Review North American Wood Fiber ReviewNorth America Wood Fiber Prices Summary ..... 3 North...

North American

Wood Fiber

Review

1 © 2016 Wood Resources International LLC.

January 9, 2017

Vancouver, WA, USA

Dear reader,

The year 2016 ended with a surprising U.S. presidential election result. Donald Trump’s term beginning in

January 2017 will surely cause major change in a variety of forest industry-related issues for both the U.S.

and Canada. Not to be outdone, in the 4Q/16 Canadian Prime Minister Justin Trudeau proposed broad new

federal legislation that would propel Canada further towards a low carbon economy, notwithstanding its status

as a major fossil fuel producer.

The incoming U.S. administration promises hard reviews of international trade agreements, including

NAFTA. The current debate over softwood lumber trade, however, has not yet showed up on the

president-elect’s radar screen. Finally, current U.S. energy policies will likely feel the winds of change,

for example, whether to adhere to or reject President Obama’s Clean Power Plan. That policy decision

alone would impact potential utilization of pellets in a brand new domestic market.

While there have been no president-elect references to date, specific actions have already taken place

regarding the lumber dispute between the U.S. and Canadian producers. The U.S. Department of

Commerce officially began its investigation into the petition by the U.S. softwood lumber coalition, and

an initial finding of “harm” by the US International Trade Commission has already been recorded in early

January 2017. If the Commerce Department determines that Canadian softwood exports have definitively

harmed the U.S. lumber sector, it would issue preliminary countervailing duties in February, 2017 and

preliminary anti-dumping duties in May, 2017.

Canada is moving ahead with a federal carbon tax proposal, as well as a plan to minimize coal utilization

by 2030. Both initiatives hold promise for a stronger biomass-utilizing sector if they are enacted in 2017.

Weather across the continent had significant impacts on wood fiber markets in the 4Q/16. Portions of the

US South were in drought through most of 3Q and into the 4Q, leading to relatively rare destructive

wildfires in Georgia and Tennessee. Midway through the 4Q, Western Canada had yet to experience

falling temperatures, which briefly drew sawlog inventories to worrisomely low levels. Luckily, by the

end of the quarter, all was well and frozen conditions were in place where expected.

And on to 2017!

Sincerely,

Tim Gammell,

NAWFR editor

North American Wood Fiber Review

Fourth Quarter, 2016

Not too late! Our fourth annual Mapping the Course conference, covering timberland, forest resources, forest products

processing and woody biomass issues in Western North America in 2017 is coming up in less than two weeks in Vancouver,

Washington, Thursday, Jan 19th, 2017 (www.westernforestry.org).

http://www.westernforestry.org/

North American

Wood Fiber

Review

© 2016 Wood Resources International LLC. 2

Table of Contents

Pulpwood, Biomass and Sawlog Prices

North America Wood Fiber Prices Summary ...................................................................................... 3

North American Wood Chip and Pulplog Prices U.S. South Central ........................................................................................................................................... 5

U.S. Southeast .................................................................................................................................................. 6

U.S. Northwest ................................................................................................................................................. 7

Market Focus: Hardwood Utilization in the U.S. Northwest …………………………………………….11

U.S. Lake States ............................................................................................................................................. 12

U.S. Northeast ................................................................................................................................................ 13

Canada, West ................................................................................................................................................. 14

Market Focus: BC forest sector faces changing landscape in 2017 ........................................................... 16

Canada, East .................................................................................................................................................. 17

North America Biomass Prices Summary table and graphs .......................................................................................................................... 18

U.S. South ....................................................................................................................................................... 19

U.S. Northwest ............................................................................................................................................... 20

U.S. Lake States and Northeast .................................................................................................................... 21

Canada, East and West ................................................................................................................................. 22

North American Regional Sawlog Prices ….……….………………………………………………….. 23

Trade and Production Data

Highlights, Energy and Transportation Prices .................................................................. 24

North American Regional Lumber Production ……………………….………….………………… 25

North American Forest Products Trade Lumber ............................................................................................................................................................ 26

Sawlogs ........................................................................................................................................................... 27

Wood Chips .................................................................................................................................................... 29

Pellets .............................................................................................................................................................. 31

Market Focus: Growth Opportunities for Pellet Utilization in Asia ........................................................ 33

WRI Export Pellet Fiber Price indices ........................................................................................................ 34

Market Pulp and Global Sawlog Price Index Update ……………………………………………………. 35

Subscription Information, Disclaimer and Copyright Laws ....................................................... 36

Note: Prices are reported as delivered to the final end consuming mill unless otherwise noted.

North American Wood Fiber Review

December, 2016

North American

Wood Fiber

Review


Notes: Exchange rate: C$1.33/US$ (Average 4Q/2016)

All prices in U.S. dollars in US$/odmt (oven-dry metric ton). 1 odmt equal to 1.102 short tons (dry weight) or 2204 lb.

Roundwood prices are delivered to pulpmill or chipping facility.

Chip prices are for residual chips and do not include chips manufactured from roundwood.

Source: Data collected by North American Wood Fiber Review.

Avg Min Max Avg Min Max

Softwood

U.S.

Northwest 95 58 138 81 54 123

Lake States 110 82 141 106 84 146

Northeast 89 60 123 93 74 116

Southeast 76 61 87 86 64 91

South Central 73 60 88 81 61 89

Canada

British Columbia 77 61 94 68 53 98

Alberta 79 44 94 ..... ..... .....

Eastern Ontario/Quebec 82 58 106 119 87 135

Maritimes ..... ..... ..... 68 47 82

Hardwood

U.S.

Northwest 104 83 127 81 39 94

Lake States 76 64 112 114 90 147

Northeast 87 71 121 99 76 127

Southeast 74 61 83 81 63 92

South Central 75 60 82 86 64 93

Canada

Eastern Ontario/Quebec ..... ..... ..... 82 58 111

Maritimes ..... ..... ..... 80 56 106

US$/odmt US$/odmt

Wood Chips Roundwood

Prices for softwood chips exported to Japan Douglas fir, U.S. $145.00 $153.00 1H 2016

SPF, Canada $153.00 $161.00 1H 20162nd Half 2016 (US$/BDU, FOB):

North American Wood Fiber Prices Summary

Fourth Quarter, 2016

North American

Wood Fiber

Review


4Q/15 1Q/16 2Q/16 3Q/16 4Q/16 Change 4Q/15 1Q/16 2Q/16 3Q/16 4Q/16 Change

y/y (%) y/y (%)

Softwood

U.S.

Northwest 49 47 47 44 43 -11 36 36 35 33 33 -8

Lake States 52 50 50 50 50 -4 46 44 44 44 43 -7

Northeast 44 41 40 40 40 -9 42 39 39 38 38 -10

Southeast 35 36 35 35 34 -3 36 37 36 36 35 -4

South Central 34 34 34 34 33 -4 34 34 34 33 33 -4

Canada

British Columbia 36 35 36 36 35 -3 31 29 30 29 28 -11

Alberta 36 34 37 37 36 -1 …. …. …. …. …. na

Eastern Ontario/Quebec 38 36 39 38 37 -2 49 47 50 49 48 -3

Maritimes …. …. …. …. …. na 30 28 29 29 27 -8

Hardwood

U.S.

Northwest 45 44 46 45 47 6 33 33 32 32 33 0

Lake States 38 36 36 36 35 -9 53 50 48 47 46 -13

Northeast 42 40 40 40 39 -5 49 49 44 42 40 -19

Southeast 34 34 34 34 34 0 35 35 34 34 33 -6

South Central 35 35 35 35 34 -5 38 38 38 37 35 -8

Canada

Eastern Ontario/Quebec …. …. …. …. …. na 35 33 35 34 33 -6

Maritimes …. …. …. …. …. na 33 32 34 33 32 -3

Wood Chips

US$/green tons ob

Roundwood

US$/green tons

Notes: Exchange rate: C$1.33/US$ (Average 4Q/2016)

All prices in U.S. dollars per green tons (2000 lbs) or equal to 0.907 metric tons

Roundwood prices are delivered to pulpmill or chipping facility.

Chip prices are for residual chips and do not include chips manufactured from roundwood.

Source: Data collected by North American Wood Fiber Review.

North American Wood Fiber Prices

4Q/15 – 4Q/16

North American

Wood Fiber

Review


The South Central region weather swings from

rain to drought, resulting in abundant fiber and

falling fiber prices

Wet conditions early in the 3Q/16 gave way to

drought throughout the fall months, with the severity

of the drought particularly noticeable in the eastern

states of the region. The summer and fall hurricane

season produced no notable events and what little

rain that did fall was needed.

With full access to the woods, including low-lying

hardwood lands that typically have limited

accessibility, there was abundant fiber supply

throughout the fall, comfortable-to-full pulpmill

fiber inventories, and declining pulplog and chip

prices.

Hardwood roundwood prices decline sharply in

the 4Q/16

The hardwood roundwood price fell two dollars

from the previous quarter to US$35/green ton in

the 4Q/16. This second consecutive quarterly

price decline represents an eight percent drop

since the record setting prices at US$38/green ton

from the 3Q/15 through the 2Q/16.

Softwood roundwood pricing in the South

Central region, while marginally easing with

ample supplies, held steady at US$33/green ton

in the 4Q/16. Quotas were widely used to control

fiber inventories and reduce wood deliveries.

Residual chip prices fall in the 4Q/16

With widespread fiber availability in roundwood

form, both softwood and hardwood residual chip

prices declined in the 4Q/16.

The hardwood residual chip price fell to

US$34/green ton, a decline that had begun

modestly in the previous quarter. The softwood

residual chip price fell by one dollar to

US$33/green ton.

U.S. South Central Wood Fiber Market October - December, 2016

0

5

10

15

20

25

30

35

40

US

$/g

reen

to

n

South Central Roundwood Prices

Softwood Hardwood

Source: NAWFR

0

5

10

15

20

25

30

35

40

US

$/g

reen

to

n

South Central Residual Chip Prices

Softwood Hardwood

Source: NAWFR

North American

Wood Fiber

Review


Roundwood fiber prices fell in the 4Q/16

Softwood roundwood prices in the Southeast fell

one dollar to US$35/green ton after early price

spikes in the Carolinas. The hardwood

roundwood price fell one dollar to US$33/green

ton.

