Although earnings were generally down, Interfor, Western Forest Products, Resolute Forest Products and Doman Building Materials all reported positive Q3, 2022 results. In other Business news: housing woes put BC sawmills at risk; Cascades to shutdown its Belleville corrugator; Lowe’s to sell its Canadian business; Port Hawkesbury Paper looks at green hydrogen; and Europe’s wood energy markets are on a steep ascent.
In other news, stories on: BC’s logging slowdown; Ontario’s slow fire-season; South Carolina’s growing forest economy; USDA’s conservation program; and the UK’s timber supply chain challenges.
Finally, the shady secrets and unique riddles of two pervasive, non-native trees.
Kelly McCloskey, Tree Frog Editor
A pall in North America’s housing market is slashing demand for lumber and threatening to shut down sawmills in BC. Lumber futures fell four per cent to $433 per 1,000 board feet in Chicago on Thursday, extending a slump to about 62% this year. The price is so low that it may result in sawmill closures in B.C., according to RBC’s Paul Quinn. “We are below the bottom, so B.C. producers are losing money,” Quinn said. “I suspect we will get a number of sawmill closures over the next year.” The move is a stark reversal from the all-time highs set in 2021 and comes as this year’s surge in borrowing costs has made homes too pricey for buyers. The U.S. Federal Reserve’s rate hike this week added to the gloom and Chair Jerome Powell said the housing market was ‘very overheated’ during the pandemic. Canadian producers West Fraser Timber and Canfor already announced reductions.
BURNABY, BC — Interfor recorded net earnings in Q3’22 of $3.5 million compared to $269.9 million in Q2’22 and $65.6 million. Adjusted net earnings in Q3’22 were $31.5 million compared to $280.2 million in Q2’22 and $46.7 million in Q3’21. Adjusted EBITDA was $129.5 million on sales of $1.0 billion in Q3’22 versus $428.6 million on sales of $1.4 billion in Q2’22. Lumber production totaled 986 million board feet, representing a decrease of 30 million board feet quarter-over-quarter. The U.S. South and U.S. Northwest regions accounted for 470 million board feet and 159 million board feet, respectively, compared to 467 million board feet and 163 million board feet in Q2’22. The Eastern Canada Operations produced 198 million board feet versus 211 million board feet in Q2’22. Production in the B.C. region decreased to 159 million board feet from 174 million board feet in Q2’22, in part due to the sale of the Acorn sawmill during Q2’22.
VANCOUVER, British Columbia — Western Forest Products reported net income of $6.6 million and adjusted EBITDA of $17.3 million in the third quarter of 2022. Results reflect compressed margins on lower lumber production and shipments and $23.1 million of inventory provisions, partly offset by an $18.0 million export tax recovery. Net income in the third quarter of 2022 was $6.6 million as compared to net income of $38.6 million for the second quarter of 2022, and net income of $42.2 million in the third quarter of 2021. …Western’s third quarter adjusted EBITDA was $17.3 million, as compared to adjusted EBITDA of $66.2 million in the second quarter of 2022, and adjusted EBITDA of $66.3 million in the third quarter of 2021. “Our results on the quarter reflect challenging global market conditions, reduced lumber sales volumes and continued pressure on log costs and logistics,” said Steven Hofer, Western’s President and CEO.
Soaring US interest rates have done little to curb inflation, but they’re hitting housing hard. The surge in borrowing costs has eroded affordability for buyers, slowing residential sales and building activity, and threatening economic growth. Home sales and housing starts have slumped after peaking during the first couple of years of the Covid-19 pandemic, when low borrowing costs allowed millions to relocate. Housing downturns ripple through the economy. Real estate and construction account for millions of US jobs, and home sales have historically been a driver of consumer spending. For many Americans a home is their biggest asset, so falling values can hurt confidence and spending. Prices have begun to roll over after a huge runup, but a crash isn’t inevitable. Many owners took advantage of low rates to refinance and may stay put. That could keep inventory low, helping support prices.
A large part of Europe is increasingly exposed to highly volatile prices of heating oil, natural gas and coal. …This vulnerability exposes the urgent need for a faster transition to sustainable renewable energy sources, concluded participants of the 80th session of the Committee on Forests and the Forest Industry (COFFI). …COFFI highlighted that while the consumption of key wood-based products (pulp and paper, wood-based panels and sawn wood) now faced sharp declines due to the economic downturn, the wood energy markets (pellets and traditional fuelwood) are on a steep ascent. Countries in the European Union (EU) burned about 23.1 million tonnes of wood pellets in 2021. It is expected that their consumption in 2022 will reach more than 24 million tonnes and increase even more in the future due to soaring fossil fuel prices and increased demand by individual households.
The world is coming together to reduce the amount of carbon in the atmosphere, and all industries and sectors will need to contribute. …Our analysis shows that over the life cycle of a typical building, 76 percent of emissions come from operations and the remaining 24 percent from the processing of raw materials used for and construction of new builds. …There are several possible decarbonization pathways across materials, design, and technology that collectively could help mitigate a significant portion of overall emissions. …To make the transition to net-zero emissions, upstream aspects of low-carbon-intensive construction materials could also be maximized for tackling embodied emissions during the construction process. The cement industry is responsible for about a quarter of all industry CO2 emissions, and it also generates the most CO2 emissions per dollar of revenue. …Wood construction materials emit anywhere from 20 to 60 percent less carbon than steel and concrete in a typical building. 
The British Columbia government says old-growth logging has fallen to historic lows in the province …But the 
All along a dirt road that snakes through Blodgett Forest are countless blackened trees. It’s the charred aftermath of September’s Mosquito Fire, which burned tens of thousands of acres throughout the El Dorado and Tahoe national forests. When the fire began edging into Blodgett Forest, which lies just west of Lake Tahoe, area researchers wondered what might happen. Blodgett, which is managed by Berkeley Forests, has long been a place where researchers can study different methods of managing land, in part to see how best to combat wildfire risks. One example is prescribed fire, which researchers started testing out at Blodgett almost two decades ago. …In the fire’s aftermath, researchers said they’ve come across some surprises. …What’s clear now, he said, is that even treated areas aren’t completely safe.
HILTON HEAD – South Carolina Forestry Commission officials announced the economic impact of the state’s forestry sector, citing a recently commissioned 
IRELAND — A new forestry programme worth €1.3 billion has been announced by the Government. The fund will see payments to farmers for planting trees rise by between 46% and 66%, and payments will continue for 20 years rather than the existing 15. The funding will be channelled through the new forestry programme that will run from 2023 until 2030 and represents the largest investment by the State in afforestation. A target of 8,000 hectares of forestry planting per annum is contained in the Climate Action Plan, but Ireland is currently only planting 2,000 hectares. Minister of State with responsibility for Forestry Pippa Hackett said the funding comes at an appropriate time, given the need for climate mitigation measures.