Forest2Mill E-Newsletter
August 2010
In This Issue
Housing Market Update
2Q Pine Fiber Results
2Q Hardwood Fiber Results
2Q Pine Sawtimber Results
Myth of Deforestation in US
AF&PA Sustainability Report
Visit Forest2Market
Quick Links

Top 3 Stories from the July Issue
From Forest2Market's Economic Outlook 
In June, performance in forestry-related industries was mixed (see table). Changes in Wood Products were almost universally negative, a situation confirmed by one respondent who observed that the "market had begun to change [for the better], but it is now declining again." Metrics for Paper Products, on the other hand, were largely positive.

The performance of forestry-related service industries showed some positive signs, with Real Estate, Rental & Leasing; Construction; and Agriculture, Forestry, Fishing & Hunting all reporting overall growth.
House Sold
New home construction statistics continue to disappoint. The number of starts decreased by 5 percent in June to 549,000 units. Completions saw a bump as the original end date for the homebuyer tax credit program required all new homes to be finished and transferred to the buyers by end of June. Permits inched up by 2.1 percent to 586,000.
Delivered to Pulp and Paper Mills in the South
Pine purchases by pulp and paper mills in the South remained flat in the second quarter. Pine pulpwood volume was just under first quarter purchase volume, while primary or chip mill chip volume fell 9.5 percent and secondary or mill residual chip volume increased by 15 percent. For all pine fiber, purchased volume declined just 0.23 percent.

Pine fiber prices fell $2.26/ton on a weighted average basis across the South. Multiple factors led to this drop. First, dryer weather increased log supply. Pulpwood costs direct to mills and through chip mills fell as a result. In addition, higher sawmill production at the beginning of the quarter increased the supply of mill residues or secondary chips. Pulp and paper mills substituted this cheaper material for higher priced primary chips from chip mills. Prices ended the quarter just above $36/ton.
Delivered to Pulp and Paper Mills in the South
Hardwood fiber purchases increased by more than 9 percent in the second quarter across the South as mills built inventory. The weighted average delivered price for hardwood fiber fell $2.34/ton.

"Inventories have decreased steeply since 3Q2009, and that continued through the first quarter," said Stuber. "So even though hardwood purchases were up 9 percent, this was primarily a move to build inventory after winter log shortages. At the same time, mill's cut hardwood production. Frankly, it doesn't look like production will increase anytime soon, since inventories have returned to year-ago levels. As a result, we expect prices will continue to fall."
Delivered to Sawmills in the South
Pine sawtimber inventories at mills dropped in the first quarter of 2010, despite heightened lumber demand. As a result of this imbalance, prices climbed through April 2010. Virtually all of 2Q2010's price increase came in April, an increase of just over $1/ton to $44/ton. Since then, mills have replenished their inventories and cut production, causing prices to level off.
Myth Busting
 Deforestation in the United States
Forest2Mill August 2009
Concerns over deforestation in the United States appear to be overstated. For years, many have argued that commercial forestry has been denuding the nation's forests. In the last several years, as more states enact renewable electricity standards that encourage the use of forest biomass to generate electricity, these concerns have been heightened.
Unnecessarily so, it turns out.
AF&PA Sustainability Report 
 Industry Continues to Make Progress
Stacked Lumber 
To demonstrate their dedication to sustainable business practices in the forest and paper products industries, the American Forest and Paper Association (AF&PA) released their 2010 Sustainability Report in June. This report gives an accounting of AF&PA member companies adherence to and progress on the Association's Sustainable Procurement and Environmental, Health and Safety (EHS) Principles, which set standards for economic, social and environmental sustainability. 
Visit Forest2Market 
Forest2Market President and CEO, Pete Stewart, will speak about the competitive position of the Northeast U.S. as a supplier of biomass for European Demand at the Northeast Biomass Conference and Expo, which is being held August 4-6 at the Westin Copley Place in Boston, MA. Pete's presentation will be at 3:30 p.m. on Thursday, August 5.

Visit Suzanne Hearn at the Forest2Market booth at the Southeast Bioenergy Conference 2010 in Tifton, Georgia, August 3-5.
14045 Ballantyne Corporate Place, Suite 150
Charlotte, NC 28277-2845
 Phone: (704) 540-1440
Fax: (704) 540-6301