Canadian Forest Industry Funding ; Steelworkers Strike Vote ; US Housing Starts ; British Columbia’s New Forests’ Minister US Construction Forecast ; Madison’s Timber Preview ; USW & IFLRA Talks to Resume ; Canadian Housing Starts ; Housing Starts, Japan ; Paper Excellence Buys Domtar Alberta Mill ; Forest Safety ; Cross-Laminated Timber ; The ABCs of NRO . . . ; Alberta Forest Products Association 4Q Results ; Russian Timber into Japan ; Turnaround, Lumber Industry ; Madison’s Timber Prevew ; BC Lumber Exports to China Overtake Japan ; Japan Import of North American Lumber, 2010 ;
March 28, 2011
Canadian Forest Industry Funding
Further to previous announcements over the past several months, the Government of Canada announced on Monday another series of investments in the forest products sector totalling $88 million, under the Pulp and Paper Green Transformation Program and Transformative Technologies Pilot Scale Demonstration Program.
The $1-billion Pulp and Paper Green Transformation Program is laying the groundwork for a more sustainable forest sector by supporting projects that improve the environmental performance of mills and helping to position the industry at the forefront of the clean energy economy.
The Transformative Technologies Pilot Scale Demonstration Program is helping forest sector companies implement pilot-scale demonstration projects that showcase emerging transformative technologies for eventual commercial applications.
Green Transformation Funding
The Canadian government recognizes that on a national scale the forest industry is an important economic driver, and these are strategic investments to help the mills. This came about after two years of stakeholder consultation, as well as discussion with agencies including: the Wood Fibre Centre, Natural Resources Canada, FPInnovations and the Wood First Strategy.
Through Canada’s Economic Action Plan
the federal government is providing $170
million over two years. This funding includes $120 million to help promote forest innovation and investment and $50
million to expand market opportunities
for Canadian forest products.
Bob Jones, Director of Industry and
Trade at the Forestry Division of Natural
Resources Canada, and Glen Hargrove,
Director of the Pulp and Paper Green
Transformation Program, spoke to Madison’s this week about these latest funding
announcements.
“As part of Canada’s Economic Action
Plan, the Pilot Scale Demonstration Program was launched in 2009,” explained
Jones, “some specific projects have already been announced in addition to the
money being allocated this week.”
“Under the Green Transformation
Program, pulp producers generated credit
based on their production of black liquor
in early 2009,” detailed Hargrove. “Since
then, companies have been told what
the maximum amount allocated to their
operations would be, and submitted environmental upgrade proposals, which all
undergo a thorough review. Once these
proposals are approved, the mills receive
financial support for their upgrade investments, which are showing very impressive environmental results.”
Penticton, BC’s, Structurlam Products
Inc. will receive $2.5 million for its new
venture into producing cross-laminated
timber. Please refer to the March 4, 2011
issue of your Madison’s Reporter for more
information on CLT. AV Group, out of
Nackawic, NB, will receive $24 million to
improve the efficiency of its lime kiln in
Nackawic and establish a state-of-the-art
biogas plant at its Atholville facility. Part
of the previously announced funding includes a $10.2 million investment in Domtar’s Windsor, QC, pulp mill to further
develop and commercialize nanocrystalline cellulose technology. Please refer to
the July 30, 2010 issue of your Madison’s
Reporter for more information on that
project.
Of the $170 million forestry investment, $40 million was set aside for pilot scale transformation projects which
stemmed from research done in the lab
by FPInnovations.
“The purpose of this funding is to
move new technologies toward commercialization,” said Jones. “$80 million will
be spent on more transformation technology research, and $50 million will go
toward developing and promoting new
products or breaking into new markets.
Which means China and Korea, among
others, as new customers for Canadian
wood products, as well as promoting
wood in the non-residential construction.
“Pilot scale projects include bioenergy, next generation wood products, nanocrystalline cellulose, biogas, and more.”
“On the pulp and paper side, the
funding will improve environmental performance of the mills, and increase re-
newable energy production,” explained
Hargrove. “Typical projects include upgrades to boilers, installation of turbines,
and investments in other efforts at increased energy efficiency.
We have had excellent results so far.
To date, announced projects are expected
to save enough energy to power 105,000
homes per year, and produce enough renewable energy to power an additional
170,000 homes – not to mention the significant greenhouse gas benefits.”
Jones pointed out that all the funding
for both Programs is slated for next generation wood products, and does not effect primary mills, therefore is compliant
with Canada’s international trade obligations, including the 2006 Softwood Lumber Agreement as well as the WTO.
“This is all about the future of Canada’s forestry industry,” concluded Jones.
Jean Hamel, VP at FPInnovations,
explained to Madison’s in a phone interview, “In 2007 FPInnovations was formed
through the merger of several different
Canadian forest product research organizations. We supported the forest product
industry’s need for change, considering
the decreasing demand for certain traditional products, and we quickly took a
leadership position in developing transformative technologies and practices. The
federal government included Natural Resources Canada and the Canadian Forest
Service in discussions with FPInnovations,
and endorsed a national view on the pulp
and paper industry and its transformation.
“Since 2007, Natural Resources Canada built on this momentum to implement
$25 million in funding per year to trans-
form the forest products industry. A part of
the program was initially focussed on next
generation papers, but we are now refocusing it on biomaterials, biochemicals and
bioenergy. At the time investment for environmental performance was a cost, now
we are improving energy efficiency, which
translates into cost reductions and saving
money. For example, in New Brunswick, AV
Cell’s dissolving pulp mill is turning into an
avant-garde biorefinery by producing biogas, which eliminates 7,000 tonnes per year
of CO2. This new process was made possible by capitalizing on an FPInnovations
innovative technology, developed under the
Transformative Technology Program.
