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NAFTA panel sides with Port Hawkesbury Paper

NAFTA panel sides with Port Hawkesbury Paper | Timberland Investment | Scoop.it
A NAFTA panel has sided with Port Hawkesbury Paper in directing the U.S. Department of Commerce to reconsider issues on which the department based imposing border duties, including the electricity rate paid by the mill.

A North American Free Trade Agreement (NAFTA) panel recently ruled in favour of the Point Tupper paper mill in the latest step of the lengthy process that began in 2015.

The five-person panel was comprised of three officials from the U.S. and two from Canada.

“The allegations that were made by the Department of Commerce and our defence of them were shared with the panel and then the panel reviewed all of the facts … the decision was certainly in support of our defence that the allegations were in our opinion not accurate,” Marc Dube, business development manager with Port Hawkesbury Paper, said in an interview Monday.

The trade action came as the result of a petition filed by two American producers of supercalendered paper that say the Canadian paper goods are unfairly subsidized. In the case of Port Hawkesbury Paper, at issue was the aid package it received in 2012 valued at about $124.5 million from the province to reopen the mill after a year-long sales process, as well as a special electricity rate that it receives.

“In the opinion of the panel, it was a process that was done in the appropriate way,” Dube said. “It’s a very positive step in the process but now the Department of Commerce has a period of time to review the facts from the board and decide on their next steps.”
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Donald Trump slams Canada for trade practices in energy, lumber, and dairy

Donald Trump slams Canada for trade practices in energy, lumber, and dairy | Timberland Investment | Scoop.it

U.S. President Donald Trump escalated his attacks on cross-border trade Thursday, repeating his criticisms of Canada’s dairy industry but expanding his rhetoric to condemn lumber and energy.

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After signing an executive order in Washington that directs his administration to investigate whether steel imports jeopardize U.S. national security, Trump decided to repeat remarks he made earlier this week on Canadian dairy policies. He called them a “disgrace” to U.S. farm workers.

 

Trump then went on to criticize Canadian policies on lumber and energy, and said that Canada, and not just Mexico, has made the North America Free Trade Agreement a “disaster for our country.”

 

“We can’t let Canada or anybody else take advantage and do what they did to our workers and to our farmers,” Trump said. “And again, I want to also just mention, included in there is lumber — timber — and energy. So we’re going to have to get to the negotiating table with Canada very, very quickly.”

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Lumber has been a trade irritant between the two nations for generations, so it’s little surprise it would be singled out by Trump. Lumber was excluded from NAFTA and its predecessor, the Canada-U.S. Free Trade Agreement. A nine-year lumber trade agreement signed in 2006 eased tensions, but that deal expired in 2015.

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China turns to western NC trees for wood flooring and furniture

China turns to western NC trees for wood flooring and furniture | Timberland Investment | Scoop.it
The rumor in the timbering parts of the mountains began a few years back: The Chinese are buying up the lumber mills.

But those "Chinese" buyers in Western North Carolina are one charismatic man, Jimmy Lee, whose 11 mills include the old Stanley Furniture plant, once the largest employer in Graham County.

Much of the lumber Lee processes there and at other facilities in both Carolinas, Virginia and Tennessee is destined for Asian markets, particularly China, where a hunger for hardwood is fueled by consumers with recently acquired wealth and a taste for quality products.

The shifting world market helps provide jobs for local timber workers, be they loggers, mill workers or exporters. When timber value remains strong, it encourages area landowners to grow and manage timber tracts as a long-term financial investment rather than turning the land over to more traditional crops, advocates say.

North Carolina's timber exports to China have skyrocketed in recent years. It's a trend reflected nationwide as more timber harvested in the United States is shipped to the world's most populous country, where it is milled into furniture, flooring and other high-value products for buyers there.

For each of the last five years, the average value of Tar Heel wood and wood products exported to China has averaged $165 million, a number nearly 30 times what the state saw in 2000. That year, wood valued at $5.7 million was shipped to China, according to the U.S. Census Bureau.
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Early U.S. softwood lumber finding stokes fear of job losses in Canada

Early U.S. softwood lumber finding stokes fear of job losses in Canada | Timberland Investment | Scoop.it

The U.S. International Trade Commission says it has found there was a reasonable indication that softwood lumber products from Canada materially injured American producers, setting the stage for the imposition of preliminary duties that softwood producers fear could impact Canadian jobs.

