Softwood Lumber Agreement Tribunal ; Alberta Fires ; US Housing Starts ; New Quebec Forestry Act ; Fraser Papers Restructures ; Canadian Trade Figures for April ; Japanese Housing Starts ; Forest Fires in Western Canada ; Mill Closures and Curtailments Bioelectricity ; Western Canada’s Fire Season ; European Pulp and Wood Chip Prices ; Domtar Pulp Mill to Convert to Ethanol Plant; Lumber Imports to Dubai Jump 63 per cent in 2008 ; US Economic Indicators; Chinese Demand for Canadian Lumber; SFK Pulp Loses AbitibiBowater Fibre Contract
June 28, 2009
Thursday and Friday last week saw the conflict resolution mechanism of the 2006
Softwood Lumber Agreement tested for the first time. At Canada’s request, the LCIA
panel which ruled in March that Canada’s eastern provinces must pay a $68 million penalty
for lumber overshipments for the first half of 2007 reconvened in Washington, DC.
Recent Arbitration, Settlement and Claims
One aspect of the 2006 Softwood Lumber Agreement, which is a great improvement over previous North American lumber trade systems, is the dispute-resolving mechanism. The methodology of either side launching a complaint against the other, and the eventual resolution process, is laid out clearly. That dispute-settling mechanism was put to the test in early 2009.
In August 2007 the US launched a complaint against Canada’s Option B provinces (Quebec, Ontario, Manitoba and Saskatchewan), which had chosen a combination of lumber export quota and duty for softwood lumber shipments in excess of the quota restrictions. In February of 2009 the arbitrator, LCIA (formerly known as the London Court of International Arbitration), ruled that Canada had indeed overshipped, and imposed a penalty. Over the ensuing weeks it became clear that Canada and the US had different interpretations of how that penalty should be collected, with Canada’s announcement of a lump-sum payment being soundly rejected by the US. It was Canada’s turn to request an arbitration hearing, indeed to request a re-convening of the original LCIA panel, to settle the questions about the penalty. That hearing was held at the end of last week, June 11 and 12, 2009.
The US had unilaterally imposed an additional 10 per cent export tax on the Option B provinces, which took effect April 17, 2009. Madison’s spoke this week to Zoltan van Heyningen, media representative for the US Coalition for Fair Lumber Imports about the recent tribunal hearing. As the LCIA panel will likely take two months to issue a decision on the appeal, the US will carry on collecting the additional 10 per cent duty on Option B provinces. Van Heyningen expects the panel to rule in favour of the US, and that either Canada will collect the extra 10 per cent or the US will continue to do so.
Laura Dalby, spokesperson for Canada’s International Trade Media Relations Division of Foreign Affairs and International Trade (DFAIT) explained to Madison’s by email that Canada had “requested the re-establishment of the Tribunal to confirm that Canada’s $46.7 million payment cures the breach in a manner consistent with the SLA” at the recent tribunal hearing.
Van Heyningen told Madison’s straight out that a Canadian victory in this arbitration process “would have been very harmful to the longevity of the SLA [ . . . ] the US would have had a real problem with the SLA had Canada won,” at the June hearing. From the point of view of the Coalition, there is no possibility of this latest tribunal ruling coming out in Canada’s favour. Madison’s will follow the eventual LCIA ruling and reactions from both countries very closely.
In terms of the additional 10 per cent export duty, Madison’s asked van Heyningen about an perceived breach of the SLA. Duties are currently being collected on the Entered Value of softwood lumber products rather than the First Mill price (the lumber first cut from harvested logs) while the $500 per thousand board feet cap stated in the SLA is being ignored (refer to your April 3, 2009 issue of Madison’s Reporter for details). Van Heyningen maintains that, according to Article 14 Paragraph 27 of the SLA, if the “US is not satisfied with the result of an arbitration, the US can impose customs duties as long as it doesn’t exceed the amount of the ruling.” According to van Heyningen, as long as the new export duties are not more than 10 per cent, it doesn’t matter how the figure is calculated.
Madison’s enlisted the help of Michael Jones, president of Jones & Jones LLC, lumber customs brokers working the Canada/US border. Jones pointed out that the Coalition’s position seems to be a somewhat skewed interpretation of the SLA. Jones lamented that the initial LCIA ruling was “missing four words.” If the ruling had stated ’10 per cent of the export price’ or even better if it had gone on to say ‘as derived from the SLA’ then the US would have been unable to ignore the method of calculating duties as laid out in the SLA. However, as Jones maintains, even without those four words, compliance with the SLA is implied in the LCIA ruling.