“In the same way that a biorefinery
takes oil and transforms it into different
fuel products and chemicals, a cellulostic
biorefinery uses biomass as the feedstock
to produce various energy products and
chemicals.
“We have invested money into dissasembling the wood into its basic cellulose
components to reassemble them into higher value products. One such component
of wood fibre is fibrils, which offers interesting and different properties over wood
fibre. Another step in the deconstruction
process is to break down the wood fibre,
or pulp, into nanofibrils, which are small
in dimension but still very strong. A final
step of the decomposing reveals the chemical component nanocrystalline cellulose
(NCC); a true nanotechnology of the 21st
century.
“Nanocystalline cellulose, for example,
is moving forest products into quantum
physics. The resultant products have an entirely new set of properties from wood, with
exceptional strength, optical properties, or
being made into film and glass.
“We are implementing these new technologies issued from the Program at the
mill level, because we have improved our
management of the innovation,” detailed
Hamel. “The most striking example is the
new Domtar-FPInnovations NCC demonstration plant, that will be producing one tonne of NCC per day, and which should
be fully operational by late autumn. Using
concurrent engineering approach with
Noram Engineering we went from lab-scale
research to a demonstration pilot plant in
less than three years. The business model
was also innovative as Domtar and FPInnovations formed a joint-venture to build
and operate this $40 million demonstration
plant. The investment was made possible
through the Pulp and Paper Green Transformation fund, the Transformative Technologies Pilot Scale Demonstration program, and in partnership with the Quebec
government.
“Today there are many more
than 100 potential customers anxiously
waiting for that NCC,” concluded Hamel.
Steelworkers Strike Vote
Over the next two weeks, about 3,000 forest workers in Kamloops, Merritt, Kelowna, Okanagan, and Cranbrook in British Columbia will be conducting a strike vote.
The workers, members of United Steelworkers Local 1-417, have been without a collective agreement for two years. Since their contract expired, agreements have been signed with Canfor, Conifer, West Fraser and the coastal companies.
Some of the mills that could be affected are Apsen Planers, Aspen Industries, West Fraser Chasm, a number of Tolko mills in the Okanagan, Tembec mills in the Cranbrook area, as well as a number of single operation sites.
BC Labour Troubles
Talks between the Steelworkers and the Interior Forest Labour Relations Association, representing lumber producers, have been stalled for several months. The two sides met a couple of weeks ago and agreed to come back to the table in late March.
“We are currently conducting a strke vote in the southern interior,” said Bob Matters of the USW Wood Council to Madison’s Friday morning. “We have told our members a strike vote is necessary.
“After a long lull in bargaining we had discussions with the IFLRA about our respective positions, seeking clarification. Both sides agreed to meet again at the end of March.
“The USW will be coming to the table with a strike mandate. We have the intention of concluding bargaining within the three days allocated in the schedule,” said Matters.
Madison’s will be in touch with both sides at that time and provide vital updates to subscribers.
US Housing Starts
Home construction in the US took the steepest monthly plunge in nearly 27 years in February and new building permits set a record low.
Construction of homes and apartments last month fell 22.5 per cent from a month earlier to a seasonally adjusted annual rate of 479,000 the Commerce Department said Wednesday.
Building permits fell 8.2 per cent from a month earlier to an annual rate of 517,000. That was the lowest level in more than 40 years of record-keeping.
Housing Starts, US
The month’s results were driven by a 46.1 per cent decline in construction of multifamily homes. Single-family homes, which made up about 78 per cent of all starts, also fell, sinking by 11.8 per cent from a month earlier.
Compared with the same month a year earlier, overall new-home construction was down 20.5 per cent.
Homebuilders are counting on a strong spring home-selling season. Some analysts attributed some of the slowdown in construction last month to severe winter weather, particularly in the Northeast.
The pickup in January’s building activity made that month’s seasonally adjusted numbers look better than they should have, said Mark Vitner, a senior economist at Wells Fargo Securities to Bloomberg. The non-seasonally adjusted numbers show that housing starts in February were no worse than they were in December.
Last week, a survey by the National Association of Home Builders showed that builder confidence edged up this month. The excess supply of foreclosures, appraisals that are coming in below construction costs, and tough lending standards for buyers and builders continue to hamper the new-homes market.
British Columbia’s New Forests’ Minister
British Columbia’s new Premier, Christy Clark, shuffled Cabinet immediately upon taking office Monday after being elected Liberal party leader following Gordon Campbell’s resignation last year. Some former Ministers who had been closely connected with the controversial HST are relegated to the back benches. A major change to the structure of the BC government, implemented by Campbell just in October, has been reversed.
The new Natural Resource Operations Ministry no longer stands alone, but has been absorbed by the Forests porfolio, which once again focusses on the land base. Mines has been shuffled into the Energy portfolio. Ministers have been moved around as well, which is enough to make one’s head spin.
British Columbia Government Changes
The rearranged forests’ portfolio is now Forests, Lands, and Natural Resource Operations. Headed by Steve Thomson, who subscribers remember was appointed Minister of Natural Resource Operations in October. Please refer to the December 12, 2010 issue of your Madison’s Reporter for details on the scope of this new ministry.