 

The trade commission announced Friday that it made an initial determination of harm from Canadian lumber that is “allegedly subsidized and sold in the United States at less than fair value.”

It said the U.S. Commerce Department will continue anti-dumping and countervailing duty investigations launched Dec. 16 into the imported products.
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The preliminary finding could force U.S. importers of Canadian lumber to pay cash deposits to cover preliminary countervailing duties in early March, followed in mid-May with deposits for any anti-dumping duties, unless the deadlines are extended.
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The decision to investigate is in response to petitions filed in November from the U.S. Lumber Coalition, which alleges that provincial governments, which own most of Canada’s vast timberlands, provide trees to Canadian producers at rates far below market value, along with other subsidies.
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Paul Quinn of RBC Capital Markets said the Americans will likely initially impose a high duty to get Canada to negotiate a deal over a long period that’s favourable to the U.S.

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UK timberland owners to benefit from BREXIT

UK timberland owners to benefit from BREXIT | Timberland Investment | Scoop.it
The significant drop in the value of Sterling since the Brexit vote in the summer (a fall of 15% against the Euro between 23 June and 31 October 2016) is expected to be of material long term benefit to UK timberland owners. The UK imports circa 80% of its annual timber consumption and weakness in the currency will see the cost of imported timber rise, once deliveries for Q1 2017 start to arrive in UK ports. In turn, this will allow UK forest owners to increase the price of homegrown timber, thereby improving the returns generated by the asset class.

The price differential between similar grade homegrown UK timber and its imported competition, currently circa 20-25%, will rise. This in turn is expected to lead to increased demand from UK processors for standing timber as they seek to exploit the price differential by increasing market share. This provides strong upside potential for UK timberland owners, potential which has yet to be reflected in UK timberland prices, providing a clear buying opportunity for investors.

As well as a positive short term outlook for timber prices, the long term outlook suggests strongly rising demand as more houses are built in the western world and consumption rises significantly in the developing world. A fascinating fact is the pitifully low consumption per capita in the developing world, particularly in the two most populous nations, China and India. Compared to the western world, where consumption of timber products annually is one cubic metre per capita, annual consumption in China is much lower, at 0.4 cubic metres per capita, and in India it is infinitesimal at only 0.05 cubic metres per capita.

Combined with a drive for a global reduction in carbon footprints, with timber being a major beneficiary over other building materials, the outlook for a significant increase in consumption is positive.
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Senators back push to renew softwood import agreement

Senators back push to renew softwood import agreement | Timberland Investment | Scoop.it
Montana’s Senate delegation co-signed a letter to President Barack Obama asking for continued pressure to get a new Softwood Lumber Agreement with Canada.

“We are disappointed that Canada appears reluctant to follow through on this commitment, which has significantly undermined (the U.S. Trade Representative’s) efforts to reach a final agreement,” Sens. Steve Daines and Jon Tester wrote on Friday, in a bipartisan message joined by 24 fellow senators.

The Softwood Lumber Agreement was originally signed in 2006 and set limits for Canadian lumber imports to the United States. It expired in 2015, but had a one-year “stand-still” clause allowing time to negotiate a new deal. That expired on Oct. 13.

The United States has proposed that Canadian imports be limited to an agreed share of the U.S. lumber market. Canadian counter-proposals have suggested setting a duty charge on imports crossing the border, but not a quota for how much wood can be sent over.

“Hundreds of thousands of U.S. jobs and thousands of U.S. rural communities depend on fairness in trade in softwood lumber,” the senators wrote. “That is why we will continue to urge you, and any future Administration, to seek a fair, effective, and sustainable agreement with Canada on softwood lumber trade, and in the absence of such an agreement, to fully enforce U.S. trade laws.”

