s the name of the US lab which
is carrying out the particle size and the
Minimum Explosive Concentration testing.
However, a quick search on the internet
yielded some very interesting information.

A minimum explosible concentration
(MEC) test determines the smallest concentration of material in air that can give
rise to flame propagation upon ignition
when in the form of a dust cloud, according
to Chilworth Global, a UK company which
specializes in process safety and optimization needs and has laboratory testing facilities with dust explosion and electrostatic
laboratories. The test involves dispersing
powder or dust samples in a vessel and attempting to ignite the resulting dust cloud
with an energetic ignition source. Trials are
repeated for decreasing sample sizes until
the MEC is determined.

Dusts are categorized as combustible
or non-combustible by testing for what is
called it’s “Kst” value, says the Utility FPE
Group, an energy risk engineering firm out
of Fredericksburg, VA. “Kst” is known as
the Deflagration Index. In short, it answers
the question “How bad is it going to be if
this dust explodes
.” A test is done on the
dust to determine the Maximum Explosion
Pressure and Maximum Rate of Pressure
Rise values. These numbers are then used
to calculate the “Kst” value. The higher the
“Kst”, the bigger the boom, says the Utility
FPE Group website.

A company called Explosion Testing,
based in the UK, explains further, that the
Kst value is calculated as the equivalent pressure in a one cubic metre sphere from the
cube law (Kst value = cube root of volume x
explosion pressure rise).
In some reassuring news, on Wednesday
the Council of Forest Industries, representing a significant proportion of BC’s forest
products companies, announced that the
industry has formed a task force to investigate combustion risks in mills, according to
a COFI press release.

The COFI task force will be comprised
of wood products manufacturing company
representatives and external scientists, insurance engineers and experts, and other
stakeholders.
The Task Force will be mandated to:

  • Quantify combustion risks related to
    dust from both green and dry wood;
  • Identify best practices for dust mitigation from other industries that have issues
    related to dust in manufacturing;
  • Develop an industry-wide, auditable
    standard that can be utilized to provide independent assurance of mill safety;
  • Undertake outreach to all wood products manufacturing companies in BC to cre-ate an industry-wide approach to safety that
    is inclusive of both large and small operators.

This Task Force will report to a CEO
Action Committee. Management and employees will work together to continue to be
vigilant in identifying potential hazards and
to put safety first and demonstrate the mutual importance placed on comprehensively
addressing all employee safety concerns.
The task force will solicit the support and
collaboration of all levels of government and
their agencies, and will encourage and appreciate the involvement and contributions
of employee groups and union leadership
toward enhancing sawmill safety, says the
COFI release.

While the catastrophic explosions have
occurred in BC only, the alarming rise in
sawmill fires in general all across North
American suggest other jurisdictions would
do well to implement similar health and safety protocols.

Madison’s Timber Preview

Reed Construction Data this week held an Economic Construction Forecast Webcast titled, “A Construction Recovery at Last—but How Long and How Strong?
The webcast featured leading construction industry chief economists from the American Institute of Architects, Reed Construction Data, and the Association of General Contractors, in an analysis of likely fauture activity within the various construction sectors.

Contact us any time for a subscription.

Financial Results

Lumber producer International Forest Products reported a 1Q net loss of $6.5 million as it dealt with higher log costs. The Vancouver, BC, -based company reported late Thursday earnings that amounted to 12 cents per share, widening the year-ago loss of $1.7 million, or four cents per share. Sales rose to $186.7 million from $178.6 million.Included in the company’s results was $1.8 million in unrecognized tax assets and a $1.3 million provision for share-based compensation. The company said lumber production was up 10 per cent, to 323 mmfbm.

AbitibiBowater, doing business as Resolute Forest Products, is reporting a net income of $23 million in its first quarter of 2012, on sales of $1.1 billion.

Year-End and Quarterly Results

Headquartered in Montreal, QC, Resolute’s results can be compared to net income of $30 million on sales of $1.2 billion in 1Q 2011. Excluding $16 million of special items described below, net income for the quarter was $7 million. Net income excluding special items for 1Q 2011 was $10 million.