Former Minister of Forests, Pat Bell, is now Minister of Jobs, Tourism and Innovation, which includes trade.
Thomson explained to Madison’s Thursday, “I will be working closely with Pat Bell during this transition. We have already had a number of meetings with stakeholders and will continue to reach out over the next two weeks.
Parts of the forest portfolio remains with Pat Bell; the 2006 Softwood Lumber Agreement, he is taking lead responsibility on the market, and will be attending the next scheduled trade mission to China at the end of March.
As Chair of the BC Chamber of Commerce for many years, then as Minister of Agriculture and Lands before heading up Natural Resource Operations last year I have dealt with forest industry issues on a deep level and am looking forward to my new role and responsibilities,” said Thomson.
“We are maintaining the streamlined One Project, One Process mandate of the NRO, with a now strengthened relationship to the Ministry of Forests.”
When asked about the crisis in Japan, Thomson said, “We are in discussions with the forest industry about providing support to Japan, both government and the industry have strong interest in proceeding strategically to offer as much help as we can.”
Pat Bell explained to Madison’s that his new role continues to have a strong emphasis forestry, “I am now leader of Forest Innovation Investment, the Wood First policy, the SLA, and oversee the value added industry.
“I will be going to China in a couple of weeks as planned, to speak at the Green Building Conference and to be present during the building of a three storey wood framed building in 72 hours. We will be using that building to hold meetings with builders and developers.
“As for future trade missions, like our regular November visit to China, I have suggested that both Steve Thomson and Christy Clark attend,” said Bell.
When asked about Japan, Bell explained, “We are contemplating assistance with the reconstruction effort, but right now the concern is more for basic emergency supplies.”
March 21, 2011
US Construction Forecast
On March 3 an informative Webinar, organized jointly by Reed Construction Data and the American Institute of Architects (AIA), titled “Contruction: Time to Spring Forward?” was held. Speakers included: Kermit Baker, Chief Economist at AIA; Ken Simonson, Chief Economist at Associated General Contractors of America (AGC); Jim Haughey, Chief Economist at Reed Construction Data; and special guest Alex Carrick, Chief Economist for CanaData.
Residential and Commercial Building
Baker started the presentations with a bang, declaring that “the US is on the cusp of a turnaround in construction.” He quickly qualified this statement by saying that the US spent ten years building more homes than it needed, which lead to excess inventory levels. However supply problems are about to occur, said Baker, because new household forming rates have declined significantly since the economic downturn, leading to calculable amounts of pent-up demand for the next few years.
During the downturn, home remodelling kept the construction industry going to the tune of $300 billion annually, although hard data on renovations is difficult to find, admitted Baker. A comparison to new home building makes it look like home renovations are rising, when in reality they have simply slowed by a lesser degree. The latest indicators show that home renovations are approaching 2006 levels. Particularly the US northeast, industrial northwest, and coastal California will show strength in home improvements in the next few years, explained Baker.
Unknowns such as changes to financing and tax laws may throw uncertainty into home renovations, Baker cautioned.
Using data gathered from US architecture firms, Baker generated projections on future building projects.
“Even if a portion of these projects now in the design phase don’t go forward, which some surely won’t, there is a still a high level of confidence that the US will see an increase in construction activity in the next year or so,” concluded Baker.
Jim Haughey spoke next, beginning with the statement that uncertainty about unrest in the Middle East and revolts by taxpayers on government spending in the US could be two dark clouds in the short term future of construction.
“There is a risk that financing for public construction will be less than was thought in 3Q 2010,” explained Haughey.
The post-US 2010 mid-term election environment has contractors working in a different environment than was understood at the end of last year, due to: steep budget cuts on the State level, commodity prices rising more than they would have without recent uncertainty factors, and tightened credit for housing. However, on the upside are: loosened credit for non-residential construction, the recent jump in consumer and business confidence, and gains in employment rates.
“Credit is becoming less of a problem for the US economy, especially after 2013,” detailed Haughey. “With gains in employment people will move out from roommate situations and parents’ houses into renting. The apartment market is booming, although the condo market continues oversupplied.”
Haughey’s analysis found that construction costs will rise, due mainly to the rising cost of construction materials.
“Commodities prices in international markets will increase by 5-6 per cent in the coming two years, while domestically-priced items will rise by 1-2 per cent,” said Haughey.
Simonson also spoke about construction material, “Material costs increases are greatly outstripping inflation, and for the moment contractors are eating the difference because there is so much competition for building work.”
This finding was echoed by Sam Anderson, CEO of the Master Builder’s Association of King and Snohomish Counties in Washington State, at this year’s Truck Logger’s AGM. Please refer to the January 28, 2011 issue of your Madison’s Reporter for details.
The AGC’s Ken Simonson added that there might be a 5-8 per cent increase in the Producer Price Index for some periods through this year, but 2011 will likely end similar to 2010.
“This should be a good year for multi-family building,” explained Simonson. “And by the end of 2011 there will be a record-low inventory of single-family homes, so that will need to increase.”
Simonson also said that total construction spending will be up 3-7 per cent for the first time in five years, but some of the gains from that increase will be absorbed by rising construction costs.
Next, Alex Carrick brought a Canadian perspective to the discussion.
“Commodities are important to Canadian construction,” detailed Carrick. “As does the dollar, which has a huge impact on the manufacturing sector.”