DFAIT’s Laura Dalby informed Madison’s that “Canada is concerned that the US is imposing customs duties that exceed the equivalent adjustment to the export charge” and that “Canadian officials have raised the issue of the basis for the export charges and the non-application of the cap with their US counterparts.” Madison’s will watch this issue closely for developments.
While all this may seem of little consequence in the grand scheme of Canada/US softwood trade, it is in fact a critical issue that speaks to legal interpretation and indeed Canada’s national sovereignty. Madison’s feels the need to be heard on these latest developments not only for those reasons but, more importantly, because no one else seems to be talking about it. The basic fact that this series of misunderstandings does not involve the large companies, the primary mills of British Columbia, explains why this issue is so dormant.
Not to be cynical, it seems like nobody cares about a handful of remanufacturers in Saskatchewan. These small and medium sized mills in regions not generally dominated by the lumber industry are being forced to pay significantly more for their exports into the US, and that at a time when they can barely afford to pay the initial 5 per cent duty. Nobody is speaking for them; there is no agency or group that covers all Canadian lumber interests equally. The only way these small companies could ever be heard on an issue like this is if they all got together and knocked on Ottawa’s door. Of course they can’t do that; they are busy just trying to keep their businesses afloat.
However, it is very short sighted for the rest of the industry to allow such action by the US to happen simply because it doesn’t affect the large producers in BC this time. If the industry does not stand together now, when will it? And what will be at stake next?
It is clear what is at stake next; it is clearly posted on the Coalition’s web site. In May 2009, when the issue of overshipments in eastern Canada was resolved, the next items on the list of priorities moved up. Stumpage policy in BC is the Coalition’s next priority, and is in fact of much more gravity than the overshipments because it is ongoing. Lumber shipments of Option B provinces in excess of the quota lasted from January to June of 2007. Madison’s asked van Heyningen at what stage the Coalition is in terms of launching an arbitration on the BC stumpage issue. He said that, if he had his way, it would already have been launched, but the new US Administration and the new US Department of Trade Representatives need time to get up to speed on the issue. While frustrated, van Heyningen is resigned to the fact that the longer everything takes, the higher the penalty will be in the end.
Asked to explain precisely what the Coalition’s concern is over BC stumpage, van Heyningen explained that the Coalition’s information is that 60 per cent of timber in north-central BC is grade 4. However, “yields have not changed much. The timber must be misgraded, otherwise how is it possible to keep producing #2&Btr lumber out of it?”
Madison’s was at a loss for an explanation. One can only hope that the large lumber producers in BC, and the government officials who are supposed to be stewards of our Crown timberlands for future generations and to ensure that the province is in compliance with major international trade agreements, do not find themselves at a similar loss when the time comes for explanations.
With the two-week old forest fire at Tyaughton Lake, west of Lillooet, BC, mostly
contained, attention of fire fighters and government officials has turned to Alberta.
On Thursday, 76 personnel, including 13 FireRanger crews from the East Fire Region,
departed Ontario for Alberta. Crews are bracing for the possibility of new fires in
the coming days.
Rob Harris of Alberta Sustainable Resource Development says the number of out
of control fires has been reduced from seventeen to twelve. But Harris says more than
100,000 lightning strikes have been recorded in the tinder dry forest since the weekend
that may have created underground fires that could spark into new wildfires at any
Experts say the forest fire threat is above normal in Alberta, BC and Saskatchewan
and below normal in the rest of Canada. Nearly 800 firefighters will be on wildfire duty in
Alberta, with another 500 stationed in high hazard areas, ready to pounce on new starts.
Starts of houses and apartments rose 17.2 per cent in May to a seasonally adjusted
annual rate of 532,000 units, which was ahead of the 500,000 units that economists had
been expecting. In April, starts hit a record low of 454,000 units.
While starts increased, applications for building permits also came in higher in May.
A sign of future activity, building permits were up by four per cent last month to an annual
rate of 518,000 units.
The Company also indicated that the black liquor tax credit available to US chemical pulp producers has added to these other issues and was a determining factor in this decision.
US Home Building
Housing starts were
down 45.2 per cent in May compared with
a year earlier, and the monthly number
has fallen 77 per cent since peaking in
With the housing slump now in its
fourth year, economists are waiting for evidence
that construction is resuming. But
analysts were not overly optimistic about
Lower prices and tax incentives are
attracting buyers, potentially laying the
groundwork for housing to rebound and
reduce its drag on the economy. Still,
rising unemployment is causing many
Americans to hold off on big purchases
and foreclosures continue to mount, so
a sustained homebuilding recovery may
take longer to emerge, analysts say.