Saint-Laurent, QC’s, Stella-Jones Inc Thursday announced financial results for its 1Q ended March 31, 2012. The Company generated record 1Q sales and net income.

Sales reached $158.8 million, an increase of $28.3 million, or 21.7 per cent over last year’s first-quarter sales of $130.5 million.

Operating income was $24.1 million, or 15.2 per cent of sales, compared with $14.4 million, or 11.1 per cent of sales, last year.
Net income for the period increased 76.5 per cent to $15 million, or $0.94 per share, fully diluted, compared with $8.5 million, or $0.53 per share, fully diluted, in 1Q 2011. Cash flow from operating activities, before changes in non-cash working capital components and interest and income tax paid, rose 58.1 per cent to $27.2 million.

West Fraser Timber, out of Vancouver, BC, is reporting a loss of $17 million on sales of $681 million in 1Q 2012.

Lumber operations in the quarter generated a loss of $29 million and EBITDA of negative $6 million. The improvement over the prior quarter was smaller than anticipated due to continued weakness in offshore prices for low-grade SPF lumber.

West Fraser’s panel segment, which includes plywood, LVL and MDF, generated $1 million of operating earnings and EBITDA of $5 million in the quarter, a marginal increase over the prior quarter.

EACOM Timber, based in Montreal, QC, recorded a negative EBITDA of $26,213,000 in year-end 2011 results. The net loss attributable to shareholders amounted to $47,412,000.

The results from 2011 include an impairment charge of $15,000,000 partially offset by a gain of $4,339,000 on the sale of the Big River mill and an immediate $2,940,000 recovery of income taxes as a result of the acquisition of the remaining one-third interest in the Elk Lake sawmill.

Sales in 2011, including both lumber and by-product sales, were $279,967,000. Lumber production for the year was 523 million board feet.

Toronto, ON’s, Norbord Inc has recorded break-even earnings in 1Q 2012, compared to a loss of $9 million in 4Q 2011. In the same quarter last year, the Company recorded a loss of $2 million or $0.05 per share, which included a non-recurring income tax recovery of $5 million or $0.11 per share.

Norbord reported EBITDA of $21 million in 1Q 2012, a $12 million improvement from 4Q 2011 and a $7 million improvement from the same quarter last year. North American operations generated EBITDA of $14 million in the first quarter of 2012 versus $2 million and $7 million in 4Q and 1Q 2011, respectively. European operations generated EBITDA of $11 million in 1Q 2012 and 2011 versus $10 million in 4Q 2011.

Domtar Corp, out of Montreal, QC, is reporting net earnings of $28 million in 1Q 2012, compared to net earnings of $61 million in 4Q 2011.

Sales for the first quarter of 2012 amounted to $1.4 billion.

Montreal, QC’s, Tembec has posted a net loss of $14 million in its March 2012 quarter compared to net earnings of $6 million in the March 2011 quarter.

Consolidated sales were $407 million, as compared to $452 million in the comparable period of the prior year.

The Specialty Cellulose and Chemical Pulp segment generated adjusted EBITDA of $31 million on sales of $176 million for the quarter compared to adjusted EBITDA of $27 million on sales of $152 million in the prior quarter. Sales increased by $24 million primarily as a result of higher shipments.

Tembec says a special board committee is considering the future of its lumber and high-yield pulp businesses, which continue to struggle in the face of weak market conditions.

Chief executive James Lopez said the Montreal producer has to decide whether to invest up to $60 million in its lumber facilities or pursue alternatives. “We’re not announcing we’re spinning off the lumber business or selling or anything like that today, but all those things are up for review,” he said Thursday during a conference call after posting disappointing quarterly results.

BC Contractor Fatality

George Park, Jr. of Kamloops, British Columbia, was crushed by an unsecured gate Thursday.

The independent contractor for Nechako Construction, a division of the BID Group, had been performing maintenance work at Canfor‘s Plateau mill west of Vanderhoof, BC, since November.