Roundwood prices have shown a modest

downward trend throughout the year, despite a

variety of significant weather-related events.

Softwood residual chip price eased in the 4Q/16,

while the hardwood residual chip price held

steady

The softwood residual chip price fell one dollar

in the 4Q/16 to US$34/green ton. The ample

volume of residual chips being generated was

beginning to tip the dynamic for the region’s

sawmills into one with a higher priority of simply

moving chip volumes, rather than maintaining

steady chip prices.

The smaller volume of hardwood residual chips

saw its price hold steady at US$34/green ton,

though some further easing of prices for spot

purchases did occur.

0

5

10

15

20

25

30

35

40

US

$/g

reen

ton

Southeast Residual Chip Prices

Softwood Hardwood

Source: NAWFR

0

5

10

15

20

25

30

35

40U

S$/g

reen

ton

Southeast Roundwood Prices

Softwood Hardwood

Source: NAWFR

U.S. Southeast Wood Fiber Market October - December, 2016

Southeast Region sees hurricanes early in the quarter, followed by drought

and wildfires

Weather conditions across the Southeast region was the biggest news in the

4Q/16, though in the end, wood fiber supplies remained ample and prices fell.

Early in the quarter, Hurricane Matthew hit the coastal regions of North and

South Carolina, resulting in temporary pulpmill closures and temporary price

spikes.

Immediately following this weather event, drought conditions centered in

Northern Georgia developed, that eventually resulting in a series of wildfires and

temporary burn bans. By early December, however, drought conditions had

eased, and ample mill fiber inventories that were seen through most of the

quarter resulted in falling wood fiber prices.

North American

Wood Fiber

Review


The price of mixed Douglas-fir chips (residuals

and roundwood chips) fell another two dollars

to US$107/bdu in the 4Q/16, while the weighted

hemlock chip price rose one dollar to

US$125/bdu. Demand in the Puget Sound sub-

region for hemlock chips kept the overall

hemlock price steady, while east of the

Cascades, higher prices for both Douglas-fir and

hemlock contributed to the modest increase.

The PNW Douglas-fir residual chip price fell by

two dollars in the 4Q/16 to US$100/bdu. The

PNW hemlock residual chip price held steady at

US$115/bdu in the 4Q/16 for the second

consecutive quarter.

Fiber availability still high in the U.S. Northwest

as the year ends

High residual chip inventories are most clearly seen

in the Western Oregon sub-region with resulting

lower prices. The situation in that sub-region has in

turn had a direct impact on ample inventories and

falling prices in the Lower Columbia River sub-

region.

Large chip inventories destined for export from

Coos Bay was the primary reason for the two

sub-region’s full inventories and lower pricing,

The lower chip volumes exported in the previous

two quarters (see pages 9 and 29) show the drop

in the take-away and the domestic buildup.

Douglas-fir residual chip and roundwood prices fell in the 4Q/16,

hemlock prices mixed

Douglas-fir fiber prices across the U.S. Northwest continued to slide in the

4Q/16, while hemlock prices both rose and fell across sub-regions.

Overall fiber availability remained high, though demand for fiber increased

in the Western Oregon sub-region due to the resumption of operations at

the IP mill in Springfield. Scheduled lock closures for maintenance on the

Columbia River dam system began late in the 4Q/16, resulting in tighter

supplies and higher pricing East of the Cascades.

120109

123

8993

108

132124

137

115 116

142

0

25

50

75

100

125

150

175

200

Softwood Douglas-fir Hemlock Douglas-fir Hemlock Softwood

Puget Sound Lower Columbia R. W. Oregon Inland Empire

US

$/B

DU

U.S. NW Residual & Roundwood Chip Prices 4Q/16

Residual chips Roundwood chips

Source: NAWFR

0

25

50

75

100

125

150

Puget Sound L. Columbia River Western Oregon Inland Empire

US

$/B

DU

Weighted Softwood Chip Prices in U.S. Northwest

4Q15 1Q16 2Q16 3Q16 4Q16

Source: NAWFR

0

20

40

60

80

100

120

140

160

180

US

$/B

DU

U.S. NW Douglas-fir & Hemlock Weighted Chip Prices

Douglas-fir Hemlock

Source: NAWFR

U.S. Northwest Wood Fiber Market October - December, 2016

North American

Wood Fiber

Review


Chips, US$/bdu (delivered) Ave Ave Ave Range Ave Range Ave

Western Washington* … ….. … ….. 125 76 - 185

(Northwest & Puget Sound) 120 76 - 152 132 76 185

Lower Columbia River 114 82 - 140 127 99 - 151 … (SW WA + NW OR)

Oregon 94 63 - 128 97 64 - 129 …

(Willamette Valley)

Inland Empire* … … 118 72 - 160 (E. Washington, Idaho) 115 72 - 159 120 72 - 159

U.S. NW weighted average 107 63 - 159 125 64 - 185 70 59 - 74 126 90 - 144

….. …..

See weighted averages




…..

…..

Douglas-Fir Hemlock

Range Range

Softwood combined Cedar Hardwood

Range

U.S. Northwest Wood Chip and Pulp Log Prices October - December, 2016

Notes:

Wood chip prices in the above table includes both residual chips and chips manufactured from roundwood.

1 BDU = 2400 lbs = 1.09 odmt

*In the Western Washington (Puget Sound) and Inland Empire regions, softwood (Douglas-fir, hemlock, balsam fir and

pine), chip prices are combined in order to avoid disclosure of individual mill information.

Cedar and hardwood prices are kept separate as U.S. West averages only. Cedar is not weighted into graph.

US$/green ton

Hardwood Ave Range Ave Range Ave Range

Washington, West 33 25-41 37 29-48 See Weighted Average23 15-28

Lower Columbia River 32 28-38 34 28-42 See Weighted Average

(SW WA + NW OR) 33 27-36

Oregon, West 30 22-38 30 22-38 See Weighted Average

32 28-35

Inland Empire 33 29-48 34 26-50 ..... .....

Weighted Average 32 (22-48) 35 (22-50) 33 16-38

Pulplog Prices – U.S. Northwest

Douglas-fir Hem-fir

October - December 2016

Douglas-fir pulplog price steadies, while

hemlock pulplog prices ease in the 4Q/16

The Douglas-fir pulplog price in the Northwest

was stable at US$32/green ton in the 4Q/16 after

a year-long price decline. The hem-fir pulplog

price eased one dollar to US$35/green ton,

representing a fifteen percent decline from the

recent high of US$41/green ton seen in the 1Q/14.

Continued high availability of residual chips

is the primary factor in the gradual pulplog

price declines.

0

5

10

15

20

25

30

35

40

45

50U

S$/G

reen

to

n

Pulplog Prices in U.S. Northwest

Douglas-fir Hem-fir

Source: NAWFR

North American

Wood Fiber

Review


U.S. Northwest Pulp Chip and Sawdust Inventories

Company Location Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Boise Paper (PCA) Wallula, Wa 26 24 26 20 16

Cascade Pacific Pulp LLC Halsey, Or 35 40 51 30 35

Clearwater Paper Corp. Lewiston, Id 22 41 38 58 56

Cosmo Specialty Cellulose Cosmopolis, Wa 6 5 5 5 5

Georgia Pacific Corp. Camas, Wa/Wauna, Or 20 21 21 22 21

Toledo, Or 15 18 18 19 18

Inland Empire Paper Co. Spokane, Wa 5 4 5 5 5

International Paper Springfield, Or 15 18 18 12 15

Kapstone Paper Longview, Wa 44 48 64 66 68

Nippon Dynawave Packaging Longview, Wa 31 47 32 32 26

(former Weyerhaeuser through August 31, 2016)

Nippon Paper Industries Port Angeles, Wa 0.2 0.2 0.2 0.3 0.3

Oregon Chip Terminal Coos Bay, Or 22 3 15 25 25

Ponderay Newsprint Co. Usk, Wa 4 2 3 5 6

Port Townsend Paper Pt Townsend, Wa 8 8 6 10 8

Roseburg Forest Products Coos Bay, Or 160 150 185 200 205

WestRock Tacoma, Wa 13 21 18 21 17

TOTAL U.S. Northwest (in 1000 BDU) 428 450 505 530 526

Change Y/Y (%) 54 26 44 25 23

Notes: Inventories include both chips and sawdust, and represent the estimated on-hand volumes at the end of 4Q/16.

0

100

200

300

400

500

600

10

00

BD

U

Estimated Pulpmill Woodchip and Sawdust Inventory in U.S. Northwest

Willamette Valley

Lower Columbia

Eastern WA/ID

Puget Sound

Exports

Total

Source: NAWFR

North American

Wood Fiber

Review


U.S. Northwest sawdust price fell, reaching a new

low

The average price of sawdust in the U.S. Northwest

fell one dollar to US$38/bdt in the 4Q/16, a new low

as recorded by NAWFR. Only the higher delivered

price of sawdust east of the Cascades kept the

regional average from settling near US$30/bdt.

A significant amount of sawdust is once again

being consumed as hog fuel in sawmill, biomass

plant, and pulpmill boilers.

U.S. Northwest shavings price held steady for the

second consecutive quarter

The average U.S. Northwest shavings price held at

US$45/bdt in the 4Q/16, remaining stable for most

of 2016.

As in the case of sawdust in the U.S. Northwest,

longer transportation distances and the resulting

higher delivered costs east of the Cascades

separates the two geographic regions.

Increased demand from the U.S. Northwest pellet

sector in the 2nd half of 2016 has not yet made a

significant impact on the regional pricing of

wood fiber.

US$/bdt (delivered) October - December 2016

Ave Range Ave Range Ave Range Ave Range

Washington, West ..... ..... 34 25-41 23 7-37 41 21-55

Lower Columbia River ..... ..... 32 25-45 24 15-29 33 25-37 (SW WA + NW OR)

Oregon, West 41 28-53 29 12-40 17 8-22 37 22-43

Northern California ..... ..... ..... ..... 24 17-31 44 39-48

Inland Empire 48 23-76 46 10-80 24 8-43 43 32-48

Weighted Average 45 (23-76) 38 (10-80) 23 (7-43) 41 (21-55)

Residue and Woody Biomass Prices - Western U.S.