“It’s fair to say that we have found a
bottom in housing, though the concern
is that the bottom is at a very low level,”
said Zach Pandl, an economist at Nomura
Securities International Inc. in New York.
“We have a long way to go to reach more
normal levels of activity.”
Losses from the housing meltdown
totaled $3.6 trillion at the end of 2008, and
will likely approach $5 trillion by the time
the crisis ends, predicts Lawrence Yun,
chief economist with the National Association
Factory utilization and producer
prices dropped at rates not seen since the
late 1940s, the Federal Reserve reported
Tuesday. The country’s industrial output
in May was down 1.1 per cent from the
previous month and 13.4 per cent from
a year earlier, the biggest annual decline
In addition, the producer price index
for May posted its biggest annual decline
since August 1949, dropping 5 per cent
from a year earlier, the US Labor Department
The Quebec government is proposing to revamp the way it manages the forest,
setting up a marketing board for the sale of almost a third of the province’s timber to the
highest bidder and breaking the forest industry’s monopoly over land use. The Forest
Occupancy Act tabled yesterday will abolish most of the province’s 250 to 300 forest
management contracts signed with companies and offer instead a guaranteed supply of
timber over a fixed term.
Quebec Timber Access
The largest firms
would still be offered at least 70 per cent of
their current guaranteed volume of public timber under the law, which would come into
effect, if approved, in September.
The other 30 per cent will be sold on the
open market by a newly created marketing
board that will set a minimum price.
The new legislation comes as the New
Brunswick government said Sunday it had
offered Fraser Papers a permanent supply of
20 per cent of the province’s Crown wood, up
from the company’s current nine-per-cent allocation.
Gilles Lavoie, director of legislative affairs
for Quebec’s Ministry of Natural Resources
and Wildlife, said the proposed law is meant to
foster development of a market in which more
firms could participate. “There is a tendency
for market concentration,” he said.
The cost of Crown wood for firms with
guaranteed supplies in Quebec would be
pegged to the price the marketing board could
fetch for its 30-per-cent share.
Fraser Papers Inc. began a court-supervised
restructuring Thursday after seeking
protection in Canada and the United States
The company – which has operations in
New Brunswick, Quebec, Maine and New
Hampshire – has been unable to address a
$194-million pension deficit, its largest single
shortfall, while markets for pulp and lumber
The fate remains uncertain for a sawmill
in Millinocket, Maine – on temporary shutdown
– and a now-closed pulp mill in Thurso, Que.,
where the company hopes the provincial government
will step in with enough cash to restart.
The Madawaska paper mill is integrated
with the company’s Edmundston complex,
where a biomass cogeneration facility that supplies
NB Power with electricity restarted last
Friday and a groundwood pulp mill will be up
and running on June 22 – both after maintenance
June 21, 2009
Renewed confirmation of Madison’s opinion that the future of Canadian export growth is in emerging markets arrived this week in the form of April export figures released by Statistics Canada.
While Canadian exports to the US fell by almost 5 per cent since April 2008, Canada is exporting some 42 per cent more than expected to an average emerging or developing economy.
Canadian Trade Export Updates: April 2009
A new report by Statistics Canada showed that Canada’s trade surplus with the United States shrank to $2.8 billion in April 2009 from $3.5 billion one month earlier. In April 2009, Canada’s monthly international trade deficit excluding the United States was $179 million, its third deficit in five months, after posting a surplus of $1 billion in March, StatsCan said. Exports to the European Union fell 16.6 per cent and led the decrease in exports to countries other than the United States.
The value of exports tumbled 5 per cent to $31 billion in April, down 24 per cent from the same time one year ago. The drop was mostly due to a 3 per cent reduction in export prices. However, demand was also soft, with the volume of goods down 2 per cent in April.
Exports have fallen 31 per cent, or $13.6 billion, since July 2008, when the economy began contracting, with more than 80 per cent of the decline occurring from November 2008 to January 2009. Imports have dropped 22 per cent, or $8.5 billion, since July 2008, with almost 70 percent of the decrease occurring in December 2008 and January 2009.
Plunging sales to the US have accounted for 88 per cent of the drop in exports, StatsCan said. In April 2009, sales to the United States made up 72.3 per cent of Canada’s total exports, down from 77 per cent in July 2008.
The rising Canadian dollar didn’t take much of a toll on trade in April 2009, since it was only 3 per cent higher than a month earlier, and currency appreciations take time to influence trade flows. However the the Canadian dollar appreciated 6 per cent in May. Peter Hall, chief economist at Export Development Canada, has modelled the result, and found that a Canadian dollar sustained at today’s levels would shave two percentage points off growth in 2010 – basically all the growth that forecasters are predicting.
