The US port strike is underway with major implications for the American and Canadian economies. In other Business news: a BC Resource Sector Coalition seeks a new approach to forest management; and the BC Conservative leader wants to repeal BC’s Indigenous rights law, while promising to promote economic reconciliation. Meanwhile: perspectives on the outlook for lumber prices, and a new study with implications for the softwood lumber dispute.
In Forestry/Wildfire news: Canada invests in sustainable buildings and international forestry; BC ENGO’s say the new Lands Ministry is not protecting biodiversity; Jasper’s caribou breeding program was impacted by wildfire; and US prescribed fire efforts face regulatory roadblocks, while post-fire replanting efforts are falling short.
Finally, Trevor Hancock opines on why carbon pricing is good for your health.
Kelly McCloskey, Tree Frog Editor
BC’s forest industry stands at an important juncture and crossroads of its future prosperity and the high standard of living it imparts to individuals, communities, and society. Much has been written, documented and analyzed about its massive contribution to the gross domestic product, taxes and revenues to all levels of government, the 100,000 jobs dependent on its success, and the absolute reliance for so many of BC’s resource communities. In fact, BC’s forest sector is one of a few “profitable” job segments that drive our economy and government services through above average wages and consequential higher tax revenues. …Today we find a forest sector under significant (or severe) stress with uncertainty being the predominant constant from initiatives at the federal and provincial levels. This uncertainty arises from the flood of programs, policies, and initiatives each arising without any apparent consistency, coordination, or weighing of economic impacts among them.
VANCOUVER, BC – John Baird, Chairman of Canfor Pulp Products Board of Directors announced today that Kevin Edgson will be leaving the role of President and Chief Executive Officer on October 31, 2024. “On behalf of the Board of Directors, I would like to thank Kevin for his significant contributions in the role of President and CEO since 2022,” said John Baird. “Kevin has worked through a number of challenges including a reduction in fibre supply in BC and fluctuating market conditions while transitioning Canfor Pulp to a smaller operational footprint. We are grateful for his leadership and appreciate his efforts to transform the company during his tenure.” The Board is in the process of selecting a successor and will share more details in the coming weeks. [END]
NEW YORK — Mercer announced that its Peace River mill has taken downtime to complete necessary repairs to the mill’s digester after experiencing a mechanical failure. The Company currently expects the repairs and related assessments will be completed in mid-October 2024, and anticipates that NBHK production at the mill will be reduced by approximately 45,000 tonnes during such period. The Company maintains property and business interruption insurance for the Peace River mill and expects the repairs and business interruption will be covered by such insurance, subject to customary deductibles and limits. …Mercer’s consolidated annual production capacity of 2.1 million tonnes of pulp, 960 million board feet of lumber, 210 thousand cubic meters of cross-laminated timber, 45,000 cubic meters of glulam, 17 million pallets and 230,000 metric tonnes of biofuels.
The longstanding trade dispute between the U.S. and Canada over softwood lumber has hinged on a critical factor: the substitutability of lumber products. A recent study by…
Due diligence requirements under the Regulation on Deforestation-Free Products (EUDR) will apply starting on December 30, 2024, setting in motion a landmark regulation to prevent products linked to deforestation and forest degradation from being placed on the EU market. …As described in further detail below, the EUDR will impact US companies that export covered commodities to the EU – either directly or indirectly through an EU supplier. …The EUDR gives companies 18 months from the date of its adoption to prepare for and implement the new rules, with large businesses – those with more than 250 employees – expected to be in compliance as of December 30, 2024 (smaller and micro enterprises have additional time to comply). In the meantime, the EU Commission is developing guidelines to clarify the EUDR’s requirements and published a nonbinding FAQ document to assist the regulated community in preparing for compliance. The final guidelines are expected to be adopted before the December 30, 2024 compliance date.
WASHINGTON, D.C.—Four Research and Development scientists were honored Sept. 23 with a Deputy Chief Award, all cited for their excellence in the science, innovation and service that plays an integral role in driving the Forest Service forward as a science-based agency. …Collectively, the honorees contributed directly to work addressing issues like climate change, wildfire risk and the need to protect biodiversity. Their work is critical not only to the health and resilience of our forests and grasslands but also to the well-being of the communities that depend on these ecosystems. About the honorees:
The world’s top container carrier is urging customers to move US cargo through East and Gulf Coast ports before the planned start on Tuesday of a dockworker strike. MSC Mediterranean Shipping said the talks “may not be resolved” by the Sept. 30 deadline, resulting in closures at terminals starting Oct. 1. That would delay the shipping of containers — both imports and exports — on trucks and railroads through ports from Boston to Houston. …The Geneva-based company said that it will continue to accept requests for dry cargo services while reserving the right to “not accept new refrigerated bookings.” Hapag-Lloyd cautioned that industrial action would will raise freight rates. …Oxford Economics estimated that a strike would cost the US economy $4.5 billion to $7.5 billion a week. …But the fallout of even a short strike would be costly for many retailers, manufacturers and other importers trying to ensure timely shipments.
A looming unknown is the potential impact from the European Union’s deforestation regulation (EUDR). If this policy requirement is implemented as currently planned on December 30, 2024, it will cause total trade chaos in world markets. Simply put, many countries will not be ready to meet the stringent requirements of the policy. While the markets may be lacklustre for the rest of 2024, the EUDR could quickly change it all with the potential of huge dislocations in global trade flows. …A quick pro-forma analysis on the lumber revenue versus the costs of lumber production of four major producing regions in North America plus Central Europe yields a very clear story. …The results are essentially negative in all regions of North America given their higher costs. …Permanent mill closures at high-cost mills have also been occurring in BC, the US Pacific Northwest regions and the US South. 