U.S. negotiators maintain the Canadian timber industry benefits from government subsidies that give an uncompetitive advantage to cutting trees on Canadian provincial and federal land. The Canadians have successfully argued in international trade court that the U.S. import limits violate free-trade agreements.
Sam Radcliffe's insight:

Nothing new here. But note how the media chose to use a picture of two guys working a portable sawmill, one with the US flag on his tee shirt. Are they suggesting that these types of jobs and companies are what's at stake in the US/Canada dispute?  What would be the impression if they used a more realistic picture like this:  https://vmcdn.ca/f/files/nob/uploadedImages/Industry-News/forestry/2015/08/White-River-Sawmill_Cropped.jpg;w=630

 

 

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Ottawa blames U.S. protectionism for softwood lumber spat

Ottawa blames U.S. protectionism for softwood lumber spat | Timberland Investment | Scoop.it
Trade Minister Chrystia Freeland said growing protectionist sentiment in the United States risks escalating a trade dispute over softwood lumber.

Ms. Freeland, speaking in an interview with Bloomberg TV on the sidelines of the G20 summit in Hangzhou, China, said there’s a chance the two sides won’t be able to reach a deal before an October deadline, raising the spectre of higher U.S. tariffs.

Ms. Freeland said she discussed the matter Sunday with U.S. Trade Representative Michael Froman, and plans to meet with him again in the next two weeks.

“There is no guarantee we are going to get to a deal that works for both sides,” she said. Coming to an agreement “is harder in this protectionist, anti-trade climate.”

The spat over lumber between two of the world’s closest trading partners highlights the extent to which support for trade agreements is faltering globally. It’s a worrisome trend that is requiring policy makers to show trade is widely beneficial, Ms. Freeland said.
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Cameroon moves to curb forest loss linked to Chinese investment

Cameroon moves to curb forest loss linked to Chinese investment | Timberland Investment | Scoop.it

A rise in Chinese companies operating in Cameroon’s timber sector, combined with weak law enforcement, have fuelled a surge in illegal logging that is fast depleting the nation’s forests, experts warn. But the government is hoping a new association it has set up for Chinese firms exploiting forests will strengthen links with officials and enable those companies to work within the law.


Every night, trucks laden with logs negotiate hundreds of kilometres of bumpy earth roads, headed to the port in Douala, Cameroon’s commercial capital, where the wood – some of it logged illegally – is shipped to foreign markets.


“We have observed a surge in timber trade activities with the increased presence of Chinese business operators in the sector,” said Bernard Njonga, coordinator of Cameroon-based NGO Support Service for Local Development Initiatives (SAILD). “The illegal forest exploitation and logging business has been compounded by weak laws applied to some groups of persons and not others,” he added.

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Global softwood lumber trade up 15%

Global softwood lumber trade up 15% | Timberland Investment | Scoop.it

Global softwood lumber trade reached an all-time high in 2015 when, according to estimates by the WRI, 118 million m3 was traded internationally. This year has started out with even higher volumes being traded around the world; the 1Q/16 shipments were approximately 20% higher than in the first quarter of 2015, according to the Wood Resource Quarterly (WRQ).

All countries on the “top-10 import list” increased their lumber importation during the first few months this year with the biggest changes in import volumes being in the US, China and Egypt. Some of the regions covered in the latest report from WRI include;

North America

There was mostly upbeat news about the US lumber market in the first few months of 2016; housing starts in March were the highest for that month since 2007, lumber consumption in early 2016 was 14% higher than the same period in 2015, lumber imports in January-April were up 42% as compared to early 2015, and lumber prices in May reached their highest levels in over a year. Despite increased domestic wood demand, lumber production on the US West coast actually fell about four percent during the first four months this year.

Canadian production was sharply higher during the first three months of 2016 as compared to the same period in 2015, with an increase of 19% in the Eastern provinces and eight percent in British Columbia.

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U.S. agents move against illegal timber imports from Amazon

U.S. agents move against illegal timber imports from Amazon | Timberland Investment | Scoop.it
U.S. agents searched the offices of a California-based wood importer this week as part of a broadening government crackdown on imports of illegally harvested timber, according to a previously unreported federal search warrant seen by Reuters.

The Department of Homeland Security agents are probing whether privately held Global Plywood & Lumber Inc violated U.S. and Peruvian law by importing wood that officials say was taken from the Amazon without proper permits, according to the warrant filed in U.S. District Court for the Southern District of California in San Diego on Monday and executed on Tuesday.

No charges have been brought against the company. A Homeland Security spokesman in Houston said the investigation was ongoing.

Kenneth Peabody, Global Plywood manager, declined to comment on the warrant, the latest sign of increased U.S. efforts to curb logging of rare forest species.

