West Fraser and Canfor closed mills in BC- Pine Beatle effects supplies

Forestry giants Canfor and West Fraser announced Thursday they will close two Interior sawmills next year because the pine beetle epidemic has gutted their timber supply.

The closures, which also involve a swap of timber harvesting rights between the two companies, will result in 434 job losses in the communities of Quesnel and Houston.

“Closing a profitable sawmill is very difficult, but there is simply not enough fibre remaining in the Quesnel area to support all of the mills in the community,” Canfor president Don Kayne said in an open letter.

The closure of Canfor’s Quesnel sawmill is expected to take place in March 2014. West Fraser and Tolko both operate sawmills in Quesnel.

The beetle epidemic peaked in B.C. in 2005, and has affected timber in an area five times the size of Vancouver Island.

Initially there was a rush to harvest lodgepole pine killed by the mountain pine beetle, in part an attempt to halt the beetles’ advance and also to capitalize on the damaged wood before it rotted. The effort was also fuelled by a booming U.S. housing market before the 2008 crash.

Both companies have had earlier mill closures to consolidate production while they tapped into a new Chinese market following the U.S. housing crash. However, this is the first example of profitable sawmills being closed because of the drop in timber supply caused by the pine beetle.

“While we considered every option — including harvesting areas currently constrained for environmental reasons or bringing in wood from longer distances — these would only have delayed the inevitable,” said Kayne.

West Fraser is closing its Houston sawmill some time between April and June of 2014. Canfor also has a sawmill in Houston.

The two companies are swapping timber harvesting rights in the respective communities; West Fraser gets Canfor’s timber rights in Quesnel, and Canfor gets West Fraser’s timber rights in Houston.

The deal allows the two companies to each shore up a sawmill operation in the Interior. The Houston mill closure and timber swap are part of what West Fraser terms its mountain pine beetle plan. The plan also includes large mill upgrades in Smithers and 100 Mile House.

Ted Seraphim, the president of West Fraser, said in a written statement that the pine beetle devastation continued to cut the availability of salable timber in the Interior.

“The shutdown of our Houston mill has been a difficult decision,” he said, adding that the company would help affected Houston workers find new employment.

But those jobs might be located in other towns in B.C. or Alberta, according to a company news release.

Employees at the mill, who work as equipment operators, millwrights, electricians, welders and other trades, were told Thursday afternoon they would lose their jobs, said Frank Everitt, a union president with United Steelworkers local 1-424. He estimated the pay of an average employee to be around $30 per hour.

“As a community they are certainly going to be reeling from this,” he said.

Sawmill closures due to the beetle epidemic were not unexpected, said Everitt, but workers had believed those closures were still years down the road.

“It wasn’t expected today,” he said.

While it may make sense from a business point of view to swap timber rights so companies have enough wood fibre, according to Everitt, it doesn’t offer much consolation to the workers losing their jobs.

Houston Mayor Bill Holmberg said there had been lots of rumours pointing toward a closure of the West Fraser mill, but nothing was definite until Thursday. He said the impact on the town would be huge.

“There’s 225 direct employees of the mill and then you take the spinoff of that — do the math,” he said. “It’s not gonna be good.”

There will also likely be some fallout for logging contractors and truckers in Quesnel and Houston.

Canfor spokeswoman Christine Kennedy said managers will be talking to contractors in Quesnel today (Friday).

In Quesnel, the closure is a disappointing end for a sawmill that had been closed once before, then resurrected in 2010 to ship all of its lumber to the emerging Chinese market.

In 2012, B.C. companies shipped more than $1 billion in lumber to China, up an astounding 1,500 per cent since 2003.

However, even that new market could not overcome the inevitability of a declining timber supply due to the beetle epidemic that had killed large swaths of pine in the Interior Plateau.

“We are extremely proud of what was achieved here, and are saddened to see it come to an end,” Kayne said of the Quesnel sawmill’s success in the Chinese market.

According to the B.C. Ministry of Forests, about 710 million cubic metres of timber have been killed since the epidemic began in the late 1990s, equivalent to the amount of timber that’s normally logged in a 10-year period in B.C.

Read more: http://www.vancouversun.com/Interior+sawmills+closed+beetle+epidemic+erodes+supply/9079750/story.html#ixzz2iiSJ6HES

China is back in timber business

According to statistics from China customs, about 25 million cubic meters logs were imported to China during January-July, 2013 grew by 11.34% over the same period of last year and the total value reached over USD 5 billion and gained an 11.34% year-on-year growth. At the same time, China imported more than 13 million cubic meters saw timber grew by 9.47% over last year and the total value is about USD 63.4 million.