With lower mortgage rates expected, will we see a hotter housing market increasing demand for lumber and lumber prices? …Although many mills continued to run during previous tough times to drive high-cost producers out of the market, mills are taking downtime more quickly now to support prices. …After a slowdown in homebuilding activity over the previous months, 
The softwood lumber market’s reaction to last week’s encouraging economic news remained moderate at best. Demand was steady in most species, but news of reduced interest rates fell far short of jump-starting sales. As a whole, prices wavered and the Random Lengths Framing Lumber Composite Price dropped $1 for the second consecutive week. Western S-P-F sales were unspectacular. …Lumber futures surged early in the week, but the board gave back on Wednesday. The front month continued to carry a premium to the physical market, affording some traders basis opportunities. Hurricane Helene’s approach through the Gulf of Mexico interrupted an otherwise steady Southern Pine market. Buyers covered mostly immediate needs in early trading and scaled back new orders as the week progressed. …A perception that recent curtailments across the South had aligned supplies more closely with demand infused a firmer tone into the market.
It’s here-we-go-again time in Canada-US trade relations on softwood lumber. And the Canadian government this month has filed legal challenges to the decision by the Department of Commerce to increase the duty it charges on softwood lumber imports from Canada to 14.54% from 8.05%. …The decision has coincided with depressed market conditions… which have fueled mill curtailments and permanent closures across Canada as well as the United States. Adding to the negative landscape has been the impact of the most destructive wildfires in Canadian forest history in 2023. …Canada is the top global exporter of softwood lumber – valued at C$13.7 billion in 2022, with the US market alone accounting for about two-thirds of this total. …Although some analysts see the fundamentals underlying softwood lumber’s end-use markets remaining strong, the trends of shipments in the past few years have reflected an industry under severe stress. 
The national index was unchanged month over month in August. Prices were unchanged in 13 of the 27 census metropolitan areas (CMAs) surveyed, while they increased in 8 and declined in the remaining 6 CMAs. The largest month-over-month decrease in August was recorded in Calgary (-0.4%), followed by St. Catharines–Niagara (-0.3%). …Nationally, the index was unchanged on a year-over-year basis in August following a 0.1% increase in July. The New Housing Price Index increased in 10 CMAs surveyed and was unchanged in 3, while it declined in 14.
In September, mortgage rates maintained their downward trajectory, returning to levels last seen two years ago. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage fell to 6.18%, a decline of 32 basis points (bps) from August. The 15-year fixed-rate mortgage saw an even steeper decline, decreasing by 42 bps from August to 5.26%. Additionally, the 10-year Treasury rate declined by 23 bps, falling from 3.98% in August to 3.75%. According to the NAHB forecast, the 30-year mortgage rate is expected to near 6% on a sustained basis by the end of 2024, with a further decline to just below 6% during 2025. NAHB also predicts furthering easing by the Federal Reserve before the end of 2024.
The US economy grew at a 3% annualized pace in the second quarter, a faster rate than Wall Street had expected. The Bureau of Economic Analysis’s third estimate of second quarter US gross domestic product (GDP) was unchanged from the second estimate which had shown 3% annualized growth. Economists had estimated the reading to show annualized growth of 2.9%. The third estimate for second quarter GDP confirms that economic growth was higher than the 1.4% annualized growth seen in the first quarter. “The revisions only strengthen our conviction that the US economy will continue to expand at a decent pace over the coming year, which suggests labor market conditions are unlikely to deteriorate markedly from here,” said Oxford Economics deputy chief economist Michael Pearce. Separately, data from the US Labor Department released Thursday showed 218,000 unemployment claims were filed in the week ending Sept. 21, below Wall Street’s expectations for 223,000.
Home prices remain elevated but price growth continues to decelerate, according to the S&P CoreLogic Case-Shiller Home Price Index (HPI). The HPI (seasonally adjusted) reached its 14th monthly consecutive record high in July 2024. The index increased at a seasonally adjusted annual rate of 2.15%, down slightly from a revised June rate of 2.19%. This rate has slowed over the past six months, from a high of 6.53% in February 2024. The index has not seen an outright decrease since January of 2023 (nineteen months). Separately, the House Price Index released by the Federal Housing Finance Agency (FHFA; SA) posted its sixth monthly consecutive record high, after having decreased slightly in January of this year. The FHFA HPI recorded a 1.57% increase in July, upward from a revised 0.03% rate in June.
Canada’s wildfire season is on track to be the second largest in at least the past two decades, trailing only last year’s record-breaking season, federal officials said Wednesday. Officials said above-normal temperatures and drought conditions across parts of Canada have continued to drive fire activity, with 5.3 million hectares burned so far, though they caution that number is preliminary. Outside of last year’s roughly 15 million hectares burned, federal records indicate only three other seasons have topped five million hectares, and the last was in 1995. Yan Boulanger, a research scientist with Natural Resources Canada, said climate change has contributed to earlier starts and later ends to the wildfire season, turning fire into a year-round phenomenon. …Western Canada has, as expected, been hit hardest this year, with about 70 per cent of the total area burned falling in British Columbia, Alberta, Northwest Territories and Saskatchewan, officials say.
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With record wildfires ravaging much of Canada again this summer, the imperative to reduce GHG emissions grows. Oil companies have been rightly called out for their significant contribution. But another sector, which to date has been mischaracterized by government and industry as carbon-neutral, is also playing a major role in driving the climate crisis. A new report, 