Timber Mart-South Market News Quarterly
4th Quarter 2010 -- Vol. 15 No. 4-A
Timber Mart-South Market News Quarterly Abridged Version
The Journal of Southern Timber Market News A Quarterly Report of the Market Conditions for Timber Products of the Southeast US Copyright © 2010-2011 by Timber Mart-South, Inc.
Tom Harris, Publisher (706)542-2832 (706)542-4756 Jacek Siry, Research Editor Sara Baldwin, Robert Simmons & Jonathan Smith, Editors Staff: Jonathan Brown, Morgan Newman, Stephen Smith and Justin Wright Mailing address: Timber Mart-South, 1860 Barnett Shoals Road, PMB 103-598, Athens, GA 30605. Phone: (706)542-4756 • Fax: (706)542-1670 • E-mail: [email protected] Web site: www.TimberMart-South.com Copyright © 2010-2011:
This publication is copyrighted under the statutes of the United States. The compilation of facts and information herein contained are the subject of private property rights of the publisher. Reproduction or transmission, either manually or electronically, in whole or in part, without express permission of the owner or other unauthorized use, is not permitted. Publisher provides the information herein as a convenience to its readers. Publisher does not represent or endorse the truth, accuracy, reliability or completeness of any of the information contained in this publication. PUBLISHER PROVIDES THE INFORMATION IN THIS PUBLICATION ON AN ‘AS IS’ AND ‘AS AVAILABLE’ BASIS, WITH NO WARRANTIES WHATSOEVER. THOSE WHO USE PRICES PUBLISHED HERIN FOR A SPECIFIC PURPOSE, SALE OR CONTRACT DO SO AT THEIR OWN RISK. UNDER NO CIRCUMSTANCE WILL PUBLISHER HAVE ANY LIABILITY FOR ANY LOSS OR DAMAGE WHATEVER CAUSED BY ANY READER’S RELIANCE ON INFORMATION OBTAINED THROUGH THIS NEWSLETTER.
ISSN 1945-4082A The University of Georgia Warnell School of Forestry & Natural Resources is under contract with the Frank W. Norris Foundation to compile and publish the TMS Market News.
Table of Contents of the Abridged Version Prices & Market Conditions ....................................................................................................3 Stumpage Prices, Reporter Comments Market Indicators ....................................................................................................................4 Lumber & Panel Indicators, US Building Construction, Pulp & Paper Indicators, Energy & Carbon Markets, Equity Markets, Manufacturing Activity Timberland Transactions .......................................................................................................14 Openings & Closings .............................................................................................................14 Biofuel & Bio-Energy.............................................................................................................16 Restructuring .........................................................................................................................16 Weather Etc...........................................................................................................................18
For a the full issue, please contact us or order http://www.tmart-south.com/tmart/subscrib.htm Please see our advertisers’ section; see a list on page 18.
Page 2
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Timber Mart-South Market News Quarterly 4 th Quarter 2010 – Vol. 15 No. 4-A
South-wide Pine Stumpage Prices
Prices & Market Conditions
quarterly averages $50
$/ton
South-wide stumpage and delivered prices for all five major timber products decreased from last quarter. Timber supply remained adequate to meet demand. Dry weather over much of the South this quarter led to unusually good fall logging conditions. The recession restrained demand for timber.
3Q 10
$20
%∆
-9.0%
$27.07
-5.4%
$30
Note: for a table of the five major products, please see our full News Quarterly. Order or subscribe at http://www.tmart-south.com/tmart/subscrib.htm
$25
Page 3
2005
2007
2009
2011
South-wide Hardwood Stumpage Prices
4Q 09
Hardwood Stumpage Prices The south-wide average mixed hardwood and hardwood pulpwood prices also declined this quarter, showing a pattern similar to pine. Although mixed hardwood sawtimber fell more than one dollar per ton, the average remained above the same period last year. Hardwood
2003
Tim ber Mart-South
year ago
Pine Stumpage Prices The south-wide average pine sawtimber price fell by 9 percent this quarter, more than any of the five major products including pine chip-n-saw and pulpwood. Low prices reflected the ongoing weakness in solid wood product markets. All three pine products were down from 4th Quarter of 2009 as well.
Pulpwood
2001
%∆
Pine Sawtimber $25.62 $28.15
Chip-n-saw
$0
quarterly averages Mixed Hardwood Sawtimber
$20 $/ton
4Q 10
$30
$10
South-wide Average Stumpage Prices $/ton one quarter
Sawtimber
$40
$15 $10 $5 $0 2001
Pulpwood
2003
2005
2007
2009
2011
Tim ber Mart-South
pulpwood continued to retreat from the dramatic peak in the 1st Quarter of 2010. Note: Timber Mart-South Summary and State reports have average stumpage and delivered prices, two regions per state. The Timber MartSouth Supplemental Report contains average harvest rates as wells as biomass fuel and other special product prices. For details on biomass and residual prices, see the Timber Mart-South Supplemental Report.
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Random Lengths Framing Lumber Weekly Composite Price ($/mbf)
Selected Reporter Comments 4Q 2010: Still not much going on, and sad to know that chip-n-saw stumpage prices are only half what we were getting not long ago. Mills are full of logs due to the dry summer and fall. Pine pulpwood is the only thing moving and that is on quota until things get wet again.
Market Indicators Gradual improvement emerged this quarter in some of our indicators, with building construction expenditures up slightly, most US manufacturing still expanding, and stock market indices up. Many projects were on hold this quarter, pending resolution of various government policy issues. A noisy mid-term election in November delivered control of the US House of Representatives back to Republicans and weakened the Democrats’ majority in the Senate. High US debt levels, both public and private, continue to generate financial uncertainty and housing markets continue to be the weakest in decades.