Shavings Sawdust Mill

Woody Biomass

Forest

Sawmill

0

10

20

30

40

50

60

70

US

$/b

dt

U.S. Northwest Shaving Prices

West of Cascades Inland Empire

0

10

20

30

40

50

60

70

US

$/b

dt

U.S. Northwest Sub-regional Sawdust Prices

Puget Sound Lower Columbia

Willamette Valley East of the Cascades

Source: NAWFR

Source: NAWFR

North American

Wood Fiber

Review


Hardwood chip prices on the rise in the Northwest

Hardwood utilization for pulp manufacturing in the

U.S. Northwest is limited in both volume and buyers

and sellers. Thus, commentary is limited to avoid

inadvertently disclosing individual mill activity.

However, there are some changes underway in the

market that are worth noting as 2016 concludes.

Hardwood fiber utilization by the pulp-sector in the

U.S. Northwest is limited to just a handful of

pulpmills, which primarily use red alder and limited

volumes of hybrid poplar from short-rotation

plantations. In addition, only three significant

companies utilize hardwood sawlogs and generate

residual chips in the manufacturing process. As a

result, NAWFR collects data across the entire region

and presents one average weighted residual and

manufactured chip price.

There has been a steady, modest increase in

hardwood chip pricing over the past two years,

culminating at US$126/bdu in the 4Q/16. This

represents a seven percent increase from the

recent low of US$118/bdu recorded in the 3Q/14.

Over the past six years, there have been changes

in ownership of hardwood sawmills in the PNW.

And in the past two years in particular, there has

been some reduction in consumption of

hardwood sawlogs (and therefore smaller

quantities of residual chips) due primarily to

difficulties in obtaining adequate economical

supplies of wood raw-material for the region’s

sawmills.

Among the hardwood fiber pulp consumers, there

have also been changes such as the prioritization

of manufactured chips over residual chips, and

even clean chips vs. dirty chips previously

acceptable in the product manufacturing.

One year ago, Greenwood Resources began the

process of selling its 25,000-acre hybrid poplar

plantation near Boardman, Oregon to agricultural

enterprises. This process entails the conversion of

three plantation acres to agricultural crops at final

harvest. The unique dryland tree farm, which has

been growing hybrid poplar on a 12-year rotation,

had become a steady supplier of residual chips to

various pulpmills. With the process underway to

convert these plantations, there will continue to

be incremental changes in hardwood supplies and

procurement strategies over the next few years.

Hardwood pulplog pricing remarkably steady

There is a small and steady market for hardwood

pulplogs across the U.S. Northwest, due to the

demand for manufactured pulp chips. A number of

log-yards collect hardwood pulplogs as a courtesy for

broader softwood harvest operations, and then

intermittently sell or process inventories of these logs

as clients request volumes.

Hardwood pulplog prices have varied in a narrow

range, between US$30-34/green ton, in the past

four years.

0

5

10

15

20

25

30

35

40

US

$/g

reen to

n

U.S. Northwest Hardwood Pulplog Prices

105

110

115

120

125

130

135

140

US

$/b

du

Hardwood Chips - weighted residual and whole log

Market Focus: Hardwood Utilization in the U.S. Northwest

Source: NAWFR

Source: NAWFR

North American

Wood Fiber

Review


The softwood roundwood price fell one dollar to

US$43/green ton, reaching the lowest price since

the 3Q/10. Many of the recent price reductions

reflect reduced demand, with several pulpmills

increasing their use of hardwood in 2016 rather

than softwood. Fiber managers expressed

concern that the diminishing market for low-

grade softwood would make harvest operations

on mixed species stands more economically

challenging.

Mixed hardwood and poplar roundwood prices

fell one dollar to US$43/green ton and

US$49/green ton respectively; a continuation of

a six-quarter downward trend.

Residual chip prices eased in the 3Q/16

The softwood residual chip price held at

US$50/green ton in the 4Q/16, though there were

signs of softening spot prices. The hardwood

residual chip price fell to US$34/green ton, the

second consecutive quarter of modest decreases.

Louisiana Pacific modifies plans for new OSB

facility in Northeast Minnesota

Louisiana Pacific revised plans for a new OSB/siding

facility, changing the location from a new building

site in Hoyt to one in Cook, Minnesota where an

idled facility is present. The company stated that by

converting the existing facility, the operation could

start up “in 12-18 months rather than two to three

years” it would take to construct a new facility.

U.S. Lake States Wood Fiber Market October - December, 2016

0

10

20

30

40

50

60

US

$/g

reen

ton

Lake States Roundwood Fiber Prices

Softwood Mixed Hardwood Poplar

0

10

20

30

40

50

60

US

$/g

reen to

n

Lake States Residual Chip Prices

Softwood Hardwood

Source: NAWFR

Fiber prices all decline in the 4Q/16, confirming a noticeable year-

long correction

Lake States fiber prices all fell in the 4Q/16, continuing what has

become a year-long decline. After a wet summer, a dry early fall

allowed good access to the woods resulting in full wood fiber

inventories at the region’s pulpmills. The transition to frozen winter

conditions was slow in arriving - early December before hard freezes

were widespread - but were handled without disruption due to the

ample fiber inventories.

Source: NAWFR

North American

Wood Fiber

Review


Northern New England hardwood roundwood

price falls because of abundant log supply

Logging contractors continued to focus on

hardwood-dominated stands in the 4Q/16 only to

see the hardwood roundwood price ease one

dollar to US$42/green ton. The poplar pulplog

price also fell one dollar to US$50/green ton. In

both cases, hardwood pricing is now at multi-

year lows.

The Northern New England softwood

roundwood price held steady at US$38/green ton

in the 4Q/16, appearing to have stabilized as a

new balance in diminished supply and demand

has been struck. Some good news for a low-grade

softwood market was found in the restart of two

biomass plants in Maine (see page 21).

Softwood residual chip price steady to end the

year

The Northern New England softwood residual

chip price held steady at US$41/green ton for

the second consecutive quarter.

U.S. Northeast fiber prices stable in the 4Q/16

The broader Northeast region saw stable prices

in the 4Q/16, with the exception of a one dollar

drop in the hardwood chip price to US$39/green

ton. Colder weather late in the 4Q/16 has

spurred some increased demand for the fiber

from domestic pellet producers.

0

10

20

30

40

50

60

70

US

$/g

reen

to

n

Northern New England Roundwood Prices

Sft Rdwood Mixed Hwd Rdwood Poplar Rdwood

0

10

20

30

40

50

60

US

$/g

reen

ton

Northern New England Softwood Residual Chip Price

U.S. Northeast Wood Fiber Market October - December, 2016

Northern New England hardwood roundwood fiber price eases

in the 4Q/16, while the softwood roundwood price stabilizes

The dramatic pullback in demand brought about by Northern New

England’s shrinking pulp sector continued to reverberate from lower

pricing, and tighter working circles, resulting in growing concerns

over the health of the logging contractor force. While the fourth

quarter is largely a transition to the major winter harvest season, mill

fiber inventories are already full, and the likelihood for strong winter

operations is muted.

Source: NAWFR

Source: NAWFR

0

10

20

30

40

50

60

US

$/g

reen to

n

U.S. Northeast Fiber Prices

Sftwd chips Sftwd rwd

Hdwd Chips Hdwd Rwd

Source: NAWFR

North American

Wood Fiber

Review


Residual chip prices stable in regions where

formulas set prices

Residual chip prices in BC’s Northern Interior and

Alberta held steady in the 4Q/16 at C$90/bdu (FOB)

and C$93/bdu (FOB), respectively. On the BC Coast,

the chip price rose modestly from the previous

quarter to C$104/bdu (FOB).

The residual chip price in the BC’s Southern

Interior market, where prices are commonly

negotiated based on the fiber supply and demand

situation, fell by four dollars to C$78/bdu (FOB),

a five percent decrease from the previous quarter.

Pulpmill fiber inventories in this sub-region were

strong, with ample pulplog supply available as

backup.

There was a sharp but brief concern in Alberta

and BC’s Northern Interior where an extended

wet transition to winter operating conditions

resulted in several sawmills becoming seriously

short of sawlogs. By early December, however,

winter temperatures had arrived, freezing forest

roads and restoring access to timber stands.

Western Canada Wood Fiber Market October - December, 2016

Douglas-Fir Hem-fir Spruce/pine/fir CedarAve Range Ave Range Ave Range Ave Range

British ColumbiaNorth Interior ..... ..... 90 74-115 90 74-115 ..... .....

South Interior 71 61-90 78 63-89 78 63-89 ..... .....

Coast 95 75-108 104 77-118 ..... ..... ..... .....60 16-81

Alberta ..... ..... ..... ..... 93 44-116 ..... .....

British ColumbiaNorth Interior ..... ..... 38 34-52 38 34-52 ..... .....

South Interior 31 28-46 34 30-51 34 30-51 ..... .....

Coast 36 34-43 37 36-44 ..... ..... ..... .....

RESIDUAL WOOD CHIP

ROUNDWOOD

Can$/m3 ub (delivered)

Can$/BDU (FOB sawmill)

Weighted

0

20

40

60

80

100

120

C$

/bdu F

OB

Western Canada Residual Chip Prices

Hemlock BC, Coast SPF BC, N. Interior

SPF BC, S. Interior SPF Alberta

Source: NAWFR

North American

Wood Fiber

Review


Pulplog prices trended down across all of British

Columbia to end the year

While there have been variations to the trend, pulplog

prices in British Columbia’s three sub-regions have

all clearly declined since mid-2015. In the 4Q/16, the

Southern Interior SPF pulplog price resumed its

decline, settling at C$34/m3, while the Northern

Interior price fell to C$38/m3. On the BC Coast, the

hemlock pulplog price held at C$37/m3.

On the BC Coast, the low pulplog price was

beginning to tighten the inflow of new volumes,

but the region still retains ample roundwood

supplies. Contacts note that much of the current

low price/ample roundwood supply scenario is a

consequence of Coastal pulpmills still operating

poorly.

In the BC Interior, the primary reason for declines

in pulplog prices has been the ample supply of

residual chips generated from the sawmill sector.

To the north, pulplog supplies have easily met the

softer demand, allowing pricing to edge

downward.

In the Southern Interior sub-region, two of the

three pulpmills have also operated at less than

normal rates and/or have come off of extended

outages that resulted in large fiber inventories

needing to be reduced.