The accident is being investigated by officials from the BID Group, Canfor, WorkSafeBC, the RCMP, and the Coroner’s office.

May 09, 2012

Sawmill Accidents

The devastating fire this week at Lakeland Mills in Prince George, British Columbia, has been shrouded in a lot of talk about extra-dry pine beetle sawdust and if that contributed to the force of the initial explosion. Of special concern is the eerie similarity to another sawmill accident, at Babine Forest Products in Burns Lake, BC, in January.

While there may be a connection, it is far too early to tell, and there are other circumstances and information that bear close attention.

Fine particle sawdust is a reality in modern sawmills. It is difficult to understand to what degree the dryness of log would impact the combustibility of the sawdust. We already know those extremely fine particles are very combustible, it doesn’t seem a priority to determine immediately how much a difference that actually makes.

More to the issue, to be frank, is maintenance and safety practices at sawmills.

To that point, the BC Minister of Labour, WorkSafeBC, the United Steelworkers, and employer representatives gathered in Vancouver, BC, for a lengthy meeting Wednesday morning to talk about the recent fires and safety issues.
Steelworkers Wood Council Chair Bob Matters explained to Madison’s in a telephone interview that there are common threads between the Babine Forest Products’ sawmill fire and explosion at Burns Lake, BC, and that at Lakeland.

Fires

“The common thread is sawdust, but there has to be an ignition source.

“Following the Burns Lake fire many BC mills had already started conducting ‘enhanced cleanup processes’ [on the weekends when the mill is not running full-on], paying extra attention to cleaning up the dust. Lakeland was one of the better performers.”

Matters explained that safety regulations relating to sawdust “have been based on respiratory levels, not in terms of combustibility.”

“WorkSafeBC will issue an order requiring Risk Assessment at all sawmills regarding sawdust. The BC Ministry of Labour and WorkSafeBC are taking this matter very seriously, which is all we can hope for for now.”

Industry is also taking this development very seriously. On Wednesday, Council of Forest Industries CEO John Allan, who was also present at the Wednesday morning meeting, told the Vancouver Sun, “A sawmill in Fort St. James, BC, has closed temporarily to clean up sawdust.”

Madison’s caught up with Conifex CEO Ken Shields for a phone interview.

“Conifex’s local management and crew in MacKenzie, BC, decided to take one day in downtime, to spend one day to tackle the dust accumulation. It was simply in view of prudent operation at the mill.

“Sawmills are multi-level operations, so on the lower level the dust accumulation was dealt with in addition to regular cleanup around the machines.”

“It just so happened,” continued Shields. “That there was a power outage at the Fort St. James, BC, mill last week when a power line went down so the crew decided to use that time for cleanup. The Conifex Fort St. James mill did not close this week, that mill was already in good shape.

“Conifex is exploring all options with respect to risk minimization, there has so far been no material change to operation and protocol.”

These recent occurrences are so new and so severe that they have taken everyone by surprise. There has never been a study done in Canada on the dangers of combustibility of wood dust at sawmills. At least as far as Madison’s could find after an extensive search.

Madison’s got to wondering, though, if there could be any insight gleaned from reports on the differences between a forest fire in beetle-killed timber stands and that in green timber, which could shed light on the fire danger of dry timber when it is processed at the mill.

Staff at Natural Resources Canada’s Forest Service in the Pacific Resource Centre explained to Madison’s that, while it may seem like there is a correlation, in fact a standing tree trunk, however dry, and a build-up of sawdust in a mill are “completely different animals.”

Monica Turner, Ecology Professor in the Department of Zoology at the University of Wisconsin, has done a lot of research work on the effects of mountain pine beetle infestations on a forest, including fire behaviour.

“There are different properties about the fuels [with a dry tree truck in the forest compared to fine sawdust in a mill],” explained Turner to Madison’s in a phone interview. “A forest fire event in a beetle-kill stand is not sawdust related. So the knowledge we have gathered can’t be transferred to a lumber production facility application.”