Lumber & Panel Indicators The Random Lengths Framing Lumber Composite (FLC) price ended the year at $293 per thousand board feet (mbf), up for the quarter and the year. The Southern Pine Composite also increased slightly to $267 per mbf. Random Lengths Framing Lumber Composite $/mbf 31-Dec-10
24-Sep-10
% +/-
31-Dec-09
% +/-
293
251
16.7%
248
18.1%
Random Lengths Southern Pine Composite $/mbf
$500 $390 $280 $170 2006
2008
2009
2010
2011
Southern pine 2x4 lumber prices followed the upward trend in the lumber composite prices, but 2x10 prices remained subdued, ending the year 10 percent below prices at the end of 2009. The Structural Panel Composite price ended the year at $289 per thousand square feet, 3/8 inch basis (msf), up slightly for the quarter and the year. Random Lengths Structural Panel Composite $/msf 31-Dec-10
24-Sep-10
% +/-
31-Dec-09
% +/-
289
278
4.0%
273
5.9%
$575 $450 $325 $200
Random Lengths Structural Panel Weekly Composite Price ($/msf)
2006
2007
2008
2009
2010
2011
Southern pine plywood prices decreased this quarter but remained more than 8 percent above prices at the end of 2009. Southern Oriented Strand Board (OSB) prices were up slightly for the quarter and the year. The Hardwood Review US Kiln Dried Hardwood Lumber Index was $1,411 per thousand board feet (mbf) down for the quarter but up nearly 10 percent from one year ago. Hardwood Lumber Price Kiln dried Index $/mbf
31-Dec-10
24-Sep-10
% +/-
31-Dec-09
% +/-
31-Dec-10
267
252
6.0%
254
5.1%
1141
Page 4
2007
24-Sep-10
% +/-
25-Dec-09
% +/-
1218
-6.3%
1041
9.6%
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Hardwood Review Kiln-Dried Hardwood Weekly Lumber Index ($/mbf)
$1,500 $1,300 $1,100 $900 2006
2007
2008
2009
2010
2011
Industrial demand for pallet cants and frame stock, which had driven up lower quality hardwood lumber prices earlier in the year, leveled off. Strong international demand had more than doubled hardwood exports in the first half of 2010 compared to the same period in 2009, but seemed to cool in the second half. Softwood lumber production remained steady this quarter. The Southern Forest Products Association (SFPA) reported that southern pine lumber production year-to-date through October was 10.19 billion board feet, an increase of about one percent over the same period in 2009. For more detail on mill activity this quarter, see Openings & Closings on 14.
Southern panel production remained slow in the 3rd Quarter of 2010 according to the latest report available from the APA Engineered Wood Association. Southern OSB production dropped slightly for the quarter and was nearly the same as the 3rd Quarter of 2009. Southern Plywood production increased slightly for the quarter but was down from the same quarter last year. Southern OSB Production 000 msf 3Q10
2Q10
% +/-
3Q09
% +/-
2155
2281
-5.5%
2171
-0.7%
Southern Plywood Production 000 msf 3Q10
2Q10
% +/-
3Q09
% +/-
1498
1450
3.3%
1548
-3.2%
APA Engineered Wood Association U.S. Southern Panel Production (Quarterly 000 msf, 3/8" basis) 3,600 2,800 2,000 1,200
OSB Plywood 2006
2007
2008
2009
2010
2011
SFPA US South Pine Lumber Production (Monthly 000 mbf) 1,900 1,500 1,100 700 2006
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2007
2008
2009
2010
2011
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
US Building Construction Total US privately-owned housing starts improved slightly this quarter. Through November, US starts were 553 thousand units year-to-date, up nearly 7 percent from the same period in 2009 according to the US Census. New residential sales also crept upwards. Inventories of houses for sale and the estimated number of months to sell a home declined from the high levels of 2009 and the first half of 2010. Residential Housing Starts, 000 units y-t-d Nov-10 Nov-09 % +/US
553
518
6.9%
South
280
259
8.2%
Foreclosures still threaten to increase housing supply but uncertainty abounds. Mortgage holders temporarily froze foreclosures in October, pending legal action from both borrowers and investors, while continuing to slowly unwind complicated financial instruments. Source: US Census http://www.census.gov/const/newresconst.pdf http://www.census.gov/const/newressales.pdf US Census Bureau US Housing Starts (Monthly SAAR Million Units) 2.7 2.1 1.5 0.9 0.3 2006
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Timber Mart-South ~ Abridged Market News Quarterly
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2011
4th Quarter 2010
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Remodeling activity this quarter remained about the same as last quarter. According to the Private Construction Spending monthly report by the US Census, improvement expenditures year-to-date through November were $107.6 billion, up 3.4 percent from $104.3 billion for the same period in 2009. http://www.census.gov/const/www/c30index.html According to the Harvard University Leading Indicator for Remodeling Activity (LIRA), total spending on improvements could be up about 3 percent higher than in 2009. http://www.jchs.harvard.edu/media/lira/ US Remodeling (LIRA) Billion $, 4 month totals 4Q10
3Q10
% +/-
4Q09
% +/-
115.5
112.2
2.9%
112.0
3.1%
Mortgage activity was slow this quarter according to the Mortgage Bankers Association (MBA). Refinancing decreased as mortgage rates increased slightly. The MBA expects home sales to be weak over the next few months. Mortgage rates increased from historic lows by year end. The December average for 30-year fixed-rate mortgages was 4.71 percent according to the Federal Home Loan Mortgage Corp. (Freddie Mac), up from the September average but still below December 2009.
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30-year Fixed US Mortgage Rates (percent) Dec-10
Sep-10
Δ +/-
Dec-09
Δ +/-
4.71
4.35
0.36
4.93
-0.22
Freddie Mac 30-year Fixed US Mortgage Monthly Average Rates (percent) 8.0 7.0 6.0 5.0 4.0 2006
2007
2008
2009
2010
2011
The Federal Reserve Open Market Committee (FOMC) maintained the federal funds rate at zero to 0.25 percent again this quarter, having kept it at this level since December 2008. The committee reported economic recovery was proceeding, but slowly, and at a rate unlikely to reduce unemployment. The Federal Reserve continues to reinvest principal payments from its securities in Treasury notes. In November it began a program to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, at a pace of about $75 billion per month.