BC Interior sawdust price stable to end the year

The BC Interior delivered sawdust price held steady

at C$49/odmt in the 4Q/16. Strong lumber production

generated robust sawdust supplies, thus helping

balance demand. However, West Fraser’s Westpine

mdf plant that has been down for repairs is likely to

resume production late in the 4Q/16, which will

increase short-fiber demand in the Quesnel region as

the year concludes.

Western Canada Wood Fiber Market continued October - December, 2016

0

10

20

30

40

50

60

C$/m

3

BC Regional SPF/Hemlock Pulplog Prices

Coast North Interior South Interior

Source: NAWFR

20

25

30

35

40

45

50

55

C$/o

dm

t

British Columbia Interior Sawdust Price

C$/odmt (FOB sawmill) C$/odmt (delivered)

Source: NAWFR

0

20

40

60

80

100

120

BC, Coast BC, N. Interior BC, S. Interior Alberta

Can

$/B

DU

(F

OB

saw

mil

l)Western Canada Residual Wood Chip Prices

4Q 1Q/16 2Q 3Q 4Q

Source: NAWFR

North American

Wood Fiber

Review


The North American forest-products industry is

constantly reacting to changing conditions, but

British Colombia stands out as a particularly volatile

market in 2017.

BC faces exposure to countervailing duties and a

tougher softwood lumber negotiation

BC’s sawmill sector arguably remains the focal point

of the controversy over subsidized lumber exports

into the U.S., though the impact of countervailing

duties and tariffs affect Eastern Canada as well.

Either a market share cap or a series of tariffs

based on market lumber prices will be the likely

constraint of any new softwood lumber

agreement. But with the U.S. election of Donald

Trump, a tougher stance on such an agreement,

as well as a lower priority to even address the

issue, increases in likelihood. A promised review

of NAFTA itself by the new U.S. administration

adds to the uncertainty of wood product exports

for this export-oriented province.

BC forest products sector still exploring on

Pacific Rim market opportunities

The BC forest industries sector’s advantageous

location for Pacific Rim trade is well utilized, most

recently successfully developing a Chinese market

for its lower grade lumber.

The importance of this alternative market and

other non-US markets, will likely increase in

2017, even though the China import of Canadian

lumber peaked in 2014 and has since eased (see

page 26 for the most recent 3Q/16 statistics).

BC Government is fully engaged in revising its

annual allowable cuts across the province

While all of Canada’s solid wood sector shares the

same concerns regarding lumber trade negotiations

with the US, the BC’s sawmill sector continues to

confront significantly declining annual allowable

cuts (AAC’s) stemming from the recent Mountain

Pine beetle epidemic which has essentially run its

course, as shown in the graph below.

Each of the province’s 37 Timber Supply Areas

(TSA’s) along with Tree Farm Licenses (TFL)

and other forest-use tenures within those

jurisdictions is under review at varying 10-year

intervals. Nearly every TSA in the Interior is

seeing reductions. In turn, forest products

companies are analyzing which of their Interior

facilities still maintain strong wood baskets,

where production shifts should be dropped or

merged with other facilities, and where plant

upgrade investments should occur.

Even as the BC coast will see several AAC

reductions over the next few years from the

Great Bear Rainforest agreement, concerns over

old-growth harvesting rates have re-emerged

over the past year in Vancouver Island

communities.

Priorities for forest resource use are being

scrutinized as declines in lumber production

loom

While BC’s Interior sawmill sector will remain

economically important, forest communities, first

nation bands, and other fiber consumers such as the

pellet sector will all continue to advocate for wider

and more secure access to a changing raw-material

resource. As one example, even as the pellet sector

continues to advocate for stronger fiber security, BC

lumber and pulp companies have successfully

negotiated partnerships with that sector in regards to

the three most recent pellet plants brought to

operation in the province.

Market Focus: BC forest sector faces changing landscape in 2017

Forest Area affected by Mountain Pine Beetle in British Columbia 2004-

2014. Source: Natural Resource Canada

North American

Wood Fiber

Review


Hardwood roundwood pricing in Eastern

Ontario/Quebec – the other major low-grade

fiber source for Eastern Canadian pulpmills –

also held steady at C$109/odmt for the second

consecutive quarter.

While the prospect of countervailing duties is

focused on softwood lumber, fiber managers

noted that any new challenge for one species

affects the fortunes of all operations when the

forests are predominately mixed species.

Softwood and hardwood roundwood prices in the

Maritime provinces fell again in the 4Q/16,

continuing a declining trend for the year

Hardwood and softwood roundwood prices in the

Maritime provinces fell in the 4Q/16 amidst

continually full mill fiber inventories and

Maine’s shrinking pulpmill sector. The softwood

roundwood price fell to C$90/odmt, while the

hardwood roundwood prices dropped to

C$106/odmt. A limited and difficult winter

operating season lies ahead for the contractor

force.

Eastern Canada Wood Fiber Market October - December, 2016

4Q/16

Hardwood HardwoodAve Range Ave Range Ave Range Ave Range

Eastern Ontario/Quebec 109 77-141 na na 158 116-179 109 77-147

Maritime Provinces na na na na 90 63-109 106 74-141

WOOD CHIPS ROUNDWOOD

Can$/odmt (delivered) Can$/odmt (delivered)

Softwood Softwood

0

20

40

60

80

100

120

140

C$/o

dm

t

Eastern Ontario/Quebec Woodfiber Prices

Softwood residual chips Hardwood roundwood

Source: NAWFR

0

20

40

60

80

100

120

C$/o

dm

t

Maritime Provinces Woodfiber Prices

Hardwood roundwood Softwood roundwood

Source: NAWFR

Eastern Ontario/Quebec fiber prices stable to end the year

The Eastern Ontario/Quebec softwood chip price held at

C$109/odmt in the 4Q/16, with a general balance in place

between supply and demand. The Scierie Leduc sawmill in

Quebec City ceased operations at the beginning of the 4Q/16

due to mounting logistical difficulties in operating the facility

that had suburbs grow up around it. In Trois Riviere, Kruger

announced plans to convert a paper machine to use recycled

instead of wood fiber by early 2017. Thus, recurring

adjustments in fiber consumption and supply continue.

North American

Wood Fiber

Review


.

0

10

20

30

40

50

US

$/B

DT

Selected Mill Biomass Prices in the U.S.

South Northwest Northern California

U.S. Regional Woody Biomass Prices Summary October - December, 2016

Unit: US$/BDT

2Q/15 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 4Q/16 Q/Q Y/Y

South, mill 40 40 40 41 40 38 37 -3 -8

South, forest 42 42 41 40 39 39 38 -3 -7

Northwest, mill 23 24 24 24 23 23 24 4 0

Northwest, forest 44 44 43 42 42 42 40 -5 -7

N California mill 29 28 27 26 25 24 24 0 -11

N California forest 50 48 46 45 45 45 44 -2 -4

Lake States, forest 64 62 58 54 54 52 50 -4 -14

Northeast, forest 72 70 64 62 60 56 56 0 -13

Change (%)

Woody Biomass Prices in the U.S.

Source: NAWFR

0

10

20

30

40

50

60

70

80

US

$/B

DT

Selected Forest Biomass Prices in the U.S.

Northeast Northwest SouthCentral Southeast Lake States

Note: Conversion of green tons to bone dry tons assumes 50% moisture content

Source: NAWFR

North American

Wood Fiber

Review


South Central

Forest-derived biomass prices reached two-year

low in the 4Q/16

Forest-derived biomass prices across the US

South Central region fell to an average of

US$37/bdt, representing a 12 percent decline

from the five-year high of US$42/bdt recorded in

the 4Q/14. There were reports of forest biomass

delivered for not much more than the cost of

transportation, from US$24-30/bdt.

Mill-derived biomass prices held steady in the

4Q/16 at US$37/bdt. An increasingly common

strategy was to prioritize sawmill-derived

biomass over forest material in order to ease

disposal pressures at the sawmills.

Southern Power’s 100MW Sacul, Texas, biomass

plant continued to run intermittently during the

4Q/16 if only to remain poised for backup

operations by turning over woody biomass piles.

The 57MW Aspen Power biomass plant in

Lufkin, Texas, built in 2011 but idled just a year

later, was reported to have been sold to an

undisclosed buyer in the 4Q/16. Future plans

have yet to be disclosed.

Mill and forest-derived biomass prices declined in

the 4Q/16, reaching multi-year lows

Mill and forest-derived biomass prices in the

Southeast region declined further in the 4Q/16,

reaching US$38/bdt and US$37/bdt,

respectively.

The mill-derived biomass price matched the price

in the 2Q/13, while the forest-derived price

matched that of four years ago, in the 4Q/12.

Typically, the drop in woody biomass pricing

would make the product more attractive and

result in increased consumption, but with natural

gas still a less expensive alternative and some

facilities having converted back, woody biomass

demand remained low.

Approaching colder winter weather in Virginia

and North Carolina is likely that the region’s

woody biomass plants will resume more

consistent operations. Such a scenario would be

welcomed as it would reduce the glut of readily-

available biomass supply.

20

25

30

35

40

45

50

55

US

$/B

DT

Southeast Mill and Forest Biomass Prices

Mill Forest

Source: NAWFR

20

25

30

35

40

45

50

55

US

$/B

DT

South Central Mill and Forest Biomass Prices

Mill Forest

Source: NAWFR

U.S. Woody Biomass Regional Updates: October - December, 2016

Southeast

North American

Wood Fiber

Review


Northern California

California wrestles with dying forests and woody

biomass power plants

The woody biomass market in Northern California

was given a lifeline of sorts during the 4Q/16 as

utilities began allocating short-term power purchase

agreements to a handful of facilities. With two new

laws in the 2nd half of 2016, 200 MW of power

generation have been allocated to facilities that will

obtain most of their fuel from high fire-risk forests.

The full list of specific plants to gain these short-

term power purchase agreements is pending on

the conclusion of a few negotiations. Whether the

new allocations will be able to keep the biomass

plant infrastructure viable long-term remains to

be seen.

To end the year, however, the mill-derived

biomass price stabilized at US$24/bdt due to the

lifeline extended to some biomass plants. Urban,

agriculture, and forest-derived biomass prices all

fell further to US$21/bdt, US$19/bdt, and

US$44/bdt respectively.