Turner had not heard of the recent explosions in BC and expressed her shock and sympathy to all concerned.
Before signing off from Edmonton, Shields made reference to the importance of safety issues.

This reflects Madison’s own sentiment: there is a greater issue of safety to be addressed here.

BC Minister of Labour, Margaret MacDiarmid, reached Madison’s by phone after the end of the work day Thursday.
“Just as the Order from WorkSafeBC today is extraordinary, so are the sawmill explosions. WorkSafeBC has sent the Risk Assessment Order to all sawmills in BC. Regardless of mountain pine beetle milling or not.

“The mills are ordered to do a top to bottom inspection for combustible material, meaning sawdust, and also for ignition standards. They are ordered to be within Occupational Safety and Health Standards, to be in compliance. Some mills had already taken this step. As a result, all sawmills in BC will undergo thorough cleaning and maintenance.”

When asked about the regulations for airborne particles being mainly focussed on safe respiratory levels, MacDiarmid said, “There is in place the ‘National Fire Protection Association Standards for Combustible Dust’. However, in terms of our regulations it has not yet been determined what the safe levels are.

“There may yet be other causes for these accidents, and if there are they will be addressed. If there will need to be further Orders, or Regulations, or changes to policy, then once we have the facts we will take those necessary steps.

The immediate parallel being drawn in many circles about additional danger of extra-dry pine beetle sawdust compared to that coming off green timber may, in the end, turn out to be relevant. However there are other factors of equal, or perhaps more, importance which should also be examined.

It is not just BC that has experienced a greater number of larger sawmill fires this year. There have also been two big mill fires in Ontario, and six in the US. Two of those have been cedar mills. Cedar Creek Mill and Tree Farm in North Dumfries, ON, burned so totally that fire officials believe they will never find out what caused the blaze. Of the two sawmill fires in Maine this year, one was at a cedar shake and shingle mill.

Only at one mill could the source be definitively determined; in Beardstown, IL, on April 8 a sawmill fire was caused by “steam pipe maintenance using an acetylene torch.” All the other facilities must wait for investigations to complete before knowing what started each respective fire.

While it is true that colossal explosions have happened only in BC, the fact of the large fires elsewhere can not be ignored. If there are maintenance and safety procedures that are not being followed, or if vigilance of these is being relaxed, then this issue reaches far beyond British Columbian, or even Canadian, borders.

The North American forest products industry appears poised on a path of steady recovery. But industry players will not believe that recovery has occurred until they can see it in hindsight. At this moment the industry is in a delicate stage: demand is increasing, causing a ramp up in production. The possibility exists that the scope of recovery for this year may be short lived. It is possible that there will be only a several weeks-long window of increased lumber shipments before business settles back down in mid-summer.

Lumber producers are naturally reluctant to invest in costly upgrades and maintenance as a long-term commitment if they will just have to put their mill back into warm storage come winter.

Are we in a situation where companies are taking shortcuts? Are there scenarios of long-unused lines getting fired back up, long-idled workers being called back in? Or skeleton crews being asked to work 10-hour days, four days a week, to cover a one-time big order?

Crusty old machines which haven’t been in full operation for four years could easily cause a spark in a mill choked with sawdust from ramping up to full-time after an extended idle period.

In many areas, experienced millwrights and other operators of sophisticated sawmill equipment have long ago moved to other regions and sectors. Are companies now scrambling to find knowledgeable workers with a deep understanding of the intricacies of running a sawmill and the danger that presents?

It seems that an examination of all current safety policies and safety practices is in order. One that goes beyond the sawdust issue alone.

There were no serious injuries or fatalities at any of the other sawmill fires mentioned above, except at Babine and Lakeland. The sawdust combustibility issue is real and must be addressed, but overall safety and maintenance is also a concern. In other jurisdictions across North America as well as in British Columbia.

US New, Pending Home Sales

Contracts to purchase previously owned homes increased solidly to a near two-year high in March, suggesting the spring selling season got off to a firmer start and offering hopes of a pickup in housing.