Meanwhile, the rate of contraction of global economic activity should moderate from the second quarter 2009 onward. The IMF projects that world output will decline by 1.3 per cent in 2009 as a whole and recover only gradually in 2010, growing by 1.9 per cent, according to a new report by the Department Foreign Affairs and International Trade (DFAIT).
The US economy slowed for the fourth straight year in 2008, as real GDP in that economy managed to expand by 1.1 per cent, compared to increases of 2.0 per cent and 2.8 per cent in the two preceding years. Growth in the euro area slowed to 0.9 per cent in 2008, down two thirds from the 2.7 per cent rate registered in 2007. European economic activity suffered a sharp contraction in the fourth quarter of 2008, declining by 6 per cent. Growth in Japan fell 0.6 per cent for the year, while the UK economy managed to expand by 0.7 per cent in 2008. As for emerging markets, growth fell from 13 per cent in 2007 to 9 per cent in 2008 in China, from 8 per cent to 5.6 per cent in Russia, and from 5.7 percent to 5.1 percent in Brazil.
In US dollar terms Canadian merchandise exports grew at roughly half the pace of world trade—by 8 per cent. In Canadian dollar terms, the value of Canada’s exports of goods and services advanced by 5.2 per cent in 2008, with goods exports expanding by 5.8 per cent and services exports up by 1.1 per cent. In volume terms world merchandise trade expanded by only 2 per cent in 2008, down from 6 per cent in 2007, and well below the 5.7 per cent annual average rate registered over 1998-2008.
Looking forward, econometric modelling of Canadian merchandise exports to the emerging world shows that Canada is exporting some 42 per cent more than expected to an average emerging or developing economy, after taking into account trade-influencing factors such as GDP and distance from Canada. Exports are particularly high to East Asia (China, Malaysia, Indonesia), but are lower than predicted to some major destinations such as Brazil and India, according to a special report by DFAIT. Canada’s global competitiveness benchmark outside of the US is noted for strength in agri-food, metals and minerals, wood and paper, and aerospace sectors, according to the report.
April housing starts in Japan were down 32 per cent from April 2008 to 779,000 seasonally adjusted units, the lowest April starts since 1965. Starts for March 2009 had been down 21 per cent to 888,000, prompting analysts to raise expectations for April.
As previous months in 2009, wood framed units fared slightly better, up 6.6 per cent from March but down 23 per cent from April 2008. April construction orders from Japan’s 50 leading domestic constructors sank by 26 per cent, compared to a 38 per cent decline reported in March.
The stubborn blaze west of Lillooet, BC continues to burn. 230 firefighters and 13 helicopters were battling the fire at Tyaughton Lake, that had grown to 65 square kilometres Thursday. Winds of 20 to 30 km/h on Monday have been blowing the forest fire east, said fire information officer Mary Ann Leach. About 10 to 15 per cent of the fire’s perimeter is contained. That means 85 to 95 per cent of the fire’s perimeter is still growing.
The fire is believed to have been human-caused on May 29.
A lightning-caused fire covering 150 square kilometres is also burning west of Fort Nelson, BC. A small fire burning eight kilometres from Kelowna city limits has been surrounded by fire retardant and is not threatening the city, fire information officer Elise Riedlinger said.
Since the 1980s, the mountain pine beetle has been infesting trees in the Bridge River Valley, the site of the Lillooet forest fire, said fire information officer Mary Ann Leach.
“When a tree dies, it drops its needles to the ground. That’s fuel. When it dies and falls over, that’s fuel on the ground,” she said. “It adds to the fuel that the fire eats up as it goes through.”
Leach said the debris causes the fire to burn hotter and requires firefighters to cut through downed trees with chainsaws.
In northern BC, fire crews are still struggling to contain a 160 square kilometre fire burning 50 kilometres south of the Yukon border, along the Alaska Highway. The pine beetle is not present in the area, said fire information officer Jillian Chimko.
The fire, which began June 1 and remains out of control, has forced intermittent closures of the Alaska Highway.
On Friday, the Ontario Ministry of Natural Resources announced it will be deploying 74 personnel to British Columbia to assist with the fire situation. Of the 74 personnel, 20 FireRangers from various districts and three related personnel will be departing from the East Fire Region.
The governments of Canada and Alberta announced last week that they are contributing $15 million each to provide both economic aid to municipalities hard hit by tough times in the forest industry and reduce their susceptibility to forest fires.
Over two years, the projects are expected to create 3,000 seasonal or 1,149 full-time one-year jobs performing FireSmart work for recently unemployed forestry workers.