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Pulp & Paper Indicators US paper and paperboard production eased this quarter according to the American Forest and Paper Association (AF&PA). While stronger than 2009, year-to-date production through November has still not recovered to 2008 levels. For more detail on mill activity this quarter, see Openings & Closings on page 14. AF&PA Production million tons y-t-d
Pulp prices declined slightly this quarter. The FOEX Ltd. Northern Bleached Softwood Kraft (NBSK) pulp price index ended December at $949 per ton, still $150 per ton above the end of 2009. Bleached hardwood kraft pulp prices, at $849 per ton at the end of December, followed a similar trend. FOEX NBSK Index $/ton 28-Dec-10
28-Sep-10
% +/-
29-Dec-09
% +/-
949
973
-2.5%
799
18.8%
Nov-10
Nov-09
% +/-
Paper
32,139
30,894
4.0%
P-Board
43,527
40,715
6.9%
28-Dec-10
28-Sep-10
% +/-
29-Dec-09
% +/-
Total
75,666
71,609
5.7%
849
870
-2.4%
700
21.3%
Paper & Paperboard Production monthly 000 tons - AF&PA
FOEX BHK Index $/ton
FOEX Ltd. NBSK Pulp Index dollars per ton
$1,100 $900
7,600
$700 $500
5,600
2006
2007
2008
2009
2010
2006
2011
2007
2008
2009
2010
2011
Recovered corrugated container prices increased this quarter. According to Official Board Markets, Old Corrugated Container (OCC) monthly average prices in the South were $155 per ton in December, up for the quarter and double prices at the end of 2009. Old Corrugated Containers - US South in $/ton Dec-10
Sep-10
% +/-
Dec-09
% +/-
155
125
24.0%
78
100.0%
Official Board Markets U.S. Southern OCC Prices (dollars per ton)
200 150 100 50 0 2006
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2007
2008
Timber Mart-South ~ Abridged Market News Quarterly
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2010
2011
4th Quarter 2010
end of the 3rd Quarter but up from December of 2009. Spot prices are available at:
Energy & Carbon Markets Fuel prices increased this quarter after remaining virtually unchanged for the previous six months. The December 2010 monthly average Gulf Coast diesel price was $3.18 per gallon, up for the quarter and the year. Gulf Coast #2 Diesel – Retail (cents per gallon) Dec-10
Sep-10
% +/-
Dec-09
% +/-
318
288
10.1%
270
17.7%
500 350 200 50 2006
Gulf Coast No 2 Diesel Retail Prices Monthly (cents per gallon) US EIA
http://www.pointcarbon.com/news/ The Regional Greenhouse Gas Initiative (RGGI) held its tenth quarterly auction on December 1st for carbon emissions of utilities in the Northeastern US. The clearing price was $1.86 per CO2 allowance, the minimum reserve price for the auction and unchanged from last quarter. Further detail on results is available at: http://www.rggi.org/docs/Auction_10_Release_Re port.pdf Note: A CO2 allowance represents a limited authorization to emit one ton of CO2.
2007
2008
2009
2010
2011
http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/psw 18vwall.xls Crude Oil prices also increased. The November 2010 monthly average West Texas Intermediate Crude price was approximately $84 per barrel and prices were over $90 per barrel in futures markets at the end of December.
The Chicago Carbon Climate Exchange (CCX) announced it would cease trading carbon at the end of 2010. Prices had been near zero per ton since September 2009 after fuel prices dropped and Congress failed to pass cap-and-trade regulations.
W Texas Int. Crude Oil (dollars per barrel) Nov-10
Aug-10
% +/-
Nov-09
% +/-
84.25
76.60
10.0%
77.99
8.0%
160 120 80 40 0 2006
Crude Oil - W Texas Int Spot Price Monthly (dollars per barrel) US EIA
2007
2008
2009
2010
2011
http://tonto.eia.doe.gov/dnav/pet/xls/PET_PRI_S PT_S1_M.xls Carbon prices were down this quarter in Europe and nearly non-existent in the US. The European Point Carbon price for the December 2010 vintage was €14.24 per ton on January 1st (about $19.02 per ton), down from the Page 11
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Equity Markets
Manufacturing Activity
Stock markets strengthened further this quarter. The Dow Jones Industrial Average (DJIA) ended the year at 11,578, up for the quarter and the year.
Manufacturing activity continued to expand this quarter. The Institute for Supply Management’s Purchasing Managers Index (PMI) which aggregates activity in US manufacturing was 57.0 in December, very near the 12-month average of 57.3 and indicating economic growth for the 20th consecutive month. A PMI above 50 indicates economic expansion, and below indicates contraction.
Dow Jones Industrial Average 31-Dec-10
30-Sep-10
% +/-
31-Dec-09
% +/-
11,578
10,788
7.3%
10,428
11.0%
Dow Jones Industrial Average 15,000 12,000
Paper & Paperboard Products reported contraction in November and December after expansion earlier in the year. Wood Products remained stable.
9,000 6,000
2006
2007
2008
2009
2010
2011
http://www.ism.ws/index.cfm
The S&P 500 finished the year at 1,258, and the NASDAQ Composite finished at 2,653. Both were up for the quarter and the year. The S&P was up 12.8 percent year-over-year and the NASDAQ was up 16.9 percent.