The National Association of Realtors said on Thursday its Pending Home Sales Index, based on contracts signed in March, jumped 4.1 per cent to 101.4, the highest level since April 2010.

US Real Estate

The US Commerce Department said Tuesday that sales of new homes dropped 7.1 per cent in March to a seasonally adjusted annual rate of 328,000 units. That followed a 7.3 per cent increase in sales in February. This figure had a huge upward revision from an initial estimate that February sales had fallen 1.6 per cent.

The median sales price was US$234,500 in March, down 1 per cent from the February price.

Sales of new homes stand at just about half the roughly 700,000-a-year pace that analysts consider evidence of a healthy market.
The supply of unsold new homes fell to just 144,000 in March — the fewest on records dating to 1963. The supply has been falling over the past two years.

The new home sales declines in March were led by a 27 per cent drop in the West. Sales in the Midwest fell 20 per cent. New-home sales rose 7.7 per cent in the Northeast and 3.1 per cent in the South.

CMHC Oversight

The federal government is putting Canada’s housing agency under tighter scrutiny amid concerns over a red-hot housing market and rising consumer debt. Finance Minister Jim Flaherty announced Thursday that responsibility for Canada Mortgage and Housing Corp will be handed over to the country’s banking regulator, the Office of the Superintendent of Financial Institutions.

Canadian Mortgage and Housing Corp

Flaherty said OSFI would now be responsible for reviewing and monitoring CMHC’s commercial activities.

The government has tightened mortgage-lending rules three times in the past four years as the Canadian housing market heated up.
CMHC’s function is to insure consumer mortgages and guarantee mortgage-backed securities issued by banks.

The Crown corporation currently has a C$600-billion loan limit, which the government increased three years ago from C$450 billion. The federal government guarantees the full value of mortgages insured by CMHC and 90 per cent of loans insured by private firms.

Bank of Canada governor Mark Carney said the average home price in Canada is about 4.75 times people’s income, while the historic average is closer to 3.5 times. Household debt to disposable income, meanwhile, is running at about 152.9 per cent.

Resolute Attempt at Fibrek Takeover

AbitibiBowater, doing business as Resolute Forest Products, has yet to secure a majority of Fibrek‘s shares. Resolute Forest Products currently holds about 48.8 per cent of Fibrek’s shares.

Resolute, Fibrek

Fibrek criticized its rival’s lack of success in convincing those other than large shareholders to tender their shares.
“After extending its bid for the eighth time now, Abitibi has once again made little to no progress convincing Fibrek minority shareholders…to tender to their inferior bid,” said a Fibrek press release.

Japan 2011 Wood Imports

The value of all wood imports into Japan in 2011 rose by 9 per cent compared to the previous year, to 990.7 billion Yen, but remained below the 1 trillion yen level in 2008, according to the Japan Lumber Reports.

Japan Wood Products Imports 2011

Appreciation of the Yen and emergency rebuilding following the North East Japan Earthquake in March last year were cited as reasons for the increase.

Imports from China accounted for 15 per cent of the total, at 149.5 billion Yen.

Canada and the US accounted for 66 per cent of all log imports, at 3,049,000 cubic metres, says the Reports.

May 02, 2012

BC Timber Supply Projections

Further to last week’s article in your Madison’s
Lumber Reporter
about government management
of public timber assets, an internal report accidentally posted for a brief period this week by a
British Columbia government staff member on
the external directory finally reveals government
projections for timber supply shortages for BC’s
interior.

Most Timber Supply Areas (TSAs) in the BC
interior have barely two years left to harvest and
salvage merchantable timber in the wake of the
mountain pine beetle in-
festation. After that, the
distances required to bring
logs to the mill will become too great. For example, according to the summary report, “Mid Term
Timber Supply Project
”, dated February 29, 2012,
from 2010 to 2020 the annual harvest in the Williams Lake TSA will be 1.9 million cubic metres
per year, compared to 3.4 million cubic metres
currently. The situation is so dire in Quesnel that
there isn’t even a forecast provided for the beyond
2020.