Tembec announcedThursday that its pulp mill located in Skookumchuck, BC will take at least two weeks of market related downtime beginning the week of June 29. Tembec attributed this action to a range of considerations including the ongoing challenging market conditions for pulp and pulp consuming products, the rapid and significant strengthening of the Canadian dollar and the lack of economically viable fibre.
The Company also indicated that the black liquor tax credit available to US chemical pulp producers has added to these other issues and was a determining factor in this decision.
Closures and Curtailments
Tembec announced Friday a series of market related temporary shutdowns affecting all its sawmills in Northern Ontario.
These idlings will affect employees at all levels at the sawmills, as well as the forestry operations supporting these facilities. Approximately 500 employees will be impacted by these combined temporary shutdowns.
The affected Northern Ontario sawmills have a total annual capacity of 550 million board feet and the B.C. mills a combined annual capacity of 450 million board feet.
The Company also confirmed that employees at its sawmills in Elko and Canal Flats, BC were advised that those sites would be idled effective June 15 for a minimum of three weeks for similar reasons.
Howe Sound Pulp and Paper announced Friday that due to continued poor newsprint demand and unsustainably low pricing levels, it will indefinitely curtail one-third of its newsprint production. Unsustainable low pricing in certain regions of the US are a direct result of the Black Liquor tax rebate.
The company operates a Kraft pulp and newsprint mill at Port Mellon, BC with an annual production capacity of 400,000 tonnes of pulp and 230,000 tonnes of newsprint.
AbitibiBowater announced Friday 2 weeks of downtime for its mill in Iroquois Falls, Ontario. From July 13 until July 27, both PaperMachine #1 and #8 will be down. This downtime is due to market conditions.
Last week Ainsworth Lumber told more than 200 workers at its Savona plant in British Columbia that it was idling the operation due to slowing demand and a rising Canadian dollar. Another 100 workers received their layoff notices at Ainsworth’s Lillooet veneer plant, where the downtime may be much longer.
June 14, 2009
The latest exciting development in generating revenue from biomass left behind at logging operations is bioelectricity. Not a new technology or process by any means, there have, however been some new studies released on land mass availability and the long term sustainability of bioelectricity in the US and Europe. Industry is very interested to know the viability of fibre supply into the future in order to plan projects.
From Forest Residue
The process involves adding wood residue to coal in existing burners to generate electricity, much of which is expected to be used in the transportation sector, according to a new study out of the University of California. The issues of green house gas emissions and carbon neutrality also make a good case for using more wood residue and less coal, generally considered a “dirty fuel” source.
The reality that expanding the use of biomass beyond the traditional wood products industry will result in more trees being planted, which will in turn absorb more carbon, is leading researchers and industry to pursue this new field with heightened interest. Several large energy companies in Europe and the US are already adding wood residue to their coal burners, including Vattenfall AB of Sweden, Germany’s RWE AG, and American Electric Power Inc. of Ohio, the biggest coal-burner in the US. Using biomass for power and heat grew by 25 per cent during the past two decades, according to the International Energy Agency.
Chips from wood stumps and branches, heated to 400 degrees Celsius, are as efficient as coal and cheaper. Current costs are about $64 a ton for ARA Steam Coal and $63 for a barrel of oil, which is expected to rise, according to Dresdner Kleinwort. In fact, biomass and wood contribute more primary energy in Europe than wind, solar or hydropower, the United Nations Economic Council for Europe says.
Madison’s spoke to Elliott Campbell, Assistant Professor of Engineering at the University of California, about his brand new study published at ScienceMag.org in May 2009. Campbell explained that “the cost of cellulostic ethanol are still emerging, it is expensive to produce and not efficient [in terms of greenhouse gas emissions].” Meanwhile, the “costs of biomass electricity are well known.” All that a regular coal burner or boiler needs is a fluidized bed (a system that blows air to move the burning materials around) in order to also burn wood residue.
Campbell’s study focussed on “how much marginal agricultural land globally could be used to grow grasses and short rotation trees” as feedstock for bioelectricity. While it’s true that the land base available is relatively small in terms of future energy demand, if managed properly there is enough to make the bioelectricity sector financially viable long into the future. Campbell expects most of the electricity from biomass to be used in transportation, namely electric – or at least hybrid – vehicles. Campbell’s study states that “bioelectricity produces an average of 81 per cent more transportation kilometers and 108 per cent more emissions offsets per unit area of cropland than does cellulosic ethanol.”