Carrick described Canada’s recent recession as ‘not bad’, explaining that all 400,000 jobs lost have now been recovered.
“Canada’s financial sector formed a solid base for the Canadian economy, and eventually helped the construction industry because office vacancy rates remained low at 8.8 per cent,” said Carrick. “Most office complexes are owned by the large pension funds.”
Carrick also explained that, as Canada is an exporting nation, as emerging markets come in, the demand for raw materials, thus the price of those, is going to increase.
The Webinar finished off with questions from listeners, most of which focussed on what effect the loss of public fund will have on newly-started and proposed building products. The panel members were in agreement that private confidence will increase, which will offset the loss of public funds.
Madison’s Timber Preview
A company newly-formed in September 2010 has secured significant tropical hardwood timber harvest licenses in Colombia. Created by Hayes Forest Services out of Duncan, BC, this week’s issue of Madison’s Timber Preview examines Prima Colombia Hardwood, which expects to start generating revenue for investors in 3Q 2011.
Contact us any time for a subscription.
USW & IFLRA Talks to Resume
In a statement released March 2, 2011, the United Steelworkers announced that after nearly four months, the Interior Forest Labour Relations Association and USW met in Kelowna.
The Parties agree to resume bargaining in Kelowna on Wednesday, March 30.
Canadian Housing Starts
Canadian housing starts in February edged higher by 6.6 per cent, to 181,900 annualized units, compared to January, according to Canada Mortgage and Housing Corporation.
While the slight increase in January came despite decreases in both the urban singles and multiples components, these major categories of new home construction more than retraced the declines in February. The fairly volatile urban-multiples component surged 14.5 per cent to 94,900 annualized units, while the more stable single-urban starts component rose 3 per cent to 66,100.
Housing Starts, Canada
Versus the first two months of last year, home starts in 2011 have averaged a drop of 10.6 per cent. The first half of 2010 was relatively strong, before a modest decline settled in during much of the second half of the year.
Strength was concentrated in Ontario, up 29.3 per cent, and the Prairies, up 26.1 per cent, with these regions’ gains seen mainly within the urban-multiples component, which were up 56.5 per cent and 41.6 per cent, respectively. Weakness was seen in British Columbia, down 5.9 per cent, Quebec, down 7.1 per cent, and Atlantic Canada, down 24.7 per cent, with both urban singles and multiples declining in each of these regions.
Some sticker price shock exists as home prices in Canada experienced only a mild drop in the recession. There was nothing like the 30 per cent correction in home prices that occurred south of the border. To date, no progress has been made in reversing the decline in U.S. residential prices. By way of contrast, the latest reading on year-over-year new home prices in Canada is up 2.1 per cent.
The inventory of unsold multiple units (i.e., mainly condos) nation-wide in February continued to climb, lifting a level that was already far too high. Toronto, Montreal and Vancouver account for more than half of total condo starts in the country. Year-to-date condo starts in Montreal are down 29 per cent versus January-February, 2010. But in Vancouver, they are up 51 per cent and in Toronto, up 58 per cent.
At the same time, there are ongoing positive indicators for the homebuilding sector. Sales of existing homes have exhibited a solid recovery after slipping for a while last summer. They now reside at a figure approximately halfway between their recessionary low and their previous peak.
Housing Starts, Japan
Japan housing starts in January totalled 66,709 units, a 2.7 per cent increase over January 2010, according to the Japan Lumber Reports. While housing starts in Japan have been increasing for eight months straight, in comparison to January 2009 the latest figures represent a 5.6 per cent drop. January’s seasonally adjusted starts were 847,000, a 1.6 per cent drop compared to December 2010.
Units built for owners rose by 5.5 per cent,while units built for sale continued their eleven consecutive months’ increase at 22.3 per cent.
At press time the full effect of Thursday night’s 8.9 magnitude earthquake off the coast of Japan is unknown but early estimates indicate that 3,000 homes have been destroyed.
Our hearts and thoughts go out to our Japanese friends and work partners.
Japan Housing Starts
New building of units for rent decreased by more than 10 per cent with no sign of recovery says the Report, while units built for sale rose by 20 per cent in January compared to December.
Tokyo metropolitan district, formerly a leader in owner’s units, saw a 9.5 per cent decline in those units, while units built for sale in Tokyo rose by 30.3 per cent.
New condominium building recovered to 10,000 units, while detached units built for sale continued their ten straight months’ increase.
New wood-framed units totalled 35,740, a 3.2 per cent increase. Share of wood based units increased to 53.6 per cent of the total.
Paper Excellence Buys Domtar Alberta Mill
A holding company affiliated with Indonesia’s Sinar Mas and Asia Pulp & Paper has signed a deal with Domtar to buy the shuttered Prince Albert pulp mill in Saskatchewan.
The holding company will invest around $200 million to repurpose the mill to produce dissolving pulp.
However, spokespeople from Paper Excellence and APP declined to comment more specifically on the matter, nor would they comment on how much dissolving pulp per year the repurposed mill is planned to produce.
In its heyday, the Prince Albert mill could produce around 330,000 tonnes/yr of NBSK pulp.
The deal is subject to certain stipulations, such as a collective agreement with employee representatives.
Forest Safety
More than 2,700 contractors now are certified under the BC Forest Safety Council safety program with another 2,100 are registered for the certification.
The joint effort by industry and the BC government also led to a push to upgrade logging roads, and provincewide radio-calling protocols were also adopted.