The complex negotiations and political

maneuverings in California regarding costs and

benefits of green energy sources could easily fill a

full page of the NAWFR each edition.

Western Washington and NW Oregon

Woody biomass supply and demand remain

balanced to end the year

Woody biomass supplies and prices in Western

Washington and Northwest Oregon continued to

fluctuate modestly in the 4Q/16, with forest-derived

biomass being the only major area of change.

Urban-derived biomass pricing eased one dollar

to US$30/bdt in the 4Q/16, while mill (and

export dock) derived biomass rose one dollar to

US$24/bdt. Sorting for higher quality and btu

content remained active for both sources in the

face of substantial available supplies.

The forest-derived woody biomass price, in

contrast, fell to US$40/bdt, representing a seven

percent decline from the previous quarter and a

13 percent drop from the recent high of

US$46/bdt in mid-2014.

Not only have volumes of biomass coming from

the forest significantly diminished, some of that

volume is better characterized as material from

land-clearing where the disposal of material is

paramount, rather than thinning or landing

cleanup.

0

10

20

30

40

50

60

US

$/B

DT

Northern California Woody Biomass Prices

mill forest urban ag

Source: NAWFR

0

10

20

30

40

50

60

US

$/B

DT

W. WA & NW. OR Woody Biomass Prices

mill forest urban

Source: NAWFR


North American

Wood Fiber

Review


Lake States

Forest-derived biomass price falls in the 4Q/16 for

the second consecutive quarter

The forest-derived biomass price in the Lake States

fell to US$50/bdt in the 4Q/16, reaching a new multi-

year low that is 22 percent lower than the peak seen

in the first half of 2015.

Steady biomass consumers - including the large

50MW co-generation unit, owned and operated

by WeEnergy and located at Domtar’s paper mill

in Rothschild, Wisconsin - have been able to

establish steady and sufficient biomass supplies

at lower prices because other consumers have

reduced their biomass utilization or converted to

natural gas.

Convergen Energy purchased an operating

20MW biomass plant in Michigan’s Upper

Peninsula in the 4Q/16. The L'Anse Warden

Electric Company (LWEC) power plant had been

converted to biomass utilization in 2009, and has

a power purchase agreement with several years

remaining. In the forest-rich Lake States region

with strong logging infrastructure, the sale is a

reminder that woody biomass utilization is viable

even in a low-priced energy environment.

Northern New England

The forest-derived biomass price stabilizes to end

the year

The forest biomass price in Northern New England

has remained stable at US$56/bdt in the 4Q/16.

While this region does have the highest price of all

regions tracked by the NAWFR, this price point

actually represents a full 25 percent decline since the

recent high of US$74/bdt recorded in the 1Q/15

(coincidently a very cold winter).

While not routinely published by NAWFR, there

were several reports that mill-derived biomass

was being delivered for approximately

US$40/bdt, and in some locations, the FOB

sawmill price was near zero, with only

transportation costs being covered.

In a rare bit of good news, Stored Solar LLC, a

subsidiary of a French energy company,

purchased two Covanta biomass plants that were

recently closed in Maine and is moving to

quickly return them to operation. The turnaround

was in large part due to the state legislature

providing $13 million dollars to support the

80MW of woody biomass plant power

generation, and these plants were able to contract

for part of that capacity.

Source: NAWFR

20

25

30

35

40

45

50

55

60

65

70

75

80

US

$/B

DT

Northern New England Forest Biomass Prices

Source: NAWFR


20

25

30

35

40

45

50

55

60

65

70

75

80

US

$/b

dt

Lake States Forest Biomass Prices

Source: NAWFR

North American

Wood Fiber

Review


In the 4Q/16, prospects for increased Canadian

woody biomass utilization became wrapped up in

two federal proposals to address greenhouse gas

emissions.

Canadian Carbon Tax proposed

Prime Minister Trudeau stated that to meet Canada’s

international obligations to reduce greenhouse gas

emissions (ie. the Paris climate change agreement),

he was proposing a federal carbon tax to further

lower fossil fuel consumption.

The initial proposal would be to impose a

C$10/tonne tax in 2018, steadily rising by

C$10/tonne per year until C$50/tonne is reached

in 2022. As an alternative, however, individual

provinces could implement a cap-and-trade

framework if it would have equivalent results.

British Columbia already has a C$30/tonne

carbon tax in place, while Alberta is set to

implement a C$20/tonne initial carbon tax in

January 2017. Ontario is set to implement a

complex cap-and-trade program in 2017, and

Quebec already has such a program in place in

partnership with California.

The remaining provinces and territories have a

variety of programs that will be assessed in light

of the proposed national standard. Nova Scotia,

for example, maintains it already has reduced

greenhouse gas emissions by more than the

national goals conveyed in the federal proposal.

Saskatchewan has been the most vocal in its

initial opposition to the proposed tax.

In all likelihood most provinces will not begin

negotiating against the carbon tax until later

years, when the tax rises to C$40/ton or

C$50/ton. BC’s current carbon tax is already

$30/tonne, so for now the new standards have no

impact.

Canadian Coal Usage to be eliminated by 2030

In November of 2016, Prime Minister Trudeau

proposed accelerating the national phase-out of coal

usage. The compressed timetable with phase-out by

2030 rather than 2040 would push the four remaining

provinces that use coal to stop their use by 2030 (with

one noted exception in the case of Nova Scotia

during peak demand in the winter months) or to

adopt technology that captures carbon.

Canada’s trajectory on cutting greenhouse gas

emissions, is now likely to contrast with

President-elect Trump’s perspective. The

incoming U.S. President has not declared any

specific programs or policies regarding reducing

greenhouse gas emissions, but initial Cabinet

level choices for agencies such as the

Environmental Protection Agency (EPA)

indicate substantial skepticism for active U.S.

green energy initiatives in the next few years.

Beyond sweeping Canadian policy proposals that

might impact woody biomass utilization, a unique

proposal was announced in the 4Q/16 that highlights

the potency of referring to the current pulp and paper

sector as a biorefinery sector in the future.

Resolute Forest Product’s subsidiary, Fibrek,

announced plans to construct a CO2 capturing

unit at its pulpmill in Saint-Félicien, Eastern

Quebec. CO2 Solutions, a manufacturer of

enzyme-enabled carbon capture technology, said

the proposed unit could collect up to 30 tonnes of

CO2 per day and sell that gas to a co-located

greenhouse 34-hectare complex growing

vegetables for the local economy.

The proposal underscores the ability of today’s

pulp and paper sector to adapt by using new

options and ideas currently being developed by

active research in new bioproducts and ways to

reduce GHG emissions.

Canada Woody Biomass Regional Update October - December, 2016

North American

Wood Fiber

Review


U.S. sawlog prices maintain stability in the 3Q/16

while Canadian sawlog prices fall in U.S. dollar

terms

There was little change in U.S. domestic sawlog

prices across the country during the 3Q/16, with both

log exports in the West (see page 27) and regional

lumber production (see page 25) being relatively

stable.

In the U.S. Northwest, the Douglas-fir sawlog

price rose one dollar to US$101/m3 and the

hemlock sawlog price rose one dollar to

US$81/m3. In both cases, however, the prices

have remained within a narrow range of a few

dollars for the past six quarters.

Southern Yellow Pine sawlog prices in the U.S.

South also maintained stability in the 3Q/16 with

the Southeast price rising modestly to US$64/m3

and the South Central price easing to US$63/m3.

Canadian sawlog prices in the 3Q/16 fell back in

US dollar terms

In Eastern Canada, the modestly falling price

trend continued with the mixed sawlog price

easing to US$54/m3 in the 3Q/16. Since the

4Q/12 price peak of US$74/m3, the regional

sawlog price has fallen 27 percent.

In British Columbia, the coastal hemlock sawlog

price held steady at US$44/m3, while the Interior

SPF sawlog price dropped two dollars from the

previous quarter to US$52/m3. Sawlog prices in

both regions have shown some volatility the past

three years in comparison to the continuous

declining price trend in Eastern Canada.

The value of the U.S dollar against the Canadian

dollar rose modestly in the 4Q/16 and is likely to

continue to strengthen because of the US Federal

Reserve’s increase of the prime rate in

December. The expected stronger US dollar will

likely reduce Canadian sawlog prices in US

dollars in the coming months.

North American Sawlog Market Update

0

20

40

60

80

100

120

US

$/m

3

Canadian Domestic Sawlog Prices

Can W, Coast Hemlock Can W, Interior SPF

Can East, Mixed softwood

Source: Wood Resource Quarterly

0

20

40

60

80

100

120

US

$/m

3

U.S. Domestic Sawlog Prices

U.S. NW Douglas-fir U.S. NW Hemlock

U.S. South Central Pine U.S. Southeast Pine

Source: Wood Resource Quarterly

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

US Dollar Equivalent in Canadian Dollars

North American

Wood Fiber

Review


This section contains the latest complete quarterly

statistics on commodity production and trade. As

such, it provides additional background and context

for the quarterly pricing found in the first section of

the North American Wood Fiber Review.

Lumber Production

North American lumber production fell in the

3Q/16 but was still the third consecutive quarter

where the volume exceeded l5 billion bd. ft. The

U.S. South and Eastern Canada continued to

occupy the spots as the top two regional

producers.

Sawlog Exports

North American West Coast softwood log

exports to Asia declined by three percent quarter-

over-quarter in the 3Q/16 after a significant surge

the previous quarter. Exports from BC were a

modest one percent higher from the previous

quarter while U.S. Westcoast shipments were

down seven percent.

Pellet Exports

North American overseas wood pellet exports in

the 3Q/16 remained virtually unchanged from the

previous quarter at 1.73 million tonnes. It was the

third quarterly volume over 1.7 million tonnes,

reflecting continued strength in the sector and

reliable demand, principally from the UK.

Energy Prices

The WTI benchmark oil price showed stability in

the 4Q/16, ranging from $45-49 per barrel. The

Baker Hughes oil-rig count for North America,

viewed as a proxy for activity in the sector, rose

to end the year at virtually the same level as one

year ago.

Diesel prices in both Canada and the U.S. were

stable to marginally higher in the 4Q/16, though

remaining at an attractive price range of

approximately 30-40 percent lower than during

2011 through 2014.