Page 12
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
March 23-25, 2011 The Ritz-Carlton Lodge, Reynolds Plantation, Lake Oconee, Georgia, USA
Optional pre-conference event:
Forestland Investment Tour - Tuesday, March 22, 2011 Conference will address post-recession views of: Housing Market Recovery on Wood Demand Global Timber Trade, Investments & Market Conservation: Accommodating the New Reality Back to the Basics Timberland Management
Housing Market Highlights: Dr. Kermit Baker – Senior Research Fellow at Harvard University’s Joint Center for Housing Studies, specializes in the construction and remodeling industries in the US. Danielle DiMartino – Financial Analyst at the Federal Reserve Bank of Dallas, specializes in the interaction of the economy and the financial markets. She is an expert on policy and the US debt-driven housing market.
www.ugacfb.com/timberlandasset Platinum Sponsors –Forestweb, Hancock Timber Resource Group, Molpus Woodlands Group, Plum Creek, Resource Management Service, Sutherland, Timber Mart-South, Timberland Investment Resources & World Forestry Center. Gold Sponsors – CellFor, Davis-Garvin Agency, Finite Carbon, Forest Investment Associates, Forest Landowners Association, Forisk, MetLife Timberland Finance Group, Orbis, Rayonier, RMK Timberland Group Smith, Gambrell & Russell, Stoel Rives, The Forestland Group & Weyerhaeuser Company. For more information contact Bob Izlar, [email protected], (706) 542-6819 or Rich Molpus, [email protected], (706) 542-5079
Page 13
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Timberland Transactions Timberland markets were slow again this quarter. Of the 165,400 acres in timberland sales announced in the 4th Quarter, approximately 67,000 were in the South. The weighted average price per acre was $1,150 nation-wide and $1,300 for the South. About 899,000 acres in US transactions were announced in 2010, the lowest annual total since 2000. The average price was $1,220 per acre, a little higher than the average in 2006. Transactions in the South represent about 621,000 acres of the total, at an average of $1,385 per acre. After the 4th Quarter earnings releases and 2010 annual reports reveal more detail, these totals may change slightly. When compared to TMS records since 2000, this quarter’s price-per-acre for timberland remains below the peaks of 2006 through 2008 but above those for the first half of the decade. In December, Timber Mart-South published a summary of transactions since 2000: United States Timberland Markets: Transactions, Values and Market Research: 2000 to mid-2010. For a description and how to order a copy, see page 15.
Page 14
Openings & Closings Both pulp manufacturers and wood products companies more or less continued at the same production levels as last quarter, with some taking time off for holidays in November and December. Retrenchment seems the rule of the day.
Pulp & Paper: Production eased slightly this quarter, but most of the announcements were expansions. Domtar finished its conversion project at Plymouth NC and started production. G-P announced longawaited locations for capital improvements to its tissue manufacturing facilities. Several new items this quarter involve non-paper use of pulp. One example, fluff pulp, a bleached softwood cellulose fiber, is used internationally in absorbent applications such as baby diapers, feminine hygiene and adult incontinence products.
Wood Products: US lumber markets were weak and many companies in the South took extra holiday downtime this quarter. There was one new marketrelated shutdown. As with pulp markets, several non-primary producers had announcements: two closures and one opening. Panel markets were slow this quarter with some producers taking extra holiday downtime.
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
New from Timber Mart-South
United States Timberland Markets Transactions, Values & Market Research: 2000 to mid-2010
First Edition: 320 pages ¾ Executive Summary of Developments ¾ One Section per Year - top owners - top sellers - top buyers - price ranges - tract sizes ¾ Articles of Interest - Reprints of original news items - 36 timberland-related articles re-printed from Timber Mart-South Market News
- More than 20 well-respected authors ¾ Appendix of timberland sales Order now: $500 per copy Contact: [email protected] or go to: www.timbermart-south.com Subscribers, please ask about available discounts Page 15
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Biofuel & Bio-energy
Restructuring
The 4th Quarter was another quiet one for new projects, although there were a few important updates, such as funding received and energy contracts won. The final BCAP rules were published and digested. For some the response was “wad and toss”. One biofuel/carbon-related study reported results with another about to begin. One experiment in carbon trading ended, while another expanded.
In addition to AbitibiBowater’s emergence from creditor protection, this quarter saw a raft of activity in mergers and acquisitions. Both Weyerhaeuser and Smurfit-Stone Container announced leadership changes as did long-time TIMO Resource Management Service.
Page 16
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Page 17
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Weather, Etc. General Weather: Dry weather predominated in the South this quarter. Florida had the driest October on record, though the driest counties were south of the pine-belt. Except for a few counties in the Appalachians, precipitation was below normal throughout the South, with only a little relief coming in November for Mississippi, Alabama, eastern Arkansas and Louisiana. http://www.hprcc.unl.edu/maps/current/ Drought: Extreme drought conditions spread to most of the South this quarter, with only the Appalachian region and some of the Atlantic Coast spared.
Southern Pine Bark Beetle: Some states reported increased SPB activity this quarter. Other pests, such as the Ips engraver beetle, were also on the rise. The Alabama Forestry Commission warned in November that beetle activity increased late in the year, when it is usually declining, but that spots needed to be checked to distinguish which insect caused the damage. Ips beetles tend to attack already dying or dead trees whereas SPB can attack fast-growing, young plantations as well. Forecast: Precipitation is expected to be below normal with temperatures above normal in most of the South through March 2011. After March the forecast shows more normal levels of rainfall returning. http://www.cpc.ncep.noaa.gov/
List of Advertisers
http://drought.unl.edu/dm/monitor.html Fire: Wildfire incidences increased with the dry weather. Louisiana, Mississippi, Florida and Georgia all reported a higher than average number of fires, but the south-wide number of fires was below average. The 485,000 acres burned across the South was near a historical low. Nation-wide about 3.4 million acres burned, also near the historical low. http://www.nifc.gov/nicc/predictive/outlooks/mont hly_seasonal_outlook.pdf
Page 18
Page
Arborgen Supertree Seedlings
12
Cellfor Elite Seedlings
17
Davis-Garvin Insurance Agency
6
F&W Forestry
5
Forest Landowners Association
9
Fountains Forestry
11
International Forest Company Seedlings
10
Larson & McGowin
8
Meeks Farms & Nursery, Inc.
