Third quarter financials by Mercer, Acadian Timber and International Paper reflect difficult market conditions. In related news from the Global Wood Summit: China’s pulp & paper growth triggers mill closures in North America; and the US perspective on Canadian softwood lumber duties. Elsewhere: a partial labour strike breaks out at the Port of Montreal; Microsoft builds with wood to reduce emissions; more on IP’s mill closures; and the latest on the True Value / Do It Right agreement.
In Forestry news: ENGOs urge rejection of biomass energy at UN biodiversity conference; a new study on climate change’s impact on permafrost forests; wildfire depressants dump toxic metals on US West forests; Washington timber sales are back on the chopping block; BC’s Sea to Sky forest fertilization project is underway; and forest fire season wrap-ups from Ontario and Alberta.
Finally, despite monsoon conditions, BC’s Sooke Potholes fire is only just declared to be out!
Kelly McCloskey, Tree Frog Editor
Strengthening demand in 2025 should boost lumber prices 20%: 
Day two of the Global Wood Summit in Vancouver opened with a presentation by Alejandra Glazebrook from PwC (Platinum event sponsor). Glazebrook presented insights into the forest sector, highlighting its significant contributions to the Canadian economy, employing over 200,000 people and generating approximately $35 billion.
ERA Forest Products Research’s John Cooney opened day two of the Global Wood Summit in Vancouver by introducing Alejandra Glazebrook of PwC Canada, who provided an overview of global trends in forest sector profitability. Cooney followed with a detailed report on the North American lumber market and then moderated a Q&A panel with Ken Shields (Conifex Timber), Stefan Lyren (Olympic Industries), John Bal (Interfor) and Dean Garofano (Delta Forest Group). In addition to weak lumber prices—economic fibre shortages, softwood lumber duties, residual offtake challenges and lingering labour constraints—were noted as causing headaches for producers. Over 3 billion board feet of sawmill capacity closures were announced across North America in 2024, after about 2 billion board feet between 2022 and 2023. And sawmill closures are no longer just a BC phenomenon with over 1.2 billion board feet of curtailments in the historically “lower cost” US South to date in 2024.
The long awaited Global Wood Summit kicked-off in Vancouver yesterday with a detailed overview of global log and lumber trends by forest market analyst and conference co-host Russ Taylor. With due notice that “forecasters are almost always wrong”, Taylor described the long list of current and expected “fibre supply disruptors”, (including the war in Ukraine and in the Middle East), and the many negative policy initiatives, (such as the EU Deforestation Regulation and new logging restrictions in BC and Oregon), that are exacerbating the availability and supply of low-cost softwood logs world wide. Within North America, potential growth in log and lumber supply is limited to the US South, and other than beetle and wildfire killed logs in select regions, there are few other new sources of wood, said Taylor.
Zoltan van Heyningen, Executive Director, US Lumber Coalition, provided a US perspective on softwood lumber duties at the Global Wood Summit in Vancouver. Van Heyningen clarified the difference between policy-driven trade action (that can result in tariffs) and legal processes that administer US trade laws (that can result in antidumping and countervailing duties). According to van Heyningen:
B.C.’s economy is unlikely to be hit too badly by the increasingly sour relationship Canada has with the Indian government. The deterioration of relations is, however, an emotional gut-punch for many in the province’s Indo-Canadian community. Some B.C. business owners rely on trade with India, with their companies exporting products such as lumber and other products to resell. …B.C.-origin exports to India totalled $1.406 billion in 2023, down 10.6% from the year before. The Canadian and Indian governments for more than a decade had been negotiating a free-trade agreement to help both economies. …“We were getting nowhere on the free-trade agreement,” Sundher Group CEO Tom Sundher said. …Sundher’s Surrey-based company sells softwood lumber to Indian customers for furniture and frames for windows and doors and also acts as an agent in helping Weyerhaeuser. None of Sundher’s clients have changed their orders because of diplomatic tensions, he stressed.