Trade and Production Data

Forest Products Statistics and Energy Prices

$0

$1

$2

$3

$4

$5

$6

US

Do

llar

s p

er U

S G

allo

n

U.S. and Canada National Average Retail Diesel Prices

Canada Average U.S. Average

0

20

40

60

80

100

120

0

2

4

6

8

10

12

14

16

US

$/B

arre

l

US

Nat

ura

l G

as

US

$/m

mb

tu;

Can

ada

Nat

ura

l G

as C

an$/g

igaj

ou

le

Natural Gas and Oil Prices

U.S. Natural Gas . - Henry Hub benchmarkCanada Natural Gas - Alberta Hub benchmarkNorth American Oil - West Texas Intermediate (WTI)

Note. Graph Sources: U.S. EIA, Gas Alberta, and Natural

Resources Canada. Canadian diesel prices are shown in the smaller

U.S gallon for equivalent units, and converted to U.S. dollars

North American

Wood Fiber

Review


North American lumber production fell in the

3Q/16 but maintained growth in year to year

comparison

After a strong 2Q/16, North American lumber

production fell three percent in the 3Q/16 to 15.23

billion bd. ft. Nevertheless, quarterly production

remained about at the 15 billion bd. ft. mark for the

third consecutive quarter, and is closing in on the

production levels seen prior to the economic

recession in 2008.

Production in the U.S. South fell four percent to

4.32 billion bd. ft. in the 3Q/16, but remained

above the 4 billion bd.ft. quarterly figure for the

third consecutive quarter.

In Canada, both BC and the Eastern provinces

saw declining lumber production in the 3Q/16.

Eastern Canada was more volatile as prices rose

and fell by four percent from the 1Q/16 to the

3Q/16, whereas BC saw a more subdued one

percent fluctuation during the same period and

BC production remains the lowest among the four

major continental regions.

In the U.S. West, lumber production fell a modest

two percent from the previous quarter, coming in

at 3.48 billion bd. ft. Production from the Coastal

region (West of the Cascades) fell five percent

from the previous quarter to 2.08 billion bd. ft,

while production from the Inland region rose four

percent.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

billio

n b

oar

d f

eet

Softwood Lumber Production in North America

US, West US, South U.S. Other

Can, BC Can, Other

Sources: Western Wood Products Assn

and Southern Forest Products Assn

North American Lumber Market Update

billion bf

3Q 4Q 1Q/15 2Q 3Q 4Q 1Q/16 2Q 3Q Q/Q Y/Y

U.S. West 3.56 3.40 3.55 3.54 3.42 3.35 3.52 3.55 3.48 -2% 2%

U.S. South 4.16 3.80 3.93 4.22 4.34 3.99 4.17 4.52 4.32 -4% 0%

U.S. Other 0.38 0.35 0.37 0.36 0.36 0.41 0.36 0.39 0.37 -3% 5%

Can, BC 3.15 3.04 3.24 3.35 3.32 3.31 3.43 3.46 3.44 -1% 4%

Can, Other 2.98 3.02 3.14 3.47 3.34 3.53 3.64 3.78 3.61 -4% 8%

Total N. America 14.22 13.62 14.23 14.92 14.77 14.58 15.12 15.70 15.23 -3% 3%

Source: WWPA

% change

North American Regional Lumber Production

0.0

0.5

1.0

1.5

2.0

2.5

bil

lio

n b

oar

d fe

et

Softwood Lumber Production in the Western U.S.

Coast Inland Cal Redwd

Source: WWPA

North American

Wood Fiber

Review


Canadian softwood lumber exports were up in

the 3Q/16

Canadian lumber shipments to the U.S rose to 9.1

million m3 in the 3Q/16, rising to the highest

quarterly volume seen since the 3Q/07. Offsetting

this increase, lumber exports to China fell

noticeably. As a consequence, combined lumber

exports to the U.S. and China (Canada’s two largest

markets) fell by one percent from the previous

quarter.

Lumber exports to China fell 19 percent to 1.3

million m3 in the 3Q/16, even as smaller

shipments to Japan and South Korea both rose.

U.S. lumber exports eased slightly in the 3Q/16

Showing the headwinds of a strengthening dollar,

U.S. lumber exports fell modestly to 970,000 m3 in

the 3Q/16.

Lumber exports to China increased, though

quarterly volatility throughout 2016 was evident.

Lumber exports to other Asian clients eased,

creating a minor declining trend from one year

ago.

Lumber exports to Mexico are a bright spot for

U.S. suppliers, having increased for the second

consecutive quarter, and more than doubling over

the past five years.

North American Lumber Trade

0

1

2

3

4

5

6

7

8

9

10

Mill

ion

m

3

Canada Softwood Lumber Exports to US and Asia

United States China (and Hong Kong)

Japan Other Asia

Source: Customs Data

0

2

4

6

8

10

12

mill

ion

m

3

U.S. Lumber Imports and Exports

US Imports from Canada

US Combined Imports from next five highest suppliers

US Exports


0

50

100

150

200

250

300

350

1000 m

3

U.S. Softwood Lumber Exports to Asia

China (& Hong Kong) Other Asia India/Pakistan



0

50

100

150

200

250

300

10

00

m3

Selected U.S. Softwood Lumber Exports

Canada Caribbean Mexico Europe


North American

Wood Fiber

Review


North American West Coast log exports fell in the

3Q/16

Log exports from BC rose marginally in the 3Q/16,

but fell noticeably from the U.S. West Coast,

resulting in an overall three percent decrease in

North American West Coast log exports to 3.16

million m3.

Still, log exports to Asian countries in 2016 in the

past two quarters are higher than any quarterly

volumes since the 2Q/14.

Log exports from British Columbia rose for the

second consecutive quarter to 1.48 million m3 in

the 3Q/16, with increased shipments to China

and South Korea. Log exports to Japan fell back

in the 3Q/16 after three consecutive quarterly

increases, but the volume of 342,000 m3

remained six percent above that from one year

ago.

U.S. West Coast log exports to Asia fell by seven

percent in the 3Q/16. Modest increases in exports

to Japan and South Korea were more than offset

by a decline in exports to China. Log exports

from all four West Coast states (Alaska,

Washington, Oregon, and California) decreased.

Source: BC Customs Data

1000 m3

4Q 1Q/14 2Q 3Q 4Q 1Q/15 2Q 3Q 4Q 1Q/16 2Q 3Q Q/Q Y/Y

Washington 624 777 893 469 348 323 477 398 455 348 505 500 -1 26

Oregon 1033 1107 1119 932 820 684 826 710 782 712 966 865 -10 22

Alaska 361 196 264 280 166 122 89 243 267 60 267 r 257 -4 6

California 41 24 62 84 113 27 93 23 19 21 67 r 63 -6 174

Total 2059 2104 2338 1765 1447 1156 1485 1374 1523 1141 1805 1685 -7 23

British Columbia 1543 1470 1662 1330 1251 1397 1199 1070 1294 1199 1455 1475 1 38

West Coast Total 3602 3574 4000 3095 2698 2553 2684 2444 2817 2340 3260 3160 -3 29

U.S. South 73 96 191 94 126 104 75 66 69 91 171 197 15 198

Change (%)

U.S. and Canadian West Coast Log Exports to Asia

0

200

400

600

800

1000

1200

1400

1600

1800

10

00

m3

BC Log Exports to Asia

China Japan South Korea Total

North American Log Exports

0

400

800

1200

1600

2000

2400

2800

1000 m

3

U.S. West Coast Softwood Log Exports to Asia

China Japan S. Korea Total

Source: Customs data

Source: BC customs data

North American

Wood Fiber

Review


Bulk log shipments from the Western U.S. states

fell in the 3Q/16

Bulk shipments of logs from the three Western U.S.

states of California, Oregon, and Washington, fell in

the 3Q/16 from a strong output the previous quarter,

as tracked by Jones Stevedoring.

A very modest rising trend in exports since the

1Q/15 is emerging. California contributes a

shipment or two each quarter, while Oregon

(including the Port of Longview, Washington)

and Washington maintain a consistent pace

relative to each other.

Oregon ports, which consist of two ports along

the coast and those on the Lower Columbia

River, export approximately 2.5 times the

volume coming from Washington ports located

around the Puget Sound and Olympic Peninsula.

Softwood log exports to China from the U.S.

South reached a new high in the 3Q/16

Softwood log exports from the U.S. South rose

notably again in the 3Q/16, to 224,000 m3.

Shipments from the Southern states to China

accounted for nearly all the increase in the 3Q/16,

rising to 192,000 m3, which was virtually all of

the 197,000 m3 shipped to Asia.

Log exports to India from the U.S. South have

increased steadily, albeit modestly, for the past

three consecutive quarters. The Indian

subcontinent market (treated as distinct from

Asia by NAWFR) remains enticing for many

log-exporting countries.

Canadian log imports from the U.S. continue to

show steady 3Q/16 volumes

Canadian log imports from the U.S. followed

their consistent 3Q/16 pattern with volumes at

approximately one million m3 over the past

several years. As previously noted, Ontario,

Quebec and New Brunswick are the three

principal provinces importing U.S. logs.

North American Log Exports continued

0

50

100

150

200

250

1000 m

3

Major Southern Mixed Pine Sawlog Exports

China India Middle East Caribbean

0

200

400

600

800

1,000

1,200

1,400

1,600

10

00

m3

Bulk Log Exports from Three U.S. Western States

Oregon Ports Washington Ports California Ports

Source: customs data


0

200

400

600

800

1000

1200

1400

1600

100

0 m

3

Log Imports to Canada from the U.S.

Softwood Hardwood


Source: Jones Stevedoring

North American

Wood Fiber

Review


U.S. wood chip overseas exports were higher in

the 3Q/16 after a major decline the previous

quarter

After a dramatic decline in U.S. wood chip exports in

the previous quarter (a 33 percent drop to 399,000

odmt in the 2Q/16), volumes rose slightly to 406,000

odmt in the 3Q/16.

Softwood chip exports to Japan fell further to

103,000 odmt in the 3Q/16, with 88,000 odmt

coming from Oregon and another shipment of

15,000 odmt from California. The slowdown in

shipments from Coos Bay, Oregon in particular

has continued to keep fiber supplies more than

ample for domestic demand, and thus

contributing to lower domestic chip prices in this

sub-region.