A different research team, lead by John Ohlrogge, Professor of Plant Biology at Michigan State University, also published a study in May of 2009 – this time in Science Magazine – that states that “a major effort has begun to develop alternative feedstocks for ethanol (or other liquid fuels) by using crop residues, forest by-products, perennial grasses, and other forms of plant biomass that are collectively termed ‘lignocellulosics’.” Citing Campbell, Ohlrogge goes on to say, “Burning biomass in power plants to produce electricity for battery-driven vehicles captures more biomass energy and provides more vehicle miles than converting it to ethanol or other fermentation products for vehicles.”
While on the subject of lignocellulosics, a patent filed in Europe on April 1, 2009 describes a new process which results in a “reduction in the cost of steam and equipment, [and] limits the degradation of desirable sugars”. The invention essentially reduces the cost and time involved in getting liquid fuel from woody biomass.
These recent advancements are being noticed and promoted around the world. A press release from the US Department of Energy on May 05, 2009 announced nearly $800 million from the Recovery Act to accelerate biofuels research and commercialization. Not to be outdone, the Energy Research Agency of Texas recently announced the discovery of “a process to make converting biomass to high-octane gasoline possible. [ . . . ] Additionally, the cost of such a conversion would lie between $1.70 and $2.00 per gallon excluding all government subsidies and tax credits.”
Application of new processes and new uses of wood biomass as feedstock in Europe is moving forward even more quickly, where strict regulations and carbon penalties will soon come into effect. In its 7th Total Funding Framework, the EU is dedicating over 32 million Euro of the 53 billion Euro budget for “collaborative research on Energy from Food, Agriculture and Fishery and Biotechnology.” On March 17, 2009 Jeff Skeer, Chair of APEC BiofuelsTask Force made a presentation to the 2009 Biofuels Conference in Washington, DC, outlining plans for “Biofuels Participation in the Asia Pacific”.
Industry examples include Range Fuels, Inc. of Broomfield, CO, which is building a facility in Soperton, GA, that will use “125 dry short tons per day of biomass comprised of unmerchantable timber and forest residues” to produce “1.87 million gallons per year, which is 935,000 gallons of ethanol and 935,000 gallons of methanol.”
Here in Canada, on March 06, 2009 Tembec founder Frank Dottori was named managing director of GreenField Ethanol’s “cellulosic ethanol” division, that is working on ways to produce and sell ethanol made from wood products. His new job will be to commercialize cellulosic ethanol in Canada.
As previously stated in Madison’s, there are so many new developments in getting fuel from biomass, which just two short years ago was referred to as wood waste, that it is difficult to keep up. Now is a good time for timber harvesters and lumber producers alike to find inexpensive ways to bring their slash roadside, because, sooner rather than later, companies will be lining up to pay handsomely for it.
This year the BC Forest Service has already reported 368 wildfires between April 1 and May 30, 96 per cent of which were caused by people. During the same time in 2008, there were 280 blazes. The province has spent $5.93 million fighting fires so far, compared to $3.29 million in the same period last spring, said Alyson Couch, provincial fire information officer with the BC Forest Service.
Two fires raged east and west of Prince Albert, SK, in the past week, burning more than 500 hectares of forest and threatening residential property and a mine site. There were 166 people either fighting or patrolling forest fires in Saskatchewan, and 11 helicopters, 12 tanker aircraft, and 10 bulldozers are in use battling the blazes. The province is dealing with a more active-than-usual fire season this year. There have been 252 forest fires so far this spring, compared to 192 by this time last year, and the 10-year average of 171 by this date.
In BC, an 800-hectare fire burned in the Tyaughton Lake area, about 65 kilometres west of Lollooet, which is north of Whistler. About 50 fire fighters and five helicopters were dispatched Monday to the fire, which was burning close to the community of Gold Bridge.
On Vancouver Island, the Parksville-based Coastal Fire Centre has already seen about double the fires they normally see at this time of year, with 55 to date. People caused 41 of the fires.
A dry spring across much of southern and central Alberta could mean the province’s forests face a higher fire risk than normal this summer.
So far this year in Alberta, more than 600 wildfires have burned through 1,640 hectares, slightly more than normal. A number of prescribed fires are burning to help reduce the spread of the mountain pine beetle and the threat of accidental blazes.
Two firefighting crews from BC’s Rappattack program have been deployed to central Alaska to help manage increasing wildfire activity, according to the BC Ministry of Forests. Six firefighters and a helicopter technician will arrive in the city of Tok, AK , followed by one medium helicopter tomorrow. The crews and equipment are expected to stay for 14 days.
Seven of B.C.’s initial attack crews have been deployed to the Yukon Territory to help manage anticipated fire start. Twenty-one fire fighters and one agency representative will arrive in the city of Whitehorse this afternoon, and are expected to stay for 10 days.