MONTREAL – Yesterday morning an indefinite strike began at the Viau and Maisonneuve terminals, in accordance with the strike notice filed by CUPE Local 375, the longshore workers’ union. As a result, these two Termont-operated terminals are closed, and no rail, truck or ship services will be provided. With 40% of total container handling capacity paralyzed by this work stoppage, and ships and trains already obliged to choose other routes, the Montreal Port Authority (MPA) expresses its deep concern about the negative repercussions of this work stoppage. All the other Port of Montreal terminals remain operational. …We are all aware of how crucial operations at the Port of Montreal are, and the vital role they play not only for Quebec, but also for the rest of Canada. The need to reach an agreement quickly is acute and cannot be ignored,” said Julie Gascon, CEO of the Port of Montreal.
NEW YORK — Mercer International reported third quarter 2024 Operating EBITDA of $50.5 million, an increase from $37.5 million in the same quarter of 2023 and $30.4 million in the prior quarter of 2024. In the third quarter of 2024, net loss was $17.6 million compared to a net loss of $26.0 million in the third quarter of 2023 and a net loss of $67.6 million in the second quarter of 2024, which included a non-cash impairment of $34.3 million against goodwill related to the Torgau facility. Mr. Juan Carlos Bueno, Chief Executive Officer, stated: “In the third quarter, softwood pulp markets continued to be strong and fiber costs remained stable. However, our operating results were constrained as a result of lower pulp sales volumes caused by unplanned downtime at our Peace River mill and other unexpected production events.
Sales picked up in many framing lumber species, especially in the West. A lack of supplies in Canadian S-P-F led to buyers switching to other species. As a result, in the middle of the week markets like the Inland and Coast saw more demand and price gains than have been evident for several weeks. The Random Lengths Framing Lumber Composite Price notched its fifth consecutive weekly gain and hit $430, its high so far this year. …Gains in the cash market were supported by strong upward movement in lumber futures through Wednesday. The November and January contracts traded in the green much of the week, with double-digit gains posted across all contracts on Wednesday. Despite an overall rising market, Southern Pine was a laggard. Supply-driven strength that fueled the recent run in the South faded or stalled as mill order files dwindled and prompt loads surfaced more frequently.
The US economy seems to have pulled off a remarkable and historic achievement. Gross domestic product expanded at an annualized rate of 2.8% in the third quarter, the Commerce Department said Wednesday. That’s a slightly weaker pace than the second quarter’s 3% rate and above the 2.6% rate economists projected. As the US economy continued to expand from July through September, inflation drifted lower toward the Federal Reserve’s 2% target during that same period, the report showed. Several economists tell CNN that the economy has finally pulled off an exceptionally rare achievement known as a soft landing, a scenario in which inflation is tamed without a recession. …Meanwhile, businesses continued to invest during the July-through-September period, though at a slightly softer pace than earlier in the year. Government spending at both the federal and state level also contributed to third-quarter economic growth.
ATLANTA — BlueLinx Holdings, a U.S. wholesale distributor of building products, reported financial results for the three months ended September 28, 2024. Highlights include: Net sales of $747 million; Gross profit of $126 million, gross margin of 16.8% and specialty product gross margin of 19.4%, which includes a net benefit of approximately $3.5 million related to import duties from prior periods; Net income of $16 million, and Adjusted net income of $17 million. …Shyam Reddy, President and CEO of BlueLinx… “Specialty products’ gross margins were within our expected range and structural products’ gross margins were strong. …Current market conditions remain challenging, but we believe our growth strategy will continue to position us well for an industry rebound.”
Persistent upward movement in framing lumber prices left many items approaching their highs for the year in the fourth quarter. The current supply-driven run has pushed the Random Lengths Framing Lumber Composite Price to its fourth consecutive weekly increase. The front month in lumber futures continued to trade at a slight premium to the physical market, but the January contract opened a sizable spread with cash. …Mills in the South continued to push for double-digit price hikes with moderate success. Most Southern Pine prices continued to climb. However, buyer resistance to the highest mill quotes grew more intense as the week progressed. …Coast dimension sales continued to outpace production, keeping upward pressure on some prices. Board markets remained on a divergent trend. Producers continued to adjust prices predominantly downward.