The reduced shipments to Japan also reflects the

larger dynamic that Japan’s longstanding demand

for softwood chips for its newsprint sector is

shrinking steadily. In addition, purchasers are

now finding sufficient volumes at suppliers

located in regions outside the U.S. West Coast

and British Columbia, predominantly in

Australia.

Softwood chip exports from the

U.S. South (all to Turkey) rose

marginally to 96,000 odmt in the

3Q/16.

Minor volumes of softwood chip

exports to Canada from the U.S.

northern tier of states all rose in

the 3Q/16. In the U.S. Northeast,

softwood chip exports into New

Brunswick were most notable,

reflecting the availability of

inexpensive fiber after the low-

grade softwood log market

collapse in Maine.


0

100

200

300

400

500

600

700

10

00

odm

t

Wood Chip Exports from the U.S.


North American Wood Chip Trade US Wood Chip Trade

1000 odmt

3Q/16 WA OR Other West North South Total, U.S. Q/Q Y/Y

Conifer Chips

Japan 0 88 15 0 0 103 -21 -28

Canada 66 0 22 74 0 162 25 11

Other 0 20 0 0 96 116 13 -34

Total 66 108 37 74 96 381 5 7

Change Q/Q (%) 14 -18 23 42 3 5

Non-Conifer Chips

Japan 0 0 0 0 0 0 na na

Canada 0 0 0 19 0 19 -30 -67

Other 0 0 0 0 6 6 -25 na

Total 0 0 0 19 2 25 -29 -85

Change Q/Q (%) na na na -30 -67 -29

TOTAL 66 108 37 93 98 406 2 -36

Change Q/Q (%) 14 -18 16 18 -1 2

Change (%)U.S. Wood Chip Exports

0

50

100

150

200

250

10

00

od

mt

Wood Chip Exports from the U.S.

Washington Oregon Other West

North South


North American

Wood Fiber

Review


Chip imports to British Columbia from the U.S.

rose in the 3Q/16, while exports from BC fell

British Columbian wood chip imports from the U.S.

Western states rose to 88,000 odmt in the 3Q/16, a

16 percent increase from the previous quarter, but

remained on a broadly declining trend since the

3Q/14.

At the same time, BC chip exports fell for the

second consecutive quarter, reflecting a multi-

year decline stretching back to 2011.

BC’s chip export trade to Japan fell to a mere

6,000 odmt in the 3Q/16, the lowest quarterly

volume in the past decade. Chip exports to Japan

from BC are likely to end completely by the end

of 2016 or in early 2017, as a structural chip

surplus in the province draws to a close, and

Japanese demand for softwood chips from the

North American West Coast continues to

diminish.

Eastern Canadian softwood chip imports rise in

the 3Q/16, while hardwood chip imports decline

Overall Eastern Canadian chip imports from the

U.S. rose in the 3Q/16, with softwood chips

accounting for all the increase, most of which

flowed into the Maritime province of New

Brunswick from Maine’s struggling softwood

market. Hardwood chip imports, primarily into

Ontario and Quebec, fell to a mere 19,999 odmt,

the lowest quarterly volume in the past six years.

Chip exports from the Maritime Provinces pause

in the 3Q/16

After a dramatic increase in chip exports (all to

Turkey) in the previous quarter, there were no

Maritime Provinces chip exports reported by

Statistics Canada in the 3Q/16. An absence of

quarterly chip exports is not unprecedented

however, with two such quarters recorded in 2014.

in 1000 odmt Wood Chip Exports from Canada

Origin Total

Destination U.S. Japan Total U.S. Turkey Other Total All

2Q/15 6 26 32 0 22 0 22 54

3Q/15 7 27 34 0 55 2 57 91

4Q/15 7 15 22 0 61 2 63 85

1Q/16 8 35 43 0 46 2 48 91

2Q/16 9 18 27 0 73 0 73 100

3Q/16 15 6 21 0 0 0 0 21

Change, Q/Q (%) 67 -67 -22 0 na na na -79

Change, Y/Y (%) 114 -78 -38 0 na na na -77

British Columbia Other Provinces

0

20

40

60

80

100

120

140

1000 o

dm

t

Eastern Canada Chip Imports and Exports

Eastern

Canada

hardwood

chips

imported from

the U.S.

Eastern

Canada

softwood

chips

imported from

the U.S.

Eastern

Canada chip

exports to

overseas


0

20

40

60

80

100

120

140

160

180

10

00

od

mt

Western Canada Chip Imports and Exports

Western

Canada chip

exports to

overseas

Western

Canada chip

exports to the

U.S.

Western

Canada chip

imports from

the U.S.


North American Wood Chip Trade continued

Canada Wood Chip Trade

in 1000 odmt Wood Chip Imports to Canada

Destination Ontario Quebec Other Total

Origin WA Other Total Total Total Total Total

2Q/15 82 27 109 15 23 53 200

3Q/15 77 21 98 15 31 59 203

4Q/15 92 21 113 27 27 41 208

1Q/16 62 24 86 23 42 37 188

2Q/16 56 20 76 22 18 39 155

3Q/16 66 22 88 17 18 58 181

Change, Q/Q (%) 18 10 16 -23 0 49 17

Change, Y/Y (%) -14 5 -10 13 -42 -2 -11

British Columbia

North American

Wood Fiber

Review


North American overseas pellet exports hold close

to last quarter’s record high

After a new high in North American overseas pellet

exports last quarter, volumes for the 3Q/16 remained

near that mark at 1.735 million tonnes, a less than

one percent decrease.

Canadian overseas pellet exports fell back five

percent to 570,000 tonnes in the 3Q/16, but were

still the second highest quarterly volume

recorded. Canadian pellet exports to Japan more

than doubled in the 3Q/16, reaching 85,000

tonnes from 41,000 tonnes the previous quarter.

The increasing volume to Japan is

evidence of the developing pellet

market in that country.

Canadian pellet exports to Europe,

principally to the U.K., declined

nearly 14 percent to 477,000

tonnes, but the 3Q/16 was still the

second highest quarterly volume

shipped on record.

U.S. pellet exports increased to 1.165

million tonnes in the 3Q/16, with all the

volume headed to Europe. U.S. pellet

exports to Asia have dried up with no

significant volumes having been

recorded in the past five quarters.

However, U.S. pellet producers have

not closed the doors to exportation as Asian markets

continue to grow.

UK and Denmark poised for more pellet

consumption, brightening North American

export prospects

Late in the 4Q/16, the EU approved a subsidy for

Drax’s conversion of its third coal plant to biomass,

while earlier in the quarter, Enviva announced an

agreement to supply 4.2 million tonnes over 10 years

to Dong Energy, Denmark. Both developments

signal a continued positive demand trends for the

North American export pellet sector.

0

200

400

600

800

1000

1200

1400

1600

1800

2000

10

00

ton

nes

Pellet Exports from North America to Europe and Asia

U.S. Canada Asia from CA Asia from US Europe Total Overseas Total

Source: WRI database

2009 1324

2010 1595

2011 2027

2012 3253

2013 4879

2014 5962

2015 6078

North American Wood Pellet Overseas Exports

Note: NAWFR determines its export statistics from five sources: Canadian and U.S. customs export data, import data tracking European

and Asian countries receiving North American pellets, and from quarterly conversations with both pellet exporters and port contacts.

in thousand metric tons

Pellet Exports to Europe Overseas Total % Change % ChangeEurope Total Canada U.S. Q/Q Y/Y

3Q/14 300 1040 1340 160 11 1511 3 27

4Q 338 1133 1471 66 6 1543 2 5

1Q/15 300 962 1262 60 3 1325 -14 -8

2Q 341 1031 1372 29 7 1408 6 -4

3Q 321 1245 1566 52 0 1618 15 7

4Q 350 1290 1640 87 0 1727 7 12

1Q/16 369 1210 1579 81 0 1660 -4 25

2Q 554 1142 1696 47 0 1743 5 24

3Q 477 1165 1642 93 0 1735 0 7

Canada U.S. Pellet Exports to Asia

North American

Wood Fiber

Review


Canada’s export pellet sectors in both Eastern and

Western experienced decreased shipments in the

3Q/16. Eastern Canadian overseas exports of pellets

(all to Europe) fell to 46,000 tonnes, slightly more

than half of the 97,000 tonnes recorded in the

previous quarter. Western Canadian overseas exports

to Europe and Asia fell five percent to 431,000

tonnes in the 3Q/16.

The decline in Eastern Canadian exports was due

to two primary factors. Rentech recorded no

exports from its port facility in Quebec City in

the 3Q/16, though production at its two Ontario

plants continued, and increased frequency of

shipments is still expected. Viridis, however,

shuttered its Nova Scotia plant and seems to have

exited the export pellet sector altogether.

In BC, pellet exporters continued their robust

shipments to Europe and showed determination

to capture at least some of the growing demand

in Japan and South Korea.

U.S. pellet exports rose in the 3Q/16

Pellet exports to Europe from the U.S. South

reversed course in the 3Q/16 and rose to 1.165

million tonnes after two consecutive quarters of

declines.

Part of the export increase was due to German

Pellet’s plant in Urania, Louisiana, resuming

production and overseas shipments in the quarter.

The company’s Texas plant also increased its

operating rate. Both plants, however, remain

under bankruptcy monitoring restraints and are

reportedly for sale.

Since the 4Q/15, Gulf port pellet exports have

declined from both bankruptcies and slowed

production from spot market players. The

Atlantic port exports have also decreased due to

lower production by spot market players, though

the decline was less significant.

Brunswick, Georgia port adds storage capacity

Early in the 4Q/16, Logistec, a Montreal based

company, announced the completion of upgraded

and expanded storage capacity at the Georgia port of

Brunswick. The expansion, along with revamped

handling equipment, is specifically oriented towards

increased pellet throughput and will benefit several

pellet exporters in the region.

New pellet plants expected to all begin exporting

pellets by the 1Q/17

Early in the 4Q/16, Portucel’s 450,000 tonne

capacity pellet plant in Greenwood, South

Carolina began shipping product to the Port of

Wilmington, North Carolina. Late in the 4Q/16,

Enviva Pellets Sampson LLC’s 500,000 tonne

plant also began operations, with the intent of

shipping its product through the Wilmington

Port.