8
Southeast Wood Producers Association
8
Timber Mart-South US Timberland Markets
15
UGA Timberland Investment Conference 2011
13
Westervelt Hunting Leases
7
Westervelt Wildlife Workshop
14
Weyerhaeuser Seedlings
16
World Forestry Center
16
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Timber Mart-South Market News Quarterly Abridged Version
The Journal of Southern Timber Market News A Quarterly Report of the Market Conditions for Timber Products of the Southeast US Copyright © 2010-2011 by Timber Mart-South, Inc.
Tom Harris, Publisher (706)542-2832 (706)542-4756 Jacek Siry, Research Editor Sara Baldwin, Robert Simmons & Jonathan Smith, Editors Staff: Jonathan Brown, Morgan Newman, Stephen Smith and Justin Wright Mailing address: Timber Mart-South, 1860 Barnett Shoals Road, PMB 103-598, Athens, GA 30605. Phone: (706)542-4756 • Fax: (706)542-1670 • E-mail: [email protected] Web site: www.TimberMart-South.com Copyright © 2010-2011:
This publication is copyrighted under the statutes of the United States. The compilation of facts and information herein contained are the subject of private property rights of the publisher. Reproduction or transmission, either manually or electronically, in whole or in part, without express permission of the owner or other unauthorized use, is not permitted. Publisher provides the information herein as a convenience to its readers. Publisher does not represent or endorse the truth, accuracy, reliability or completeness of any of the information contained in this publication. PUBLISHER PROVIDES THE INFORMATION IN THIS PUBLICATION ON AN ‘AS IS’ AND ‘AS AVAILABLE’ BASIS, WITH NO WARRANTIES WHATSOEVER. THOSE WHO USE PRICES PUBLISHED HERIN FOR A SPECIFIC PURPOSE, SALE OR CONTRACT DO SO AT THEIR OWN RISK. UNDER NO CIRCUMSTANCE WILL PUBLISHER HAVE ANY LIABILITY FOR ANY LOSS OR DAMAGE WHATEVER CAUSED BY ANY READER’S RELIANCE ON INFORMATION OBTAINED THROUGH THIS NEWSLETTER.
ISSN 1945-4082A The University of Georgia Warnell School of Forestry & Natural Resources is under contract with the Frank W. Norris Foundation to compile and publish the TMS Market News.
Table of Contents of the Abridged Version Prices & Market Conditions ....................................................................................................3 Stumpage Prices, Reporter Comments Market Indicators ....................................................................................................................4 Lumber & Panel Indicators, US Building Construction, Pulp & Paper Indicators, Energy & Carbon Markets, Equity Markets, Manufacturing Activity Timberland Transactions .......................................................................................................14 Openings & Closings .............................................................................................................14 Biofuel & Bio-Energy.............................................................................................................16 Restructuring .........................................................................................................................16 Weather Etc...........................................................................................................................18
For a the full issue, please contact us or order http://www.tmart-south.com/tmart/subscrib.htm Please see our advertisers’ section; see a list on page 18.
Page 2
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Timber Mart-South Market News Quarterly 4 th Quarter 2010 – Vol. 15 No. 4-A
South-wide Pine Stumpage Prices
Prices & Market Conditions
quarterly averages $50
$/ton
South-wide stumpage and delivered prices for all five major timber products decreased from last quarter. Timber supply remained adequate to meet demand. Dry weather over much of the South this quarter led to unusually good fall logging conditions. The recession restrained demand for timber.
3Q 10
$20
%∆
-9.0%
$27.07
-5.4%
$30
Note: for a table of the five major products, please see our full News Quarterly. Order or subscribe at http://www.tmart-south.com/tmart/subscrib.htm
$25
Page 3
2005
2007
2009
2011
South-wide Hardwood Stumpage Prices
4Q 09
Hardwood Stumpage Prices The south-wide average mixed hardwood and hardwood pulpwood prices also declined this quarter, showing a pattern similar to pine. Although mixed hardwood sawtimber fell more than one dollar per ton, the average remained above the same period last year. Hardwood
2003
Tim ber Mart-South
year ago
Pine Stumpage Prices The south-wide average pine sawtimber price fell by 9 percent this quarter, more than any of the five major products including pine chip-n-saw and pulpwood. Low prices reflected the ongoing weakness in solid wood product markets. All three pine products were down from 4th Quarter of 2009 as well.
Pulpwood
2001
%∆
Pine Sawtimber $25.62 $28.15
Chip-n-saw
$0
quarterly averages Mixed Hardwood Sawtimber
$20 $/ton
4Q 10
$30
$10
South-wide Average Stumpage Prices $/ton one quarter
Sawtimber
$40
$15 $10 $5 $0 2001
Pulpwood
2003
2005
2007
2009
2011
Tim ber Mart-South
pulpwood continued to retreat from the dramatic peak in the 1st Quarter of 2010. Note: Timber Mart-South Summary and State reports have average stumpage and delivered prices, two regions per state. The Timber MartSouth Supplemental Report contains average harvest rates as wells as biomass fuel and other special product prices. For details on biomass and residual prices, see the Timber Mart-South Supplemental Report.
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Random Lengths Framing Lumber Weekly Composite Price ($/mbf)
Selected Reporter Comments 4Q 2010: Still not much going on, and sad to know that chip-n-saw stumpage prices are only half what we were getting not long ago. Mills are full of logs due to the dry summer and fall. Pine pulpwood is the only thing moving and that is on quota until things get wet again.
Market Indicators Gradual improvement emerged this quarter in some of our indicators, with building construction expenditures up slightly, most US manufacturing still expanding, and stock market indices up. Many projects were on hold this quarter, pending resolution of various government policy issues. A noisy mid-term election in November delivered control of the US House of Representatives back to Republicans and weakened the Democrats’ majority in the Senate. High US debt levels, both public and private, continue to generate financial uncertainty and housing markets continue to be the weakest in decades.
