Robert McKellar
Tree Frog:
A lot has changed in the six months since you wrote about political risk management in the Canadian forest products sector. In the media and thus the Tree Frog News, we’ve been hearing a lot about US lumber duties and tariffs and their potential impact on both sides of the border. But before we talk about that, can you comment on what’s changed from a political risk perspective?
Harmattan:
Back in August 2024, I pointed out that the sector had long enjoyed stability, largely because Canada’s primary market—the US—had been open, rational, and predictable. That sense of stability was rooted in a belief that even occasional trade disputes were manageable within a predictable framework. But as we noted then, political risk is not just about places, but also about periods, and things can change even in places we’re very used to. And yes, since that time, we’ve witnessed a dramatic evolution. …President Trump is now a critical variable in the fortunes of Canadian companies in the US, and indeed a major factor in the evolution of the international system. Getting a sense of the man and what he means is probably the most direct route to contextual insight for what follows. I’m not an expert on Trump or even US politics. But like most political risk consultants, I have been fascinated by his rise and character, and have kept an eye on the more discerning observations. What follows is a brief sketch.
China suspended on Tuesday the soybean import licences of three U.S. firms and halted imports of U.S. logs, stepping up its retaliation for Donald Trump’s decision to impose an extra 10% duty on China. …The suspension of U.S. logs was a direct response to Trump’s move on March 1 to order a trade investigation on imported lumber. Trump had earlier told reporters that he was thinking about imposing a 25% tariff rate on lumber and forest products. “The announcement of import restrictions on U.S lumber and soybeans linked with phytosanitary issues follows a long history of similar measures by Beijing,” said Even Pay, agriculture analyst at Trivium China. …China is one of the world’s largest importers of wood products and the third-largest destination for U.S. forest products. It imported around $850 million worth of logs and other rough wood products from the U.S. in 2024, according to Chinese customs data.
BEIJING – China suspended on Tuesday the soybean import licenses of three U.S. firms and halted imports of U.S. lumber, stepping up retaliatory action after the United States imposed additional tariffs on Chinese goods. Earlier in the day, China also imposed import levies covering $21 billion worth of U.S. agricultural and food products… Customs said it detected ergot and seed coating agent in imported U.S. soybeans while the suspension of U.S. lumber imports was due to the detection of small worms, aspergillus and other pests. …Beijing’s retaliatory measures were in response to U.S. President Donald Trump’s decision to impose an extra 10% duty on China, effective Tuesday, resulting in a cumulative 20% tariff in response to what the White House considers Chinese inaction over drug flows. …The suspension of U.S. lumber was a direct response to Trump’s move on March 1 to order a trade investigation on imported lumber. 
If the Trump administration follows through, the impact on economies across the U.S. will be extensive, and it will vary greatly from state to state. …CNBC looked at the exposure of all 50 states on a country-by-country basis. …The 10 states that have the highest percentage of imports from Canada are: Montana (92%), Maine (69.4%), Vermont (68%), North Dakota (64%), Wyoming (55%), Oklahoma (51%), West Virginia (44%), South Dakota (41%), Minnesota (38%), and Colorado (31%). Energy was the top-dollar import from Canada for all states. The amount of oil imported from Canada is staggering. For example, the value of the oil that Montana imports from Canada — $4.9 billion — is more than 10 times the value of the state’s next biggest import. U.S. states facing exports retaliatory risk. …Looking at the top 10 states that export to Canada, North Dakota topped the list (82%), followed by Maine (49%), Montana (46%), South Dakota (44%), Michigan (43%), Ohio (39%), West Virginia (38%), Idaho (37%), Missouri (37%), and Vermont (34%).
NEW YORK — Mercer International reported fourth quarter 2024 net income of $16.7 million compared to a net loss of $87.2 million in the fourth quarter of 2023 and a net loss of $17.6 million in the third quarter of 2024. Q4 revenues were $488 million, down from $502 million in Q3, 2024 but up from $470 million in Q4, 2023. Mr. Juan Carlos Bueno, CEO, stated: “In the fourth quarter of 2024, softwood pulp prices remained strong, decreasing slightly from recent record prices.” …Hardwood pulp prices in China and North America decreased in the fourth quarter of 2024 as the market absorbed capacity increases from earlier in the year. …Lumber sales realizations increased, driven by modestly higher prices in the U.S. market, while in Europe, prices remained stable. 
Japan’s timber industry is seeing notable changes, with predictions of a drop in log imports and varying trends in lumber imports. These shifts are influenced by economic factors, environmental concerns, and policy decisions affecting how Japan uses timber. The Japan Lumber Importers Association has shared its predictions for wood imports, expecting a 13% decrease in log imports for 2024. …While log imports are expected to decline, the situation with lumber imports is more complex. In 2024, lumber imports are projected to increase by 17.2%. However, in the first half of 2025, a 12.5% decrease is expected compared to the same period the previous year. Several factors influence these mixed trends… Japan’s housing starts decreased by 4.6% year-over-year in 2023, with owner-occupied housing falling by 11.4%. These changes directly impact the demand for lumber, influencing import volumes.