In Arkansas, Highland Pellets commissioned its

600,000 tonne plant in Pine Bluff, with exports

to begin during the 1Q/17.

0

200

400

600

800

10

00

to

nnes

U.S. South Pellet Exports by Port Regions

SE Atlantic Ports SC Gulf Ports

Source: WRI data

0

100

200

300

400

500

600

1000 tonn

es

Canadian Pellet Exports by Region and Destination

BC to Asia BC to Europe Eastern CA to Europe

Source: WRI data

North American Wood Pellet Overseas Exports continued

North American

Wood Fiber

Review


While Europe currently leads the world in pellet

consumption for both heating and industrial power

generation, Asia’s Northern Pacific Rim countries

have recently become regarded as the next significant

market in the world.

BC pellet producers have been persistent in their

efforts to penetrate two emerging national markets in

South Korea and Japan. To date, however, these

efforts have seen only marginal results despite the

tantalizing potential.

The South Korea policy-driven market for pellets

favors low-cost, low-quality pellet consumption

South Korea’s emerging market grew sharply as a

national renewable energy production goal was set at

10 percent by 2020. Since 2014, imports have

remained relatively steady, hovering between 1.45

and 1.82 million tonnes per year. Utilities have to

date been focused on meeting the nation’s green

power production goals primarily by purchasing

inexpensive pellets, typically made from palm kernel

shells (PKS) as a by-product of the palm oil industry

in Southeast Asia.

The Wood Pellet Association of Canada (WPAC)

estimates S. Korean pellet imports could climb to 2.7

million tonnes by 2020. However, issues of quality

and sustainability have yet to be prioritized by the

Korean utilities, which would give BC producers

more standing. Canadian shipping and

manufacturing costs also keep Canada at a

disadvantage compared to pellet producers in nearby

nations like Vietnam and Malaysia.

Japan market looks poised to grow

The Japanese pellet market to date is substantially

smaller than the South Korean market, but North

American pellet producers are eying the potential

with greater intensity.

Since the 2011 earthquake and tsunami in Japan and

the country’s subsequent resolve to replace or reduce

nuclear power, green power from pellets and and

other biomass products has gained in recognition as

a necessary component of the replacement energy

needed.

While the current Japanese market is but a quarter of

the South Korean market, Canadian pellet producers

have established a strong foothold and dominant

market share. Issues of sustainability and

certification have higher value in the Japanese market

than in South Korea which feeds into the Canadian

pellet sector’s advantage.

Future Metrics LLC, a US consulting firm

specializing in global pellet market analysis, projects

several scenarios of plausible demand for wood pellet

utilization in Japan for the next decade, taking into

account competition from PKS pellets and coal plant

co-firing vs. complete conversions. By 2020, the

market for wood pellets could triple to 1.2 million

short tons, and could even reach 8 million short tons

by 2025-2030.

Market Focus: Growth opportunities for N. American pellet utilization in Asia

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Th

ou

san

d t

on

s

Source:

Customs data

Wood Pellets Imports to South Korea

Vietnam Malaysia Other Total

0

50

100

150

200

250

300

350

400

10

00

to

nnes

Wood Pellet Imports to Japan

Canada China Vietnam Other Total

Source: Customs data

North American

Wood Fiber

Review


The Canadian Overseas Pellet Fiber Price Index

The Canadian PFPI combines the larger Western

export pellet sector in BC and Alberta with the

smaller Eastern sector found in Ontario, Quebec,

New Brunswick and Nova Scotia.

The CA PFPI eased in the 4Q/16 to

C$49.60/odmt, maintaining a nearly unbroken

albeit modest declining trend since the high of

C$51.30/odmt seen in the 4Q/14.

The recent closure of the Viridis pellet mill in

Nova Scotia leaves only three plants significantly

contributing to Eastern Canadian pellet exports:

Rentech’s operations in Ontario, and Group

Savoie and Shaw Lumber in New Brunswick.

Several Quebec pellet producers selling into the

Canadian and U.S. domestic market continue to

test the international market place, but have yet

to commit in a substantial way. Thus for now, the

BC pellet plants contribute most of the weighted

fiber costs into the Canadian PFPI.

The CA PFPI index for export pellet fiber

finished virtually stable at year end, but drivers

in 2017 (further AAC reductions and a likely

imposition of a countervailing duty and/or tariff

on lumber) could increase the costs as the new

year progresses.

The U.S. Overseas Pellet Fiber Price Index

The U.S. PFPI currently reflects the fiber costs of

eleven pellet plants exporting through Gulf ports,

and an equal number from Atlantic coast ports. The

two categories also virtually coincide with the South

Central and Southeast regions used by NAWFR to

track roundwood and residual chips.

The U.S. PFPI fell in the 4Q/16 to

US$56.60/odmt, representing a seven percent

drop from its recent high of US60.90/odmt in the

1Q/16.

Falling roundwood prices as well as plummeting

sawdust costs found across the two regions were

the major elements in the declining PFPI.

Even as three new major pellet plants began

operations in the 4Q/16 bringing their own new

fiber mixes into the PFPI (see page 32), other

operating export pellet facilities are making

significant adjustments to their own fiber mixes

to take advantage of falling fiber costs.

2017 will be an interesting year in terms of

changes in fiber costs that may be seen by the US

export pellet plant sector, as plants under

bankruptcy are likely to find new owners, and

short fiber pricing in particular is likely to fall

further at various rates across the region. (See

discussion of growing sawdust supplies in the

U.S. South in the 3Q/16 NAWFR)

Note: WRI’s pellet feedstock price indices (PFPI) for Canada

and the U.S. both show a quarterly volume-weighted price for

the fiber consumed by each country’s export pellet sector. Each

facility’s estimated mix of fiber (roundwood, sawdust,

shavings, microchips, etc.) are calculated with local fiber

pricing to determine a combined weighted price, which is

further combined with production capacity and operating rate

to calculate the final regional index price.

WRI Export Pellet Fiber Price indices

40

42

44

46

48

50

52

54

56

58

60

Cdn$

/odm

t deli

vere

d

Canada Pellet Fiber Price Index

30

35

40

45

50

55

60

65

US

$/o

dm

t deli

vere

d

US Pellet Fiber Price Index

PFPI - US PFPI - Can

Source: WRI data

Source: WRI data

North American

Wood Fiber

Review


The Global Sawlog Price Index falls in the 3Q/16

as the PNW Douglas-fir price inches higher

WRI’s global sawlog price index (GSPI) tracks the

prices of softwood sawlogs in 19 world markets and

calculates the index by volume weighted log

consumption. The GSPI fell slightly in the 3Q/16, as

did all the North American regional prices except for

the Pacific Northwest Douglas-fir.

The higher Douglas-fir price emphasizes its

prized qualities of strength and durability, while

also emphasizing its significant cost

disadvantage as compared to most other sawlog

markets.

NBSK and BHK market pulp prices reopen a gap

The NBSK U.S. market pulp list price held

steady in early December at US$1000/tonne,

though some weakness was emerging due to

increasing inventories. An increasing US dollar

also portends some additional near-term

headwinds for North American producers.

The BHK U.S. list price continued to drift lower,

reaching US$820/tonne in November, 2016.

Production increases in South America have

created what could be called a structural

imbalance between current supply and demand.

The price gap between the two products is also

becoming sufficiently large, once again, to where

some substitution may begin to occur.

Chinese importation of

market pulp rises strongly in

the 3Q/16

Chinese imports of market

pulp rose in the 3Q/16 for the

second consecutive quarter,

representing a 13 percent

increase from one year ago.

Chinese demand stands out

when compared to all other top

consumers.

quarterly

million tonnes 2013 2014 2015 3Q/15 4Q/15 1Q/16 2Q/16 3Q/16 y/y %

China 13.58 14.28 15.79 3.98 4.13 3.99 4.05 4.50 13%

United States 4.85 4.87 4.80 1.19 1.27 1.27 1.26 1.25 5%

Germany 3.92 3.86 3.98 1.00 1.01 1.05 1.01 0.99 -1%

Italy 3.09 2.97 3.08 0.75 0.81 0.76 0.78 0.79 (est) 6%

Netherlands 2.39 2.31 2.35 0.64 0.55 0.57 0.61 0.62 (est) -3%

South Korea 2.02 1.93 2.00 0.48 0.53 0.51 0.48 0.46 -4%

France 1.85 1.69 1.71 0.42 0.45 0.46 0.46 0.42 0%

Japan 1.46 1.49 1.45 0.36 0.36 0.34 0.36 0.35 -2%

Indonesia 0.79 0.83 0.64 0.16 0.15 0.19 0.16 0.16 (est) 0%

Spain 0.86 0.83 0.89 0.22 0.23 0.25 0.23 0.23 2%

Imports of Market Pulp by Top Consumers

0

20

40

60

80

100

120

140

US

$/m

3 d

eliv

ered

Global Sawlog Index and NA Regional Prices

GSPI BC Interior SPF

PNW Douglas-fir U.S. South Yellow Pine

E CA. Mixed Sftwd

0

200

400

600

800

1000

1200

US

$/m

etri

c to

n

Market Pulp List Prices in the U.S.

BHK NBSK

Market Pulp and Global Sawlog Price Index update

Source: WRI data

Source: Forestweb

North American

Wood Fiber

Review


The “North American Wood Fiber Review” is published quarterly by Wood Resources International, LLC. The report

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In addition to the North American Wood Fiber Review, the company also publishes the Wood Resource Quarterly,

the source for global wood price data and market information, in its 29th year of comprehensive analysis of wood

market trends for the international forest industry. Each report is approximately 50 pages in length and includes sawlog,

pulplog, wood chip prices and market information from all major regions of the world. Timely knowledge of global

wood costs and trends remains a cornerstone for competent internal strategic planning within the forest product

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E-mail: [email protected]

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Mr. Tim Gammell, Editor of North American Wood Fiber Review

Phone: +1-360-433-2324

Email: [email protected]

Disclaimer

Prices published in the North American Wood Fiber Review are collected from sources believed to be reliable and

having a good knowledge of the market place. Prices in the report are the best estimates for the published quarter and

they may vary depending on special agreements and specific conditions.

Wood Resources International LLC has made every effort to ensure accuracy and completeness of information provided

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