A huge snow pack in the coastal forests will delay logging later than usual into the spring. With extremely steep terrain on BC’s Vancouver Island and the Sunshine Coast, much of it accessible only by boat, even fallers with multi-decades of experience are impeded by weather conditions. It’s not safe to attempt to climb up a slippery vertical with climbing equipment, let alone encumbered with a pack, chain saw, and containers of gas and oil.
Bringing down the big trees once they get to the site is a task for Paul Bunyan, not mortals who have WorkSafe BC and government safety inspectors looking over their shoulders. I
t’s no wonder logging is one of the most dangerous occupations in BC (93 deaths per 100,000), along with commercial fishing, military service, working in the oil patch and rodeo bull riding.
There were six deaths in BC’s forests in 2010, up from four the previous year, but well down from the average 22 deaths a year in the past two decades, and a significant improvement on the year of 2005, which saw 43 deaths.
Following the horrific death toll in 2005, the industry and government declared that improving forest safety was a top priority.
March 13, 2011
Cross-Laminated Timber
The Cross-Laminated Timber Symposium held February 8 and 9 in Vancouver, BC, brought researchers and building experts from North America and Europe to discuss this exciting subject. Presented by Wood Works!, BC Wood, and FP Innovations, the symposium focussed on architectural and structural design, manufacturing, seismic resistance, connections, fire safety, acoustics, floor vibrations, durability, and environmental performance.
Cross-laminated timber (CLT) panel, also commonly known as a solid wood panel, provides an innovative massive building system for single- and multi -family residential buildings, multi-storey residential and commercial buildings, buildings for business and industry, and for special applications in structural timber constructions.
New Wood Technology
Cross-laminated timber is commonly applied for external and internal walls, ceilings and roofs. The building system offers a minimum of assembly time at the building site due to its prefabricated elements. There is no break in the insulation layer and no need for a moisture barrier in walls. Production of the elements with single layer boards provides a lot of advantages: air tightness, fire resistance, thermal insulation and acoustic insulation.
Dimension lumber is assembled and bonded in various ways according to the design specifications of the intended building. The SPF mix, as well as Hemlock/Fir, are ideally suited to CLT production due to adherence and stiffness (modular of elasticity) properties of the wood. There are some restrictions on the visual quality of the lumber, there must be limited wane but, with selection, #2&Btr and even #3/Utility grades are acceptable for design values established to predict performance.
“CLT has been used in non-residential construction in Europe for about 15 years,” explained Brad Wang of FPInnovations to Madison’s in a phone interview this week. “Also known as ‘jumbo plywood’, CLT is structurally similar to plywood except the element is lumber rather than veneer. CLT is thicker, and can be prefabricated for walls, ceilings, and floors based on the dimension required. The product is then assembled at the building site for installation. At the moment there are nine storey demonstration buildings in Austria, the UK, and elsewhere.”
Please refer to the January 9, 2009 issue of your Madison’s Reporter for details.
“There are two CLT grades; appearance for walls, and structural for floors and roofs. Standards are being drafted in North America , which FPInnovations has submitted to APA – The Engineered Wood Association to be finalized,” detailed Wang. “North American CLT standards are about 75 per cent complete, and will specify grade requirements and how to make it.”
When asked about the possibility of using beetle kill, Wang replied, “As long as there is not too much check and wane, and recovery is slightly lower (than non-beetle kill wood).”
“In the near future revised building codes in North America to allow for taller building made with wood will bring mixed-use, or commercial, institutional, community centres, schools, parking lots, and more built using CLT.”
Asked for costing details, Wang concluded, “The current selling price in Europe is around US$800 per cubic metre, while production costs could be up to US$700 per cubic metre but are often lower.”
Structurlam Products Ltd, out of Penticton, BC, is already running with this promising new product as the first big western manufacturer to invest in a plant.
“Our CLT manufacturing plant in Okanagan Falls, BC, is expected to be complete in June,” said company CEO Bill Downing to Madison’s in a phone interview Wednesday. “Sizes produced will be up to 40′ x 10′ x 12″ (9 layers thick), and we will generally be using fingerjoint 2×6 for input, sometime 1×6.”
Asked about Wang’s pricing estimates; Downing generally agreed, “Margins in Europe might be different, there is more automation in the plants there which makes for higher production capacity therefore lower production costs. Then again fibre costs are higher in Europe.
“Once the universal standards are in place we should be able to export CLT anywhere, although we are expecting our customers to be largely domestic. We see this as primarily a BC product. We’ll have to see who the adopters are. Likely they will be institutional; schools, recreation centres, city halls. The new six-storey wood building is an interesting market. Just as glulam replaces steel, CLT replaces concrete. It is ideal for use in stairwells, elevator shafts, for sheer walls, as flooring and multi-slab, not in the least because it is much faster to build with.”
In reference to beetle kill, Downing said, “We’re using beetle kill like crazy. Actually its better because it’s drier. Usually we can use #2&Btr, but with a maximum 14 per cent moisture count, 12 per cent is the target. The thing is our suppliers have to sort after the planer, for the grade and moisture, or else we would have to put the wood back into a kiln.”
Given that this new product, strong, durable, and easy to build with, is a lumber product hybrid that is not complicated to make and is less expensive to use than concrete, it seems that there should be a big push from government to use it.