We can see that the China’s demand on logs and saw timber increase a lot compared to the same period of last year. State Bureau of Forestry estimate that wood supply deficit will increase over 50% by 2015.

As the huge demand on wood import, Wood Guangzhou 2014 Committee focus on the cooperation with national wood trading markets especially in South China, which provide a good platform for these Chinese trading companies and sawmills to find reliable suppliers. At present, most of wood trading markets and sawmills in South China have promised that they will organize their member companies to attend Wood Guangzhou 2014.

Guangdong Yuzhu International Timber market, which is the biggest wood trading market in China with 400 member companies, located at Guangzhou city, imported various logs and saw timber from Europe, America, Africa and Australia every year. In Wood Guangzhou 2014, committee will continue to invite Yuzhu timber market to participate

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Mynamar Exports: US and Western Countries lifts ban

Myanmar will export its timber to the European Union (EU) countries starting June this year and s delegation of the EU will Myanmar next month to coordinate for the export, local media reported Wednesday.

During its visit in Myanmar, the EU delegation will observe current timber extraction in the country and sign a memorandum of understanding (MoU) for timber trade, said the Weekly Eleven News.
Exporting Myanmar’s timber to EU needs certificate for their legal authentication, the report said.

Myanmar is a country with most severe forest depletion due to widespread illegal logging throughout the country, the report quoted Win Htun, Minister for Environmental Conservation and Forestry as saying.

Meanwhile, the United States and some Western counties have lifted sanctions on Myanmar timber.

Global Timber prices going high as China buying more

Lumber exports to China from Washington, Oregon, northern California, and Alaska rebounded in the fourth quarter of 2012, jumping to 89.4 million board feet, an increase of 97.2 percent compared to the third quarter of the year, according to the U.S. Forest Service’s Pacific Northwest Research Station. At the same time, total lumber exports to all countries from the West coast increased about 21 percent, from 185.6 million board feet in the third quarter of 2012 to 224.2 million board feet.

“ China continues to maintain a dominant position in the log export market,” said Xiaoping Zhou, a research economist with the station who compiled the data. “Over 271 million board feet, or 60 percent of the West coast’s log exports, were shipped to China during the fourth quarter of 2012.”

Fourth-quarter total log exports from the West coast were over 4.4 percent higher than they were in 2011 because of a 19-percent increase in shipments to China.

Other highlights of 2012:

The total value of lumber exported through the West coast increased about 17 percent to $156 million in the final quarter of 2012, while the total value of exported logs increased over 19 percent to $309 million;
The total 2012 volume of logs exported from the West coast represents about 60 percent of the total U.S. log export;
The total 2012 volume of lumber exported from the West coast represents about 29 percent of the total U.S. lumber export.

Zhou compiled the statistics using data from the U.S. International Trade Commission and Production, Prices, Employment, and Trade in Northwest Forest Industries, an annual station publication that provides current information on the region’s lumber and plywood production as well as the trade of forest products and employment in forest industries.

Timber Imports in India: releasing pressure from himalayas.

In a bid to conserve a precious resource, the Jammu and Kashmir government has adopted a dual policy of liberalising timber imports and enforcing measures that have brought down timber smuggling by a staggering 99 percent.

“From the year 2009 to 2013, the state imported 14.7 million cft (cubic feet) of timber from abroad and from other parts of the country and simultaneously brought down timber smuggling by 99 percent,” Forest Minister Mian Altaf Ahmad told IANS.

During this period, 1.2 million cft of timber grown in the state was also sold.

“The different agencies of the state forest department sell dried and fallen trees only after the ban on felling of green trees was imposed by the Supreme Court in 1996,” Ahmed said.

Jammu and Kashmir has suffered 50 percent degradation of forests due to “need and greed of human beings, coupled with increasing cattle population, prompting the government to take up afforestation and conservation projects on a massive scale,” the minister explained.

According to official statistics, Jammu and Kashmir has a geographical area of 101,387 sq km (excluding area under Pakistani and Chinese occupation) while the forest cover is 16,309 sq km, excluding the cold desert area of Ladakh, which has just 0.06 percent forest cover.

Jammu and Kashmir’s forests are famous for pine, fir, kail, deodar and chir trees.