British Columbia BC Interior Allowable Cut and Timber Supply

BC Timber Supply Interior Allowable Cut

A BC Ministry of Forests, Lands and Natural Resource Operations staff survey of licencees
indicated that by late 2013 the Quesnel TSA will
see a 51 per cent decline in timber supply.

Government Figures

There is no question the people of
Quesnel and the surrounding area, and
the forest products industry with operations located there, would have benefitted
from knowing the full extent and timing of
this looming timber shortage as soon as
this data was gathered.

The summary report, which has been
made available on several media websites
Wednesday, was by Thursday afternoon
posted on the BC government’s pine
beetle website, here: http://www.for.gov.
bc.ca/hfp/mountain_pine_beetle
/ (click
“What’s New”). Madison’s has obtained
the ten appendices from which the sum-
mary report was drafted. Anyone interested in receiving these documents is invited
to contact our office.

The 122 page report for the Prince
George TSA was completed in November.
There are repeated references in the
summary report to public consultations
and communications strategies in advance
of “government decisions required by
December 31, 2012 to avoid conflict with
May 2013 election.” When pressed in the
Legislature Wednesday, Pat Bell, Minister
of Jobs, Tourism and Innovation, told opposition members that discussions with
stakeholders, First Nations, and the Beetle Action Coalitions would take place in a
couple of months, ‘probably over the summer’. Given that the Lakes and Williams
Lake TSAs can anticipate timber supply
shortages in late 2014, reductions of 67 per
cent and 32 per cent respectively, one has
to wonder what could be accomplished by
this hold up.

British Columbia BC Land Base, Timber Harvest and Projections

British Columbia Land Base, Timber Harvest and Projections

As BC readers will know by Friday, it
was independent MLA for Cariboo-Chilcotin Bob Simpson who spotted the document. Madison’s caught up with Simpson
Wednesday for a phone interview.

“While ten years ago we knew the
green attack numbers [of the mountain
pine beetle infestation], even in 2004 forest
companies in BC were continuing to build
sawmills. In 2007 and 2008 there were up-lifts to the Annual Allowable Cut (AAC),
which were needed to salvage the dying
timber,” Simpson said. “But there is a lot
of information that industry still needed.

“Frankly, why isn’t the government
acting? Why wait until summer to begin
consultations, we should be immediately
engaging.”

Simpson explained that he had a conference call scheduled with local mayors.
“We will be looking at alternatives on
the TSA level. Have all options for using
the fibre been pursued? What about the
bioeconomy? There is also a hardwood
profile in those forests. What about mining?”, Simpson asked. “We need to take
the worst case scenario and start planning.
Now discussion can be based on reality
since the data is finally available.”

In a brief phone interview Friday morning, Pat Bell explained to Madison’s that
the summary report is a culmination of
work that has been going on for the past
four years.

“Some of the calculations might be new,
some of the projections may not have previously been put out in quite that format,”
said Bell. “But most of the report restates
information the government has already
made available.

“The issue is that due to the fire at
the Babine mill in Burns Lake, the government was required to
ramp up the timeline on
taking action. We need
to act sooner rather than
later. One thing that has
become clear is that the
entire region of the in-
terior impacted by the
beetle needs to be looked
at, not just the Lakes
TSA,” explained Bell. “In
two months or so we will
begin public consultation,
and it will be an expedited,
inclusive process. There
is a sense of urgency because if [Babine sawmill
owner] Hampton Affiliates
does decide to rebuild that
mill then they will want to
make that decision within
this year.”

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines the latest financial results of several large US building materials suppliers, as well as looking at new agreements and financing for Sherwood Lumber and 84 Lumber.

Contact us any time for a subscription.

US Housing Starts, Home Sales

March housing starts in the US dropped 5.8 per cent to a 654,000 annual rate, the least since October, Commerce Department figures showed Wednesday. The slump was led by the volatile multifamily category, which at the same time showed a jump in permits, a proxy for future construction.

Construction of single-family houses eased 0.2 per cent to a 462,000 rate. Work on multifamily homes, which include townhouses and apartment buildings, dropped 17 per cent to an annual rate of 192,000. The decrease followed gains of 13 per cent and 17 per cent in the prior two months.