“CLT could revolutionize the lumber industry,” said Pat Bell, BC’s Minister of Forests, Mines and Lands to Madison’s in a phone interview Thursday. “Species on the coast and the interior can be used, including SPF and Hem-Bal. CLT replaces concrete in tilt-up construction, is cost competitive, and building with it is faster than with concrete and steel. There are so many benefits; for example when using concrete for an elevator shaft, builders must shim every floor to make the tracks true but with CLT only the bottom floor needs to be shimmed. CLT is very true.
“Each piece of wood consumed to make CLT has specific qualities, depending on what qualities are desired from the resulting panel.”
There would have to be some pilot projects, demonstration buildings, constructed before building codes would be changed, explained Bell.
“In the meantime builders would secure an engineer’s permit from the relevant authority. We will likely include CLT in building codes; that is not a huge barrier. CLT would then be incorporated in government buildings as part of our Wood First initiative. In a few years, CLT will consume a huge volume of lumber in a new kind of wood building.”
Pilot projects using CLT are already underway in BC, for Prince George’s new Wood Innovation and Design Centre and at the UBC bio-mass facility, as well as in a house at Whistler.
For more information visit http://www.wood-works.org/BC/Timber.
The CLT Handbook is available at Amazon here .
Madison’s Investment Rx
Valuable insight gained through contacting solid wood producers and wholesalers on a weekly basis combined with the latest statistics on US and Canadian lumber production, log harvests, log prices, export levels and more. A concise overview of the latest happenings in the forest industry Download a free sample copy!
The ABCs of NRO . . .
British Columbia’s newly created Ministry of Natural Resource Operations is taking questions from stakeholders to help inform BC’s forest industry about its function. Do you want to know:
What is the British Columbia Ministry of Natural Resource Operations?
Why was it created?
How will the new structure affect your day-to-day business?
Will it impact your timber supply?
If you have questions, the Ministry of Natural Resource Operations (NRO) wants to hear from you. Submit your queries to nromedia (at) gov.bc.ca by March 31 and we’ll answer them in a future issue of Madison’s Lumber Reporter.
If you’re looking for more information now, check out the Natural Resource Operations website at http://www.gov.bc.ca/nro. It provides a quick primer on the ministry’s structure, and includes a service plan outlining NRO’s long-term goals and why the one-land manager model is good for business and the environment.
An article on the creation of NRO was also published in the December 10, 2010 issue of your Reporter.
Our staff want to ensure it’s business as usual for BC’s forest industry. We look forward to hearing from you.
Alberta Forest Products Association 4Q Results
The value of Alberta’s forest products shipments increased 25 per cent from 2009 to 2010, said the AFPA in a press release Wednesday. Total shipments of lumber, panelboard, pulp and paper manufactured by Alberta Forest Products Association-member companies for 2010 increased from approximately $1.9 billion to $2.3 billion compared to one year ago.
Alberta 4Q 2010 Shipments
The improvements were due to both stronger prices and increased volume. The pulp and paper sector was particularly strong, with shipments of approximately $1.3 billion.
Shipments dipped slightly from 3Q 2010 to 4Q, declining about $18 million or 3 per cent. Brady Whittaker, AFPA President and CEO, attributed the decline to a softening of the pulp market. “The pulp market has been performing very strongly, but it backed off a bit in 4Q. That has put our numbers down slightly for this quarter.”
AFPA-member companies shipped 698.9 million board feet between October and December 2010 with a value of $188.6 million. Part of this production came from the secondary manufacturing sector. Total shipments were down 33.6 mmfbm or 7.1 per cent from 3Q 2010, but stronger prices pushed values up by $19 million or 10.1 per cent.
Compared to 4Q 2009, shipments were up 46.7 mmfbm, or 7.2 per cent, and values increased $50.8 million, or 36.9 per cent. For the year of 2010, lumber shipments increased by 247 mmfbm, 9.6 per cent and values were up $219 million, 42.3 per cent, as compared to 2009. Total lumber shipments for 2010 totalled 2.8 billion board feet valued at $740 billion.
AFPA-member panelboard operators produced 264.8 million square feet of 7/16 inch equivalent product in 4Q 2010 valued at $64.7 million. Production was down 19.4 million square feet. 6.8 per cent, and the value declined $7.7 million, 10.6 per cent compared to 3Q 2010.
When looking at 4Q 2010 versus 4Q 2009, production was up 10.3 million square feet, 4 per cent, but value declined $2.8 million, also 4 per cent. For 2010, panelboard shipments dropped 29.1 million square feet, 2.6 per cent, but values increased $23.8 million, 8.5 per cent. Total panelboard production for 2010 was 1.1 billion square feet valued at $303.5 million.
Russian Timber into Japan
Imports of Russian logs to Japan in 2010 was 447,300 cubic metres, according to the Japan Lumber Journal, only two-thirds of the volume received in the previous year, that amounted to 693,100 cubic metres.
The arrival of Russian logs in December 2010 was 25,900 cubic metres, down by 7.9 per cent from the previous year. The arrival of larch logs, whose demand as plywood materials has been declining, was still low. Imports of fir logs was large, exceeding 10,000 cubic metres for the first time since August. The usage of larch logs at the plywood factories declined while most of factories stopped sawing up red pine logs in Japan, says the Journal.
Month-by-month fluctuation in the arrival of Russian logs has been becoming larger with its demand-supply scale shrinking.
Compared to the previous month, the price of Russian larch logs in Japan made a large increase of 13.3 per cent, but prices of pine and fir logs went down by 2.7 per cent and 0.1 per cent respectively. However, prices of larch and fir increased by 11 per cent and 5.1 per cent respectively from the previous year while the price of pine was down by 5.7 per cent from 2009.