In February, wood flooring giant Lumber Liquidators Inc agreed to pay more than $13 million in criminal fines and forfeitures to resolve a U.S. Department of Justice investigation into the import of wood illegally logged in far eastern Russia, home to many endangered species.
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Vietnam’s timber industry faces Chinese threat

Vietnam’s timber industry faces Chinese threat | Timberland Investment | Scoop.it

Wood manufacturers across Vietnam attended a seminar in Ho Chi Minh City on Monday hosted by the Vietnamese Chamber of Commerce and Industry (VCCI), which focused on the risks of exporting timber products in the context of Vietnam joining the Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement (EVFTA).
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Huynh Van Hanh, vice president of the Ho Chi Minh City Handcraft and Wood Industry Association, explained that the fear came from the recent tendency of Chinese wood companies investing in Vietnam in order to avoid an anti-dumping taxation imposed on Chinese exports by the U.S.


Chinese products, Hanh said, face a very high anti-dumping duty in the U.S., and Chinese companies are looking toward Vietnam to avoid the tax by exporting their products under Vietnamese labels.

According to Hanh, instead of manufacturing timber products in Vietnam, these companies only import goods from China, make some minor adjustments, then ‘re-export’ them to foreign markets within the TPP to take advantage of the favorable tax conditions that Vietnamese products enjoy as part of the agreement.

 

The surge in Chinese investment in Vietnam’s timber industry and subsequently in the country’s wood export to the U.S. has the potential to leave domestic manufacturers vulnerable to anti-dumping lawsuits filed by American companies, Hanh explained.

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New softwood duties inevitable, forestry conference told 

New softwood duties inevitable, forestry conference told  | Timberland Investment | Scoop.it
Canadian forest companies are no longer debating whether they will be hit with a softwood lumber duty, but how much pain the duties will cause, forest products analyst Paul Quinn told an international wood products conference Thursday.


Although Canadian Prime Minister Justin Trudeau and U.S. President Barack Obama told negotiators last March that they have 100 days to resolve the lumber impasse between the two countries, Quinn said that mid-June deadline is likely to pass with no resolution.


“I am pretty pessimistic on them finding a deal,” he said. “The history on this file is very difficult, and there are lots of issues.”

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U.S., Canada vow to fix long-standing softwood lumber dispute

U.S., Canada vow to fix long-standing softwood lumber dispute | Timberland Investment | Scoop.it
The United States and Canada on Thursday vowed to settle a long-standing dispute over Canadian exports of softwood lumber which could erupt again this October when an earlier agreement on the problem expires.

U.S. producers complain that Canadian softwood lumber, which tends to come from government-owned land, is subsidized. A 2006 deal that ended the last dispute expired in October 2015 but both sides agreed to take no action for a year after that.

Faced with the prospect of the U.S. timber lobby pressing for penalties when the grace period runs out this October, President Barack Obama and recently elected Canadian Prime Minister Justin Trudeau asked officials to work out possible solutions and report back within 100 days.

"This issue of softwood lumber will get resolved in some fashion ... undoubtedly to the dissatisfaction of all parties concerned," Obama told a news conference after holding Oval Office talks with Trudeau.

"Each side will want 100 percent, and we'll find a way for each side to get 60 percent or so of what they need, and people will complain and grumble, but it will be fine," he said.

Trudeau said he was confident both sides were "on the right track towards a solution in the next weeks and months to come".

Major companies operating in Canada which could be affected if the U.S. lobby pushed for higher duties on lumber include Canfor Corp, Tembec Inc, Resolute Forest Products Inc and West Fraser Timber Co Ltd.
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U.S. finds hardwood plywood from China subsidized, slaps on duties

U.S. finds hardwood plywood from China subsidized, slaps on duties | Timberland Investment | Scoop.it
The U.S. Department of Commerce said on Tuesday it had made a preliminary finding of subsidies in imports of hardwood plywood products from China and will impose countervailing duties ranging from 9.89 percent to 111.09 percent.

The investigation follows petitions from six privately owned U.S. plywood producers into the imports, which are used in wall panels, kitchen cabinets, table and desk tops, and flooring.

In 2016, imports of hardwood plywood products from China were valued at an estimated $1.15 billion, Commerce Secretary Wilbur Ross said in a statement.