Lumber & Panel Indicators The Random Lengths Framing Lumber Composite (FLC) price ended the year at $293 per thousand board feet (mbf), up for the quarter and the year. The Southern Pine Composite also increased slightly to $267 per mbf. Random Lengths Framing Lumber Composite $/mbf 31-Dec-10
24-Sep-10
% +/-
31-Dec-09
% +/-
293
251
16.7%
248
18.1%
Random Lengths Southern Pine Composite $/mbf
$500 $390 $280 $170 2006
2008
2009
2010
2011
Southern pine 2x4 lumber prices followed the upward trend in the lumber composite prices, but 2x10 prices remained subdued, ending the year 10 percent below prices at the end of 2009. The Structural Panel Composite price ended the year at $289 per thousand square feet, 3/8 inch basis (msf), up slightly for the quarter and the year. Random Lengths Structural Panel Composite $/msf 31-Dec-10
24-Sep-10
% +/-
31-Dec-09
% +/-
289
278
4.0%
273
5.9%
$575 $450 $325 $200
Random Lengths Structural Panel Weekly Composite Price ($/msf)
2006
2007
2008
2009
2010
2011
Southern pine plywood prices decreased this quarter but remained more than 8 percent above prices at the end of 2009. Southern Oriented Strand Board (OSB) prices were up slightly for the quarter and the year. The Hardwood Review US Kiln Dried Hardwood Lumber Index was $1,411 per thousand board feet (mbf) down for the quarter but up nearly 10 percent from one year ago. Hardwood Lumber Price Kiln dried Index $/mbf
31-Dec-10
24-Sep-10
% +/-
31-Dec-09
% +/-
31-Dec-10
267
252
6.0%
254
5.1%
1141
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2007
24-Sep-10
% +/-
25-Dec-09
% +/-
1218
-6.3%
1041
9.6%
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Hardwood Review Kiln-Dried Hardwood Weekly Lumber Index ($/mbf)
$1,500 $1,300 $1,100 $900 2006
2007
2008
2009
2010
2011
Industrial demand for pallet cants and frame stock, which had driven up lower quality hardwood lumber prices earlier in the year, leveled off. Strong international demand had more than doubled hardwood exports in the first half of 2010 compared to the same period in 2009, but seemed to cool in the second half. Softwood lumber production remained steady this quarter. The Southern Forest Products Association (SFPA) reported that southern pine lumber production year-to-date through October was 10.19 billion board feet, an increase of about one percent over the same period in 2009. For more detail on mill activity this quarter, see Openings & Closings on 14.
Southern panel production remained slow in the 3rd Quarter of 2010 according to the latest report available from the APA Engineered Wood Association. Southern OSB production dropped slightly for the quarter and was nearly the same as the 3rd Quarter of 2009. Southern Plywood production increased slightly for the quarter but was down from the same quarter last year. Southern OSB Production 000 msf 3Q10
2Q10
% +/-
3Q09
% +/-
2155
2281
-5.5%
2171
-0.7%
Southern Plywood Production 000 msf 3Q10
2Q10
% +/-
3Q09
% +/-
1498
1450
3.3%
1548
-3.2%
APA Engineered Wood Association U.S. Southern Panel Production (Quarterly 000 msf, 3/8" basis) 3,600 2,800 2,000 1,200
OSB Plywood 2006
2007
2008
2009
2010
2011
SFPA US South Pine Lumber Production (Monthly 000 mbf) 1,900 1,500 1,100 700 2006
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2008
2009
2010
2011
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
US Building Construction Total US privately-owned housing starts improved slightly this quarter. Through November, US starts were 553 thousand units year-to-date, up nearly 7 percent from the same period in 2009 according to the US Census. New residential sales also crept upwards. Inventories of houses for sale and the estimated number of months to sell a home declined from the high levels of 2009 and the first half of 2010. Residential Housing Starts, 000 units y-t-d Nov-10 Nov-09 % +/US
553
518
6.9%
South
280
259
8.2%
Foreclosures still threaten to increase housing supply but uncertainty abounds. Mortgage holders temporarily froze foreclosures in October, pending legal action from both borrowers and investors, while continuing to slowly unwind complicated financial instruments. Source: US Census http://www.census.gov/const/newresconst.pdf http://www.census.gov/const/newressales.pdf US Census Bureau US Housing Starts (Monthly SAAR Million Units) 2.7 2.1 1.5 0.9 0.3 2006
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Timber Mart-South ~ Abridged Market News Quarterly
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2011
4th Quarter 2010
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Remodeling activity this quarter remained about the same as last quarter. According to the Private Construction Spending monthly report by the US Census, improvement expenditures year-to-date through November were $107.6 billion, up 3.4 percent from $104.3 billion for the same period in 2009. http://www.census.gov/const/www/c30index.html According to the Harvard University Leading Indicator for Remodeling Activity (LIRA), total spending on improvements could be up about 3 percent higher than in 2009. http://www.jchs.harvard.edu/media/lira/ US Remodeling (LIRA) Billion $, 4 month totals 4Q10
3Q10
% +/-
4Q09
% +/-
115.5
112.2
2.9%
112.0
3.1%
Mortgage activity was slow this quarter according to the Mortgage Bankers Association (MBA). Refinancing decreased as mortgage rates increased slightly. The MBA expects home sales to be weak over the next few months. Mortgage rates increased from historic lows by year end. The December average for 30-year fixed-rate mortgages was 4.71 percent according to the Federal Home Loan Mortgage Corp. (Freddie Mac), up from the September average but still below December 2009.
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30-year Fixed US Mortgage Rates (percent) Dec-10
Sep-10
Δ +/-
Dec-09
Δ +/-
4.71
4.35
0.36
4.93
-0.22
Freddie Mac 30-year Fixed US Mortgage Monthly Average Rates (percent) 8.0 7.0 6.0 5.0 4.0 2006
2007
2008
2009
2010
2011
The Federal Reserve Open Market Committee (FOMC) maintained the federal funds rate at zero to 0.25 percent again this quarter, having kept it at this level since December 2008. The committee reported economic recovery was proceeding, but slowly, and at a rate unlikely to reduce unemployment. The Federal Reserve continues to reinvest principal payments from its securities in Treasury notes. In November it began a program to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, at a pace of about $75 billion per month.