Building permits climbed 4.5 per cent to a 747,000 annual rate in March, the highest level since September 2008. Applications for multifamily units increased 21 per cent, while those for single- family houses, which account for about 70 per cent of the market, dropped 3.5 per cent.

Housing Starts, Home Sales US

New-home orders increased 33 per cent in the three months ended February 29, said Lennar Corp, the third largest US home builder by revenue, CEO Stuart Miller to Bloomberg. Shares of the Miami-company rose to the highest level since 2007.

Sales of previously owned homes in the US fell in March for the second-straight month. Existing-home sales decreased 2.6 per cent in March from a month earlier to a seasonally adjusted annual rate of 4.48 million, the National Association of Realtors said Thursday.

Even with the monthly decline, however, the first three months of 2012 were the strongest start to the year for existing home sales since 2007. March’s sales were 5.2 per cent above the same month last year.

The inventory of previously owned homes listed for sale, meanwhile, increased to 2.37 million at the end of February. That represented a 6.3-month supply at the current sales pace, a pace considered healthy by economists.

The median sales price for existing homes in March was US$163,800, up 2.5 per cent from US$159,800 a year earlier.
Meanwhile, short sales outnumbered foreclosure sales in 12 states in January, indicating that more homeowners are finding an easier way out of a distressed home loan, said USA Today Thursday.

Short sales — which occur when a lender agrees to a home sale for less than what’s owed — were up 33 per cent in January year-over-year, and preliminary February numbers also look strong, according to market researcher RealtyTrac.

The data underscores lenders’ increased willingness to do short sales, which tend to harm neighborhoods less than foreclosures. Homeowners also may regain eligibility for a new mortgage sooner than those who go through foreclosure.

RealtyTrac says foreclosure sales, which occur after a bank has repossessed a property, still outnumber short sales nationwide but the gap is closing.

Earlier this week, Bloomberg News reported that data from mortgage tracker Lender Processing Services show short sales surpassed foreclosures in January for the first time.

WorkSafeBC Concludes Babine Study

British Columbia’s workplace health and safety agency has concluded the first phase of its investigation into the incident in which two workers died and many others were seriously injured at the Babine Forest Products Mill site in Burns Lake, BC, earlier this year.

WorkSafeBC has had an investigative team at the mill since the January 26 incident, and examined the site for ignition and fuel sources that could have caused the explosion. In recent weeks, cranes and other heavy equipment were brought in to selectively remove debris and allow access to areas of interest within the site. At this time, all pertinent areas of interest have been fully examined and all evidence has been removed for further detailed analysis and lab testing to identify the causal and underlying factors that led to the explosion.

The next phase of the investigation will be equally complex and is expected to take many more months to conclude. The employer, Hampton Affiliates, have been informed of WorkSafeBC’s departure from the site and the status of the investigation.

BC Snowpack Threatens Fraser River

Cooler spring temperatures have created a higher-than-normal snowpack throughout British Columbia, increasing the risk of flooding in the next two months, according to a BC River Forecast Centre report.

There are higher-than-normal snow-packs along the entire length of the Fraser River, from the Fraser Valley to Prince George.
Snowpacks in the Upper Fraser in northern BC are at record levels, noted the report, based on April 1 snowpack.

The BC River Forecast Centre has identified the upper Fraser as the area of most immediate concern because snowpacks there are at record measured levels – 135 per cent of normal and characterized as “very high.” The lower Fraser is at 120 per cent of normal levels and the snowpack there is categorized as a “high.”

Similar high-level snowpacks in the province occurred twice before, in 2007 and 1999, but didn’t result in significant flooding, noted David Campbell, head of the BC River Forecast Centre.

West Fraser Appoints

West Fraser Timber has appointed Edward “Ted” Seraphim to the position of President and COO.

Seraphim joined the company in 1997 and has held the positions of Vice-President, Pulp & Paper and was most recently Executive Vice-President and COO.

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