The Commerce Department said it calculated preliminary subsidy rates of 111.09 percent for Shandong Dongfang Bayley Wood Co and 9.89 percent for Linyi Sanfortune Wood Co.

Sixty-two other companies received a subsidy rate of 111.09 percent and all other producers/exporters in China were slapped with a preliminary subsidy rate of 9.89 percent, the department said.

The Commerce Department said it is scheduled to announce its final determination on or about July 5 unless the statutory deadline is extended.
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Maine’s Forest Industry on Brink of Accessing Lucrative European Wood Chip Market

Maine’s Forest Industry on Brink of Accessing Lucrative European Wood Chip Market | Timberland Investment | Scoop.it

Maine still has lots and lots of trees, but the decline of the paper industry has devastated rural communities that depend on forest products.

Wood chips, which are burned for fuel in biomass energy plants, are in strong demand in Europe, and have the potential to rejuvenate the forest products sector in Maine. The only problem is that they can’t be exported, because of all the pests and pathogens that could be spread to other countries.

Now one Maine company has a solution to that problem.

“This is a large capacity item here, we’ve kind of had to shuffle things around in the shop in order to make room,” says David Cook, the senior project manager at the Fastco Corporation in Lincoln.

It’s Cook’s job is to keep his metal fabricators on schedule to build the two heater-drying systems that are scheduled to be trucked to Eastport for testing in the next few weeks.
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Fastco President Allen Smith says if the tests are successful, the heater units will be placed aboard cargo vessels and used to decontaminate low-grade wood chips for shipment to Europe.
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The unit spends several hours heating up the chips in an airtight hold until the humidity level reaches 100 percent and the temperature peaks at 140 degrees Fahrenheit. Thirty minutes later, when the phytosanitation process is over, the chips are bug free and ready for sale to markets in Europe.

University of Maine professor of forest operations, bioproducts and bioenergy Doug Gardner says that means that the state of Maine could finally exploit a competitive advantage.

“In the southern U.S., they’re shipping a lot of biomass material to Europe right now,” he says. “Maine is closer to Europe and provides a shorter shipping distance.”

And demand is strong. Countries in the EU have signed on to a mandate requiring that they must obtain 20 percent of their energy supply from renewable power sources by 2020. Those clean power goals have the potential to revitalize Maine’s forest products industry by providing revenue for landowners and paychecks for woodsmen, truckers and stevedores.

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TFS Set to Harvest Growth In China and India

TFS Set to Harvest Growth In China and India | Timberland Investment | Scoop.it
There are not many companies - if any - that could capture an 80% market share of their industry. But that’s the reward that Australian sandalwood grower TFS (TFC.AU) is eying as its investment in new supplies of the fragrant timber and oil are set to pay off as production ramps up to meet strongly growing Chinese demand.

CEO Frank Wilson, who owns a 12% stake in TFS, laughs off suggestions he’s running the OPEC of sandalwood when he sat down with Barron’s Asia, but he’s acknowledges the company is in a strong position as its transitions from being a forestry investment play to a provider of products hotly demanded for use in incense, perfumes and traditional Chinese medicine. The company has around 30% market share now, but as its plantations mature - trees take 15 years to grow - it could emerge with an 80% market share by 2030. The stock has done well over the past 12 months, with a 37% increase bringing its advance over the past five year to 140%.

TFS is the lone survivor of the shakeout of the Australian timber industry, one that saw a large number of forestry managed investment schemes (MIS) collapse under the weight of too much debt, leaving thousands of investors nursing heavy losses. For Wilson, the ability of TFS to survive the travails of the MIS debacle reflects a focus on a niche part of the industry, rather than more commodity type plantations favored by those forestry plays that hit the wall. “The reason I went into it is that it has big barriers to entry and it had a good end market that wasn’t aimed at one particular manufacturer, industry or country, and that should eliminate the boom-bust cycle you have in agriculture,” Wilson says. “That’s proved to be true.”
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Chart of the Month: Canadian Lumber Imports

Chart of the Month: Canadian Lumber Imports | Timberland Investment | Scoop.it

Despite the sunsetting of the Softwood Lumber Agreement (SLA), Canadian lumber imports to the US have risen by over 82 percent since the Great Recession and the subsequent bottoming of the housing market in 2009. Interestingly, even though total lumber imports from Canada are 30 percent lower than they were at their peak in 2005, lumber from Canada continues to make up a significantly higher percentage of new, single-family housing units.