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Pulp & Paper Indicators US paper and paperboard production eased this quarter according to the American Forest and Paper Association (AF&PA). While stronger than 2009, year-to-date production through November has still not recovered to 2008 levels. For more detail on mill activity this quarter, see Openings & Closings on page 14. AF&PA Production million tons y-t-d
Pulp prices declined slightly this quarter. The FOEX Ltd. Northern Bleached Softwood Kraft (NBSK) pulp price index ended December at $949 per ton, still $150 per ton above the end of 2009. Bleached hardwood kraft pulp prices, at $849 per ton at the end of December, followed a similar trend. FOEX NBSK Index $/ton 28-Dec-10
28-Sep-10
% +/-
29-Dec-09
% +/-
949
973
-2.5%
799
18.8%
Nov-10
Nov-09
% +/-
Paper
32,139
30,894
4.0%
P-Board
43,527
40,715
6.9%
28-Dec-10
28-Sep-10
% +/-
29-Dec-09
% +/-
Total
75,666
71,609
5.7%
849
870
-2.4%
700
21.3%
Paper & Paperboard Production monthly 000 tons - AF&PA
FOEX BHK Index $/ton
FOEX Ltd. NBSK Pulp Index dollars per ton
$1,100 $900
7,600
$700 $500
5,600
2006
2007
2008
2009
2010
2006
2011
2007
2008
2009
2010
2011
Recovered corrugated container prices increased this quarter. According to Official Board Markets, Old Corrugated Container (OCC) monthly average prices in the South were $155 per ton in December, up for the quarter and double prices at the end of 2009. Old Corrugated Containers - US South in $/ton Dec-10
Sep-10
% +/-
Dec-09
% +/-
155
125
24.0%
78
100.0%
Official Board Markets U.S. Southern OCC Prices (dollars per ton)
200 150 100 50 0 2006
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2011
4th Quarter 2010
end of the 3rd Quarter but up from December of 2009. Spot prices are available at:
Energy & Carbon Markets Fuel prices increased this quarter after remaining virtually unchanged for the previous six months. The December 2010 monthly average Gulf Coast diesel price was $3.18 per gallon, up for the quarter and the year. Gulf Coast #2 Diesel – Retail (cents per gallon) Dec-10
Sep-10
% +/-
Dec-09
% +/-
318
288
10.1%
270
17.7%
500 350 200 50 2006
Gulf Coast No 2 Diesel Retail Prices Monthly (cents per gallon) US EIA
http://www.pointcarbon.com/news/ The Regional Greenhouse Gas Initiative (RGGI) held its tenth quarterly auction on December 1st for carbon emissions of utilities in the Northeastern US. The clearing price was $1.86 per CO2 allowance, the minimum reserve price for the auction and unchanged from last quarter. Further detail on results is available at: http://www.rggi.org/docs/Auction_10_Release_Re port.pdf Note: A CO2 allowance represents a limited authorization to emit one ton of CO2.
2007
2008
2009
2010
2011
http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/psw 18vwall.xls Crude Oil prices also increased. The November 2010 monthly average West Texas Intermediate Crude price was approximately $84 per barrel and prices were over $90 per barrel in futures markets at the end of December.
The Chicago Carbon Climate Exchange (CCX) announced it would cease trading carbon at the end of 2010. Prices had been near zero per ton since September 2009 after fuel prices dropped and Congress failed to pass cap-and-trade regulations.
W Texas Int. Crude Oil (dollars per barrel) Nov-10
Aug-10
% +/-
Nov-09
% +/-
84.25
76.60
10.0%
77.99
8.0%
160 120 80 40 0 2006
Crude Oil - W Texas Int Spot Price Monthly (dollars per barrel) US EIA
2007
2008
2009
2010
2011
http://tonto.eia.doe.gov/dnav/pet/xls/PET_PRI_S PT_S1_M.xls Carbon prices were down this quarter in Europe and nearly non-existent in the US. The European Point Carbon price for the December 2010 vintage was €14.24 per ton on January 1st (about $19.02 per ton), down from the Page 11
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Equity Markets
Manufacturing Activity
Stock markets strengthened further this quarter. The Dow Jones Industrial Average (DJIA) ended the year at 11,578, up for the quarter and the year.
Manufacturing activity continued to expand this quarter. The Institute for Supply Management’s Purchasing Managers Index (PMI) which aggregates activity in US manufacturing was 57.0 in December, very near the 12-month average of 57.3 and indicating economic growth for the 20th consecutive month. A PMI above 50 indicates economic expansion, and below indicates contraction.
Dow Jones Industrial Average 31-Dec-10
30-Sep-10
% +/-
31-Dec-09
% +/-
11,578
10,788
7.3%
10,428
11.0%
Dow Jones Industrial Average 15,000 12,000
Paper & Paperboard Products reported contraction in November and December after expansion earlier in the year. Wood Products remained stable.
9,000 6,000
2006
2007
2008
2009
2010
2011
http://www.ism.ws/index.cfm
The S&P 500 finished the year at 1,258, and the NASDAQ Composite finished at 2,653. Both were up for the quarter and the year. The S&P was up 12.8 percent year-over-year and the NASDAQ was up 16.9 percent.