As for imports of lumber products from Russia, the arrival of pine and fir that are main products remained good, up by 1 per cent from November and up by 23.8 per cent from the previous year.
Imports of laminated lumber for structural use was low at 1,700 cubic metres, down by 35.1 per cent from November and also down by 15.2 per cent from the previous year.
Among lumber product prices, the price of largely traded pine and fir items increased by 3.5 per cent from November and also up by 4.3 per cent from the previous year.
The price of pine and fir was stable throughout the year, ranging from upper 31,000 yen to lower 33,000 yen. The price of laminated lumber for structural use was 47,217 yen per cubic metre, down by 2 per cent from November and up by 22.6 per cent from the previous year, maintaining its recovery trend.
March 06, 2011
Turnaround
The February 7, 2011 issue of your Madison’s Investment Rx explained of the US home buying market, “Those who have trouble securing financing will be out of luck while the good-sized proportion of people with cash ready to invest are going to pour it into extremely undervalued homes.” Figures released this week by the US National Association of Realtors bear out this statement.
The NAR reported Wednesday that existing home sales in January rose 2.7 per cent to 5.36 million units, a jump of 5.3 per cent in year over year comparisons. Single family sales rose 2.4 per cent to 4.69 million, up 4.9 per cent compared to one year ago. The median price of an existing home fell 5.9 per cent to US$158,800 from December’s US$168,800, a drop of 3.7 per cent in year over year comparisons. Inventories fell to 3.380 million from 3.560 million units, dropping the months’ supply to 7.6 months from 8.2 months previously.
Lumber Industry
Foreclosures and other distressed properties made up 37 per cent of homes sold last month, the NAR reported. The cheap homes lured investors, who accounted for 23 per cent of buyers, up from 20 per cent the previous month and 17 per cent a year ago. As more investors entered the market, all-cash purchases surged to their highest level since the group started tracking those numbers in October 2008.
The US Commerce Department released January new home sales Thursday at 284,000, off 12.6 per cent compared to December, and an 18.6 per cent drop compared to one year ago. Median new home prices were off 1.9 per cent to US$230,600 against December’s US$235,000.
Unsold new home inventories fell slightly to 188,000 units while months’ supply rose to 7.9 months, from 7 months in December, due to the slower sales pace.
Meanwhile, Real estate data firm CoreLogic revealed in February that the National Association of Realtors may have inadvertently overstated a widely followed measure of housing sales by as much as 20 per cent over the past four years. NAR estimates that housing sales came in at 4.9 million last year. CoreLogic counted just 3.3 million.
US home prices fell 4 per cent in 4Q 2010 from a year earlier as record foreclosures sapped the confidence of homebuyers, according to the Federal Housing Finance Agency. The drop was the 13th consecutive month of year-over-year retreat and the largest since 3Q 2009’s, the Washington-based agency said Thursday in a report. Prices fell 0.8 per cent from the prior three months. Real-estate values in 20 US cities tumbled 4.1 per cent in 4Q from a year earlier, the biggest drop in almost two years, according to the S&P/Case-Shiller home-price index. That slump put prices near the record low set in 1Q 2009.
The share of homes in foreclosure rose to 4.63 per cent in 4Q, matching an all-time high set in 1Q 2010, according to the Mortgage Bankers Association in Washington, DC. The combined share of mortgages in foreclosure or delinquent was 14 per cent, about 1 in every 7 home loans, the trade group said in a February 17 report.
Homes in the foreclosure process sold last year at a 28 per cent discount to properties that weren’t in some stage of mortgage distress, RealtyTrac Inc said today. The gap widened from 27 per cent in 2009 and 22 per cent in 2008, according to the data firm. About one in four mortgaged US homes is underwater, meaning their mortgage balances exceed current value, according to Zillow Inc. The number of homeowners with so-called negative equity reached 15.7 million in 4Q 2010, up from 13.9 million in 3Q, the real estate data firm said in a February 9 report.
The true test of whether the housing market will rebound will come in spring, the peak time of year for home-buying.
“It really does boil down to the spring-buying season,” said Carl Riccadonna, a senior US economist with Global Markets Research. “There are signs that we’re starting to claw back from the bottom. As long as it’s flat-lining during the winter, it’s the spring that will tell the tale.”
While US real estate remains in a state of epic confusion, strong indications of recovery, and even improvement, are beginning to show with the US home builders who did not go out of business during the downturn. Toll Brothers, based in Horsham, PA, and with operations in 19 states, upended Wall Street’s expectations Wednesday in reporting a profit for its fiscal first quarter and higher contracts for new homes. The builder reported net income of US$3.4 million for the quarter ended January 31. That compares with a loss of US$40.8 million a year earlier. The company’s national spring sales event, which ends this weekend and offers buyers upgrades on home features such as cabinets and kitchen fixtures, has already brought in 15 per cent more deposits than last year. In the November to January period, Toll’s contracts on new homes climbed 4 per cent in units and 5 per cent in value to US$307.2 million. Revenue climbed 2 per cent to US$334.1 million.