Mercer International, Canfor Pulp, and Finland’s Oy Metsä-Botnia have separately announced that their June 1 list prices in Europe for northern bleached softwood kraft (NBSK) pulp will be US$630 per tonne, up $30/tonne from the May 1 list price.
According to PPPC, market pulp shipments in North America were down 26 per cent in April, compared to one year ago, and down 22.5 per cent from January 1 to April 30, 2009. FOEX.fi reported this week that market pulp stocks in Europe were down to eight days supply, which has helped producer efforts to raise prices.
Wood Chips and Pulp
The latest price increase announcements provided support for previous announcements by Canadian NBSK producers Domtar Corp. and West Fraser Timber Co.
Wood Resources Quarterly reported this week that the competition for wood raw-material in Europe has been intensifying the past few years as sawmills, wood-panel manufacturers, pulpmills and bio-energy facilities expanded capacity during 2006 and 2007, therefore increasing the usage of roundwood and wood residues.
The increased demand for biomass from the energy sector has not only had an impact on prices of residual chips from sawmills but also of small-diameter logs, which have increasingly been utilized for energy generation.
With the energy sector emerging as a new and aggressive market player, floor prices for wood chips and pulplogs are not expected to ever return to the low levels of the late 1990’s again. The increased competition for raw-material between the biomass sector, the composite board manufacturers and the pulp industry will result in relatively high fibre costs even in weak markets for forest products in the future.
A pulp mill in northern Saskatchewan that has been shut down for three years could be redeveloped into a bioenergy plant. The facility in Prince Albert would convert cereal straw into ethanol to be used as fuel.
Energy Minister Bill Boyd says the government has signed a letter of intent with Iogen Energy that could see it buy parts of the mill from Domtar.
The project would also include a partnership with Royal Dutch Shell for a “green” power plant producing electricity from forest and ethanol plant residues. Iogen and Shell are to make a final decision on the multimillion-dollar project after a feasibility study is done.
June 07 , 2009
North American lumber producers lost a huge chunk of their customer base when the US housing market suffered terrible declines in the second half of 2006. Some predicted a recovery of US home building by early 2009, but now must acknowledge US lumber demand may not increase until 1Q 2010.
Traditionally, North American lumber exports were weighted heavily towards Japan, but with that country suffering its own temporarly lull in home building, exports have dropped dramatically.
Demand for wood products, meanwhile, has been steadily rising in China. Madison’s has detailed recent export figures to China on a couple of occasions. Another region showing steady, sharp increases in lumber imports is Dubai. This, the most populous city of the United Arab Emirates serves as an import hub for the Gulf States.
New Customers for Wood Products
A few weeks ago Madison’s started receiving phone inquiries about exporting lumber to Dubai. Curiosity could not be contained and Madison’s had to ask the fourth consecutive caller, “What is going on in Dubai suddenly?” If the queries had been for all various Middle Eastern countries it might not be so puzzling, but all to exactly the same place was intriguing.
It turns out that there was a major trade show for wood products in Dubai held at the end of April 2009. The Dubai International Wood and Wood Machinery Show was first staged in 2006, and has been held annually since. Serving as a hub for middle eastern wood buyers, the show promotes itself as, “Woodshow is the region’s most prominent tradeshow to showcase the entire spectrum of wood & wood technologies encouraging the world’s pioneers in this field to present their latest offerings at the event. [ . . . ] This event offers an opportunity for multi-national companies and agents to showcase wood products and related machinery to potential and prospective target audiences.”
Imports of ‘wood and articles of wood’ increased in Dubai by almost 10 per cent from 1999 to 2000, and by over 46 per cent from 2003 to 2004. In 1999 Dubai imported 756 million AE dollars of ‘wood and articles of wood’, while in 2004 the value of such imports rose to 1,529 million AE dollars. Similarly, imports of ‘pulp of wood’ rose from 917 million AE dollars in 1999 to 1,422 million AE dollars in 2004.
In 2008, wood imports to the United Arab Emirates (UAE) registered a dramatic 63 per cent increase from 2006, according to trade industry estimates. In 2007, wood imports to the UAE topped 8.5 billion AE dollars, from 5.2 billion AE dollars in 2005, according to statistics from the Dubai Ports, Customs and Free Zone Corporation.
Overall, the market registered 25-30 per cent growth annually, with certain segments registering higher growth rates.
According to the US Census Bureau, US hardwood product exports to the Middle East and North African region reached US$52.2 million (191.6 million AE dollars) during the first ten months of 2007, a rise of 32 per cent from the same period in 2006.