High Point, N.C. — After a successful first year, British Columbia wood expert 
FRANKFURT – Bayer has told U.S. lawmakers it could stop selling Roundup weedkiller unless they can strengthen legal protection against product liability litigation, according to a financial analyst and a person close to the matter. Bayer has paid about $10 billion to settle disputed claims that Roundup, based on the herbicide glyphosate, causes cancer. About 67,000 further cases are pending for which the group has set aside $5.9 billion in legal provisions. The German company has said plaintiffs should not be able to take Bayer to court by invoking U.S. state rules given the federal U.S. Environmental Protection Agency has repeatedly labelled the product as safe to use, as have regulators in other parts of the world. “Without regulatory clarity (Bayer) will need to exit the business. Bayer have been clear with legislators and farmer groups on this,” analysts at brokerage Jefferies said in a note on Thursday, citing guidance Bayer’s leadership provided in a meeting.
Polarization is gripping the country and the centre isn’t holding, Environment and Climate Change Canada found when setting the country’s latest emissions reduction target. The department solicited feedback… to determine what Canada’s internationally binding 2035 pollution reduction obligations should be. …The results found that overcoming polarization is a major hurdle to implementing aggressive emissions reductions that climate scientists say is required to avoid catastrophic warming. About two-thirds of Canadians who participated support stronger measures to address climate change. “There was little middle ground, and very few people were satisfied with the status quo,” according to the findings. …When asked if the federal government is doing enough to fight climate change, 47% believe Canada needs to do more, compared to 36% that feel existing measures go too far. …Polarization is gripping the country and the centre isn’t holding, Environment and Climate Change Canada found when setting the country’s latest emissions reduction target.
The harvesting and burning of forest biomass to produce energy continues to surge, according to a new report entitled 
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Norwegian forestry companies are making history by revolutionizing how timber is transported. Beginning in 2027, Viken AT Market and AT Skog will be the first in the forestry industry to ship timber on zero-emission vessels—a game-changing move that signals a dramatic shift toward sustainable maritime logistics. This breakthrough is made possible through a partnership with Skarv Shipping, which will provide vessels powered by ammonia and electricity, significantly reducing emissions compared to conventional diesel-powered ships. Norway’s timber industry plays a crucial role in the country’s economy, exporting approximately 1 million tons of timber annually to European markets. However, most of this transport has relied on traditional diesel-powered vessels, which contribute to greenhouse gas emissions. In an effort to push the industry forward, Viken AT Market is committing to zero-emission transport, securing a long-term shipping agreement with Skarv Shipping and Arriva Shipping.
In December 2024, Drax and Pathway Energy announced a multiyear deal that could see Drax supplying upward of 1 million metric tons of wood pellets to Pathway’s currently proposed sustainable aviation fuel (SAF) plant on the U.S. Gulf Coast. In the months leading up to the announcement, Drax had hinted at such prospects, indicating plans to develop a pipeline of biomass sales opportunities in North America, including in the SAF market. Drax CEO Will Gardiner confirmed as much during a November quarterly earnings call. Currently, Drax has 17 operational wood pellet production plants across North America and a 450,000-metric-ton facility under construction in Longview, Washington. While Drax is well known in the industrial wood pellet industry, Pathway Energy is a new and unique market participant. Pellet Mill Magazine interviewed Pathway Energy CEO Steve Roberts to introduce the company, technology and plans.
Turkey is poor in oil and gas while its renewable energy sector is heavily reliant on a mix of hydro, wind and solar. But another element is heating up: biofuel – fuel derived directly from biomass, such as wood or plant matter – is gaining interest domestically and creating an export market not available to other renewables. Demand for and output of biomass pellets used in stoves, furnaces and heaters as an alternative to coal or wood to cope with Turkey’s often freezing winters have increased in recent years. Produced by crushing and compressing wood waste, the pellets have a higher per-kilo energy output than gas, coal or oil, and far lower emission levels, according to promoters. Studies estimate Turkey has the raw material to produce up to 1.8 million tonnes of pellets annually, although installed processing capacity has yet to reach this level.
Authorities in Japan have warned that the country’s biggest wildfire in decades is likely to spread, after it damaged dozens of homes and forced more than 1,000 people to flee. Fires continued to rage a week after they broke out in the city of Ofunato, on the north-east coast, with weather officials speculating that this year’s unusually dry winter and strong winds were to blame. As of Monday, the fire had spread through about 2,100 hectares of land, damaged 84 homes and forced 1,200 residents to take refuge in school gymnasiums and other shelters. A further 2,000 are staying with friends or relatives. …More than 2,000 self-defence force [SDF] troops and firefighters have struggled to control the flames as they spread through heavily forested mountainous areas bordering Ofunato, which was among communities destroyed in the March 2011 earthquake and tsunami.
MORIOKA, JAPAN — One person has died, and more than 80 homes appear to have burned down after a wildfire broke out in a northeastern Japan city, local authorities said Thursday, as the region faced its third fire in about a week. Since Wednesday, the blaze has scorched more than 600 hectares in Ofunato, Iwate Prefecture, the municipal government said. With the fire still spreading, about 3,300 residents have been ordered to evacuate. Firefighters battled the blaze through the night, while helicopters were deployed in the morning to contain it from the air. The Fire and Disaster Management Agency requested emergency support from firefighting departments in eight nearby prefectures, and they sent about 690 personnel combined. …Efforts to contain the blaze Wednesday were carried out at ground level as the strong winds precluded waterbombing by helicopters. When the latest fire broke out, strong wind and dry air warnings were in place in the area.