“The troubled situation in Jammu and Kashmir during the past over two decades is mainly responsible for degradation of the forests in the state and also forest land,” Ahmed said.

He said militants, along with the mafia, were involved in massive timber smuggling and encroachment of forest land.

“Timber smuggling has now come down by 99 percent and there is no fresh case of encroachment of forest land. We are working on getting earlier encroachments evacuated,” the minister said.

The state government had announced a forest policy in 2011, under which “emphasis is on conservation of forest resources for ecosystem goods and services, meeting needs of the people for forest produce, and poverty alleviation through forestry-related activities”.

With the total ban on felling green trees, “we have liberalised the import of timber. No restriction (is imposed) nor is there the need for a licence to import timber. Private companies importing timber from different parts of country or from abroad have to only get registration done at Lakhanpur (entry point to Jammu and Kashmir),” the minister said, adding that the forest department takes care of the timber’s quality control.

The forest minister, however, said there were still miles to go to ensure the proper conservation of the state’s forests.

It is a massive task that, he said, gets much more difficult because of paucity of funds and lack of staff.

“The forest department gets just Rs.45 crore in the budget; its staff shortage is in the range of nearly 40 percent,” he said.

Construction of new highways, augmenting the state’s road network and infrastructure under various schemes also result in the felling of trees and the loss of forests.

“We plant 100 trees for every 50 trees felled. Besides this, an amount has to be deposited in CAFMPA (Compensatory Afforestation Fund Management and Planning Authority) account for forest land diversion. This money comes in handy for conservation efforts,” the minister said.

The state has Rs.500 crore in the CAFMPA account, but only 10 percent of this can be used. The rest must be maintained in reserve.

“Our main focus is on protection of forest land, the import of timber for domestic and commercial use and increased tree cover in traditional forests to check soil erosion and the like. These measures will also serve to boost tourism,” the minister said.

He said the state intended to introduce schemes that would offer employment to those living close to forests.

Eco-tourism projects are also planned to be undertaken in association with local people.

None of these measures, though, can be properly assessed in the short term: That is something no one knows better than the forest minister.

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New Zealand Pine Hot- Demand from China increasing.

Demand from China has not only pushed up demand from large forest product exporters like Brazil. According to new figures from the country’s Ministry of Agriculture and Forestry (MAF), demand from the world’s most populous country has significantly driven up the value of forestry exports from New Zealand.

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The value of the forestry exports from New Zealand in the year to the end of March rose by NZ$ 800 million to NZ$ 4.4 billion. This rise was mainly driven by the increase in log exports to China, which is eager to buy up raw materials for building to allow its economy to continue to grow.

In the first quarter of 2011 alone, some 1.7 million cubic meters of logs were exported from New Zealand to China – up 44.5 per cent on the same month in 2010. India is another market that is importing logs in huge quantities to feed growing demand for construction. In the first quarter of 2011, exports to India increased by a huge 157 per cent to 0.4 million cubic meters of timber.

Although the greater demand from emerging economies has been welcomed, the rising prices are also being felt domestically and local construction industry slow-downs are adding to the pressure on the country’s producers.

“As a result, some mills have closed or down-scaled since the December 2010 quarter, and some remaining saw millers have reported to MAF that they are questioning their future viability in the industry,” explained Andrew Doube of the MAF.

Although some workers have been laid off as a result of sawmills closing, there is some positivity that local demand will increase when the rebuilding after the Christchurch earthquake really gets going. Doube explained, “There is a general expectation that there will be increased demand for processed wood products once the post-quake rebuild begins.”

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Lumber price to go high

Sawlog prices trended upward throughout the world in the 4Q 2013 and the Global Sawlog Price Index (GSPI) rose to US-$ 88.78/m³. This was the highest level in over two years and the third highest price on record since 1995, reports Wood Resource Quarterly (WRQ). Upward price movements the past year have been the highest in the Western US, Western Canada, Japan, Latvia and Sweden, with 4Q 2013 prices being between 8 to 18% higher than in the 4Q 2012. Most of these countries are major lumber exporters, and with improved consumption of lumber around the world in late 2013, demand for sawlogs increased so sawmills have been forced to pay more for logs to be able to obtain sufficient supplies to feed their mills. This trend is likely to continue in 2014 with lumber markets improving in North America and Europe.

In all of 2013, global shipments of softwood logs were up by as much as 17% from 2012, totaling more than 80 million m³, based on estimates by WRQ. This would be the highest shipment of logs since 2007.