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Economic Outlook: A Summary
The outlook for the U.S. economy continues to dim. Slack final demand is feeding a downturn in production and a rise in unemployment, which creates a further falloff in demand. A stronger dollar is impinging on new export orders for forest products. The inventory of new homes is shrinking, but the overhang of existing homes is likely to continue to swell as a growing number of job cuts contribute to a rise in mortgage defaults. Oil prices weakened further in December in concert with the ongoing recession, but geopolitical tensions and supply cutbacks threaten to drive prices higher.
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Wood Chips Put the Squeeze on Northwest Mills |
In the Pacific Northwest, already beleaguered forest products producers are confronting sagging global demand for wood pulp and paper. Suffering as a result of the lowest lumber prices since the 1980s, mill owners in the region are now being challenged by a freefall in wood chip prices.
Weak lumber markets always create a decline in the volume of wood chips generated as a by-product of lumber production, and the diminished supply then leads to higher prices. While not great news for pulp and paper producers seeking furnish for pulp mills, sawmill operators in this region depend heavily on these higher returns from residue, particularly wood chips, to serve as an offset to production costs. When lumber prices are low, chip revenue can mean the difference between running and shutting down.
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Housing Update - Good News |
 It's been a long time since we've been able to report good news in the housing market. We saw an uptick in sales in December 2008! Sales of existing homes increased by 6.5 percent in December, primarily on the strength of buyers taking advantage of lower prices in distressed markets (Calif., Nev., and Fla.). The number of unsold homes on the market also fell, with inventory now at a 9.3 month supply (November's inventory was 11.2 months). Median sales prices continued on trend, however, falling just under $5,000 to $175,400 in December.
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Oak Ridge National Laboratory's New Report on Combined Heat and Power |
 In a new report, entitled Combined Heat and Power: Effective Energy Solutions for a Sustainable Future, Oak Ridge National Laboratory (ORNL) looks at how cogeneration (CHP) might alleviate a significant portion of U.S. dependence on foreign oil. The report quantifies the benefits from U.S. companies and institutions that currently produce both heat and electricity from a single fuel source:
- They have reduced total use of fuel by 1.9 quadrillion Btu.
- They have reduced CO2 emissions by the equivalent of removing 45 million cars from the road.
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Legislation Watch - Tax Credits for Electricity Produced from Biomass |
Paper and wood products mills could soon receive 1-2 cent per kWH tax credit for the electricity that they produce from biomass. Since 1986, the Internal Revenue Code has provided tax credits for companies that produce electricity and sell it to the grid. Companies that produce electricity for on-site use have not been eligible for the credit.
|  | Upcoming Speaking Engagements for Pete Stewart |
Introduce yourself to Pete Stewart, Forest2Market's President and CEO, at the following events: - The Southern Lumber Manufacturers Association's 2009 Spring Meeting on March 3 at the Atlanta Airport Hilton in Atlanta, Ga.
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The 75th Annual Meeting of the Forest Resources Association (FRA), which will be held at the Marriott Hotel at Hilton Head Island, South Carolina on March 13-16.
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The International Biomass Conference and Expo, which runs from April 28-30, 2009 at the Oregon Convention Center in Portland, Oregon.
- The Southern Forest Products Association Expo, which will be held June 11-13 in New Orleans at the Morial Convention Center.
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