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
March 23-25, 2011 The Ritz-Carlton Lodge, Reynolds Plantation, Lake Oconee, Georgia, USA
Optional pre-conference event:
Forestland Investment Tour - Tuesday, March 22, 2011 Conference will address post-recession views of: Housing Market Recovery on Wood Demand Global Timber Trade, Investments & Market Conservation: Accommodating the New Reality Back to the Basics Timberland Management
Housing Market Highlights: Dr. Kermit Baker – Senior Research Fellow at Harvard University’s Joint Center for Housing Studies, specializes in the construction and remodeling industries in the US. Danielle DiMartino – Financial Analyst at the Federal Reserve Bank of Dallas, specializes in the interaction of the economy and the financial markets. She is an expert on policy and the US debt-driven housing market.
www.ugacfb.com/timberlandasset Platinum Sponsors –Forestweb, Hancock Timber Resource Group, Molpus Woodlands Group, Plum Creek, Resource Management Service, Sutherland, Timber Mart-South, Timberland Investment Resources & World Forestry Center. Gold Sponsors – CellFor, Davis-Garvin Agency, Finite Carbon, Forest Investment Associates, Forest Landowners Association, Forisk, MetLife Timberland Finance Group, Orbis, Rayonier, RMK Timberland Group Smith, Gambrell & Russell, Stoel Rives, The Forestland Group & Weyerhaeuser Company. For more information contact Bob Izlar, [email protected], (706) 542-6819 or Rich Molpus, [email protected], (706) 542-5079
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Timberland Transactions Timberland markets were slow again this quarter. Of the 165,400 acres in timberland sales announced in the 4th Quarter, approximately 67,000 were in the South. The weighted average price per acre was $1,150 nation-wide and $1,300 for the South. About 899,000 acres in US transactions were announced in 2010, the lowest annual total since 2000. The average price was $1,220 per acre, a little higher than the average in 2006. Transactions in the South represent about 621,000 acres of the total, at an average of $1,385 per acre. After the 4th Quarter earnings releases and 2010 annual reports reveal more detail, these totals may change slightly. When compared to TMS records since 2000, this quarter’s price-per-acre for timberland remains below the peaks of 2006 through 2008 but above those for the first half of the decade. In December, Timber Mart-South published a summary of transactions since 2000: United States Timberland Markets: Transactions, Values and Market Research: 2000 to mid-2010. For a description and how to order a copy, see page 15.
Page 14
Openings & Closings Both pulp manufacturers and wood products companies more or less continued at the same production levels as last quarter, with some taking time off for holidays in November and December. Retrenchment seems the rule of the day.
Pulp & Paper: Production eased slightly this quarter, but most of the announcements were expansions. Domtar finished its conversion project at Plymouth NC and started production. G-P announced longawaited locations for capital improvements to its tissue manufacturing facilities. Several new items this quarter involve non-paper use of pulp. One example, fluff pulp, a bleached softwood cellulose fiber, is used internationally in absorbent applications such as baby diapers, feminine hygiene and adult incontinence products.
Wood Products: US lumber markets were weak and many companies in the South took extra holiday downtime this quarter. There was one new marketrelated shutdown. As with pulp markets, several non-primary producers had announcements: two closures and one opening. Panel markets were slow this quarter with some producers taking extra holiday downtime.
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
New from Timber Mart-South
United States Timberland Markets Transactions, Values & Market Research: 2000 to mid-2010
First Edition: 320 pages ¾ Executive Summary of Developments ¾ One Section per Year - top owners - top sellers - top buyers - price ranges - tract sizes ¾ Articles of Interest - Reprints of original news items - 36 timberland-related articles re-printed from Timber Mart-South Market News
- More than 20 well-respected authors ¾ Appendix of timberland sales Order now: $500 per copy Contact: [email protected] or go to: www.timbermart-south.com Subscribers, please ask about available discounts Page 15
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Biofuel & Bio-energy
Restructuring
The 4th Quarter was another quiet one for new projects, although there were a few important updates, such as funding received and energy contracts won. The final BCAP rules were published and digested. For some the response was “wad and toss”. One biofuel/carbon-related study reported results with another about to begin. One experiment in carbon trading ended, while another expanded.
In addition to AbitibiBowater’s emergence from creditor protection, this quarter saw a raft of activity in mergers and acquisitions. Both Weyerhaeuser and Smurfit-Stone Container announced leadership changes as did long-time TIMO Resource Management Service.
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
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Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
Weather, Etc. General Weather: Dry weather predominated in the South this quarter. Florida had the driest October on record, though the driest counties were south of the pine-belt. Except for a few counties in the Appalachians, precipitation was below normal throughout the South, with only a little relief coming in November for Mississippi, Alabama, eastern Arkansas and Louisiana. http://www.hprcc.unl.edu/maps/current/ Drought: Extreme drought conditions spread to most of the South this quarter, with only the Appalachian region and some of the Atlantic Coast spared.
Southern Pine Bark Beetle: Some states reported increased SPB activity this quarter. Other pests, such as the Ips engraver beetle, were also on the rise. The Alabama Forestry Commission warned in November that beetle activity increased late in the year, when it is usually declining, but that spots needed to be checked to distinguish which insect caused the damage. Ips beetles tend to attack already dying or dead trees whereas SPB can attack fast-growing, young plantations as well. Forecast: Precipitation is expected to be below normal with temperatures above normal in most of the South through March 2011. After March the forecast shows more normal levels of rainfall returning. http://www.cpc.ncep.noaa.gov/
List of Advertisers
http://drought.unl.edu/dm/monitor.html Fire: Wildfire incidences increased with the dry weather. Louisiana, Mississippi, Florida and Georgia all reported a higher than average number of fires, but the south-wide number of fires was below average. The 485,000 acres burned across the South was near a historical low. Nation-wide about 3.4 million acres burned, also near the historical low. http://www.nifc.gov/nicc/predictive/outlooks/mont hly_seasonal_outlook.pdf
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Arborgen Supertree Seedlings
12
Cellfor Elite Seedlings
17
Davis-Garvin Insurance Agency
6
F&W Forestry
5
Forest Landowners Association
9
Fountains Forestry
11
International Forest Company Seedlings
10
Larson & McGowin
8
Meeks Farms & Nursery, Inc.
8
Southeast Wood Producers Association
8
Timber Mart-South US Timberland Markets
15
UGA Timberland Investment Conference 2011
13
Westervelt Hunting Leases
7
Westervelt Wildlife Workshop
14
Weyerhaeuser Seedlings
16
World Forestry Center
16
Timber Mart-South ~ Abridged Market News Quarterly
4th Quarter 2010