In 2007, European woodworking exports from Germany and Spain to the Middle East region were valued at 165 million Euros (894.3 million AE dollars) as the Gulf states imported more woodworking machinery, tools for the woodworking, clipboard and veneers.
As if this rate of increase wasn’t impressive enough, the total value of Bahrain’s wood imports and exports into the UAE topped US$652.4 million in 2008, according to data released by the Bahrain Foreign Trade System. The UAE is among the top four importers of softwood lumber in the Gulf States, who, along with Qatar, Kuwait and Saudi Arabia have collectively imported a total of 2.8 million cubic metres of the product, equivalent to US$576.6 million in 2007.
Based on the phenomenal success of the 2009 Woodshow, expectations are that the import of wood products into Dubai will be booming. The European Federation of Woodworking Machinery Manufacturers has already pledged its support for the next three editions of the show. The event hosted 180 exhibitors from over 26 countries in 2009.
The only exhibition of its kind in the Middle East, Woodshow concluded with over US$79 million in closed deals among the global companies that participated, according to organizers of the event.
Global organizations in attendance included the American Hardwood Export Council, Italian Trade Commission, Quebec Wood Export Bureau, Lithuanian Development Agency, Taiwan Woodworking Machinery Association, French Timber, and the Malaysian Timber Council.
From the interest in exporting wood products to Dubai generated in British Columbia since the April 2009 Woodshow alone, it is obvious that this region can not be ignored as a potential customer.
Recent statistics show that exports of Canadian wood products to China have been steadily growing in the past few years while those to the US have been declining. While lumber producers in Canada are waiting around for the all important US housing market to recover, there are new markets and new customers emerging that did not exist a decade ago. Considering the enquiries are coming apparently out of the blue, ignoring this important new customer base would be foolish and misguided.
Despite sizable growth of new markets and new products in wood products globally, the US housing market still rules as the main customer for Canadian lumber and panel. This week several economic indicators came out of the US, which tell a good story of what can be expected in the near future and into 2010.
The April sales of existing homes were slightly above expectations of a 4.67 million sales rate. But about 45 per cent of the sales were foreclosures and short sales.
The large number of these distressed property sales has driven prices lower, year over year. The median price for an existing home in April was down 15.4 per cent from April 2008.
Sales of new single-family homes increased by 0.3 per cent compared to the prior month, the Commerce Department said Thursday. Year over year, new-home sales were 34 per cent lower than the level in April 2008. For a new home, the median price dropped in April by 15 per cent compared to one year ago.
Also forcing prices lower are a glut of unsold houses on the market. At the end of April, there were an estimated 297,000 homes for sale. The ratio of houses for sale to houses sold in April remained high, at 10.1. It was 10.6 in March.
Recent figures show that Canadian softwood lumber shipments into China, which have been growing steadily since 2005, had a sharp increase in 2007 accordting to the Japan Lumber Report.
While still not strong enough to fill the large hole left by the lagging US housing market, indications are that demand for wood products in China will soon surpass that of Japan, moving China up to the world’s second largest lumber customer, according the the Report.
Chinese Lumber Market
The volume of softwood lumber shipments into China swelled more than ten times in 2008 when compared to 2005, according to the Japan Lumber Report. Annual shipments rose from about 80 million cubic meters in 2007 to 600 million cubic meters in 2008.
Canadian lumber exports to both Japan and the US are falling, while China has been steadily taking 100-200 containers a month. Demand is mostly for utility and economy grades, which do not compete with the US and Japanese markets.
The threat of a large Russian export tax on raw logs is credited with the rise in demand for Canadian lumber. With current low lumber prices for western KD items, expectations are that Canadian lumber will successfully substitute Russian products, according to the Report.
Québec Superior Court has confirmed the unilateral termination of SFK Pulp’s fibre and bark supply agreements by Abitibi-Consolidated Company of Canada on April 24, 2009.
SFK Pulp, created in 2002, had a contract with Abitibi to fulfill substantially all of SFK Pulp’s fibre and bark requirements at the Saint-Félicien mill for a period of 20 years.
Under the fibre supply agreement, Abitibi was required to supply certain wood fibre volumes to SFK Pulp based on the price of NBSK pulp. At the time of termination of the agreement, based on the formula, SFK Pulp was benefiting from a discount of 20$ per tonne on the price of NBSK pulp.
“During ongoing negotiations between the parties, Abitibi offered a minimum of 500,000 metric tonnes/year of wood chips and an adequate volume of bark to SFK Pulp. We are also firming up our business opportunities with other wood chip suppliers that are not already under contract with Abitibi,” reports Pierre Gabriel Côté, president and CEO of SFK Pulp.