Tom Gump, a principal with Neighborhood Development, said Monday that Texas-based home builder D.R. Horton has signed an agreement to buy 28 finished lots in Inspiration, a 242-acre development in a Bayport, NY, residential community that went into foreclosure in 2007. Brooklyn Park-based Contractor Property Developers was the original developer, but gave it back to lender M&I Bank when it couldn’t repay a US$14.65 million development loan. Neighborhood Development’s contract with D.R. Horton reflects the slow but steady recent return to the market by national builders, who have winnowed down their stocks of unsold homes and finished lots, according to Ryan Jones, director of MetroStudy Twin Cities, which monitors residential real estate activity in markets across the nation.
“National builders have reduced their inventory of lots to a 15 to 20 month supply, down from the 24 to 36 months that builders say is equilibrium during a good market,” Jones said. “I think every national builder in this market is buying again. They aren’t big projects; they’re picking up anywhere from 20 to 45 lots, and I think they’ll stay cautious like that over the next couple years.”
But thanks to those low inventories, more land sales could come later in the year if the pace of home sales improves from 2010 levels.
“If sales of new homes grow by 10 to 15 per cent, which people are hoping to see, builders would probably be back in the market for more lots,” Jones said.
“People look at new homes and they think the prices look good, but they still fear that they could lose value if they buy a home now,” Jones said. “That keeps pricing touch and go.”
Emile Haddad, CEO of FivePoint Communities, is developing four new master-planned California communities with a combined 45,000 residences, two in the Los Angeles area and two in San Francisco, the company announced Tuesday. Haddad, a former executive at US home builder Lennar Corp, sold 12,000 acres in California for a US$277 million profit at the housing market’s peak four years ago. He and his partners then reacquired it at half the price in 2009. Construction of the first homes is scheduled to begin in the second half of this year.
Los Angeles and San Francisco were two of only four major US housing markets with year-over-year price gains in November, according to the S&P/Case-Shiller index. Values have risen 23 per cent statewide from the trough in February 2009, with affordability at the highest level in a decade for first time buyers, according to data from the California Association of Realtors.
“I don’t want the party to show up and I’m not dressed,” Haddad, 52, said in an interview with DailyBusinessReview.com
Madison’s Timber Preview
This week’s issue of Madison’s Timber Preview, provided free to all Reporter subscribers as a special bonus, takes a look at recent announcement of pulp price increases globally. The latest figures on pulp inventories and shipments are also examined.
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BC Lumber Exports to China Overtake Japan
British Columbia’s lumber exports to China for 2010 are valued at about $687 million, more than double the value of shipments in 2009 and, for the first time, exceed the value of softwood products shipped to Japan, Minister of Forests, Mines and Lands Pat Bell announced Tuesday.
BC exported approximately 4.6 million cubic metres (an estimated 2.8 billion board feet) of softwood lumber products to China in 2010, an increase of 76 per cent from 2009. With the province producing roughly 12 billion board feet of lumber annually, the US continues to be the biggest buyer of BC wood products at just under seven billion board feet.
Bell, however, said he could see that situation changing in future as December sales saw the US account for about 36 per cent, while China and Japan combined were over 45 per cent.
Historically, the US takes upward of 70 per cent of the province’s lumber output, while domestic Canadian consumption is around 10 per cent.
“If we annualize December sales to 5 billion board feet, the two markets (the US and China) are getting very close to each other,” said Bell.
BC Lumber Exports to China
Bell added that China had about 10 million housing starts annually, with 6 to 7 million housing units in six-story walk-up apartment buildings.
“If we can crack into that market in modular style of construction that we are proposing and demonstrating at the Green Building Show in Beijing in March, I think this market will truly far exceed anything that British Columbia, Canada and perhaps the world is capable of delivering.”
Bell told Xinhua Media the majority of BC wood exports to China were currently going to Beijing, Tianjin, Hubei province, Shanghai and Sichuan province.
“But you are starting to see companies building clusters of wood manufacturers. We visited one in Tianjin that expects to have a wide variety of businesses that is building furniture and other wood projects, all clustered within a relatively small area around the port.
Despite the demand for wood, Bell admitted transport remained his main concern. With China buying huge amounts of coal, iron ore and potash, among other resources, from both Canada and the United States, this had taxed capacity at the province’s two main ports in Vancouver and Prince Rupert.
He added the Ministry of Forests, Mines and Lands was also looking at the possibility of shipping through secondary ports at Kitimat and Stewart.
Japan Import of North American Lumber, 2010
Total Japanese imports of North American lumber in 2010 grew by 21 per cent over 2009, to 2,747 million cubic metres, according to the Japan Lumber Reports. With depressed home building in the US, production in North America was stimulated by a sharp increase in demand from China, bringing a stable supply stream into Japan. The strong Yen is also credited with the increase in lumber imports, by keeping the costs of imports lower.
Canadian mills supplied far more lumber than the US, but the amount of US lumber imported into Japan increased by a larger degree because more mills in the US began cutting to metric sizes.
Japan Log and Lumber Demand, 2010
Total imports of Douglas fir grew more than another other species, by 45.7 per cent compared to 2009, to 560 million cubic metres says the Reports. Imports of hemlock, a traditional favourite in Japan, increased by 15 per cent to 417 million cubic metres.
The SPF mix continues to dominate demand in Japan, up 18 per cent compared to 2009 to 1,515 million cubic metres. The construction of 2×4 units in Japan increased by 4 per cent in 2010 compared to one year ago, to 96,000 units.
In addition, SPF is now being used in traditional post-and-beam homes as rafters. Retailers and builders in Japan find the stable supply and relative low cost of SPF lumber appealing.