According to updated September trade statistics from the US Census Bureau and the United Nations, US exports of total market pulp are on track to flatten in 2016. At their current pace, exports will reach 6.75 million metric tons, slightly up from 6.71 million in 2015, but below peak years between 2010 and 2013. Export prices will also be flat at $713 per metric ton.
While some forest products companies still maintain a land base, large integrated pulp and paper companies owning a significant land base in order to secure a portion of their raw material is largely a business model whose time has passed. One can argue whether this is a positive or negative change, but this reality has dramatically altered the way wood products companies source their raw materials; it has also created opportunities for improving supply chain efficiencies and profitability.
A November 17 story in the Yakima Herald-Republic addressed an important issue regarding the symbiotic relationship between working forests, forest health and the forest products industry. It's an issue that typically gets lost in the contentious, often emotionally-driven, debate about forest management, harvesting practices and sustainability.
A few weeks ago, I read a summary of the American Hardwood Export Council's (AHEC) European conference, which, among other things, said that "one in every five boards of American lumber will now end up in China." The United States' trading policies are on the minds of many in the wake of the US presidential election, so I wanted to dig a little further into some of the US export data on logs and lumber.
Earlier this month, Forest2Market do Brasil held a regional seminar in Northeast Paraná that covered topics related to the region's forestry sector and the larger forest products industry. Co-sponsors of the seminar included APRE (Parana's association for forest-based companies), Resource Management Services do Brasil (RMS) and BO Paper. The event was the first in a series of three seminars that will be organized in the coming months to bring together members of the forest products industry for discussing multiple perspectives on the state of the forest industry in different regions of the country.
The composite southern yellow pine lumber price inched down during week 47 of 2016 to the $376/mbf mark. While prices have remained fairly steady through the fall months, this number is 15 percent above its January 2016 starting point of $326/mbf, and 20 percent above its 2015 week 38 price of $314/mbf.
Total industrial production (IP) edged up 0.1 percent in September (-1.0 percent YoY) after falling 0.5 percent in August. For 3Q as a whole, IP rose at a SAAR of 1.8 percent-its first quarterly increase in a year. Manufacturing output increased 0.2 percent in September (3Q: +0.9 percent SAAR). New orders increased 0.3 percent in September. Excluding transportation, new orders rose 0.6 percent (but -0.3 percent YoY, the 22nd month of YoY contractions out of the past 24). Business investment spending, which has contracted on a YoY basis during all but two months since January 2015 (inclusive), fell by 1.3 percent (-3.8 percent YoY).
If astonishing events come in "threes," we can add the latest housing starts data to a recent list that includes the Chicago Cubs finally winning a World Series, and a real estate mogul winning the White House in what was arguably the biggest upset in US presidential election history. (At the very least, it was the biggest upset since 1948, which was an election cycle the establishment news media also got spectacularly wrong; The Chicago Daily Tribune's headline infamously declared "Dewey Defeats Truman," despite Truman actually winning by over 2 million votes.) US housing starts surged to a nine-year high in October as growth in both single and multifamily homes continues to contribute to economic growth in 4Q2016.
Forest2Market would like to congratulate longtime friend and partner Fred Souba Jr. on his recent appointment to Chief State Forester at the Wisconsin Department of Natural Resources. Fred brings over 40 years of forest industry experience to the Department, where he will also serve as administrator for the DNR Division of Forestry.