 

The exchange rate effect cannot be ignored when analyzing this chart; the US dollar has remained strong against the Canadian dollar, which has resulted in cheaper Canadian lumber over the last two years. Also of note, the period between 2006-2015—when the SLA was in effect as a trade policy—the Canadian “market share” of US housing construction was at its highest, reaching a peak in 2011. While this market share has abated during 2012-2016, levels remain above the historic average, which signifies that, relative to today’s housing market, Canadian market share is strong.

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The EU is the world’s largest wood pellet market

The EU is the world’s largest wood pellet market | Timberland Investment | Scoop.it

A report recently published by the USDA Foreign Agriculture Service’s Global Agricultural Information Network provides an overview of the European Union’s biofuel, wood pellet market and biogas production. Without any doubts, the EU is the world’s largest wood pellet market.

 

While the EU produces about fifty percent of world production, EU demand represents about 75 percent of the market. Therefore, the EU is the world’s largest wood pellet market, with approximately 20.5 million metric tons of pellets consumed in 2015, with approximately 65 percent of that volume used for heat and 35 percent for power. It is expected that demand for pellets will increase up to 22.5 million metric tons in 2017.

 

Residential use for heating is a relatively stable market compared to industrial use for power generation. About 60 percent of the pellet demand is estimated to be for household use. However, the past three winters have been relatively mild and coupled with the low prices for fossil inputs, has tempered the use of pellets for residential heating. Medium-size use of pellets for energy use by industries or public buildings such as hospitals and swimming pools is generally less dependent on weather conditions.
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Despite their significant domestic production, the Scandinavian countries, mainly Denmark and Sweden, partly depend on imports from the Baltic Region and Russia. The port restrictions in Scandinavia are favoring the Baltic Sea supply, which generally ship with smaller vessels than used in the Atlantic trade. In Denmark, one plant is located at a deep seaport and is supplied from North America. Improved flexibility in the infrastructure is expected to further increase the sourcing from North America. The market for pellets in Germany, Austria and lesser extent France and Italy is more isolated and depends mostly on the production in this region itself. Since 2008, EU demand for pellets has significantly outpaced domestic production.

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U.S., Canada Approaching Trade Dispute Over Softwood Lumber

U.S., Canada Approaching Trade Dispute Over Softwood Lumber | Timberland Investment | Scoop.it
The U.S. and Canadian governments are approaching the end of a one-year standstill that could erupt into a trade dispute over timber imports that industry officials and federal lawmakers say are hurting Montana mills.

Trade representatives from both countries have until midnight, Oct. 12 to reach a new deal before industry leaders can file complaints in court against Canada.

The U.S. timber industry says Canadian producers are benefiting from an unfair cost advantage by exporting subsidized softwood products that are undercutting U.S. producers. Canada is one of the world’s largest producers and exporters of softwood lumber, which is used to build homes, and the U.S. is the largest market for Canada’s softwood products.

A nine-year softwood lumber agreement between the two countries expired in October 2015 followed by a one-year grace period to allow both sides to negotiate a new deal before any trade complaints could be initiated.

Barring an 11th-hour deal, it appears the two countries are headed for a trade battle that could include new tariffs on Canadian lumber imports.
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Lumber Trade War Brewing as Hope of New Canada-U.S. Deal Fades

Lumber Trade War Brewing as Hope of New Canada-U.S. Deal Fades | Timberland Investment | Scoop.it
A trade dispute between the U.S. and Canada over softwood lumber is escalating, raising the specter of higher tariffs as officials downplay the likelihood of reaching a deal before an October deadline.


President Barack Obama and Prime Minister Justin Trudeau directed their governments at a June meeting in Ottawa to push forward and reach accord on the issue, long a thorn in relations, while acknowledging “significant differences” remain. Officials began two days of talks in Washington on Wednesday, the fourth round of negotiations since the leaders met.


Optimism is fading. Canada’s Ambassador to the U.S., David MacNaughton, and the country’s chief softwood lumber negotiator, Martin Moen, have each said this month the sides remain far apart. Trade Minister Chrystia Freeland signaled the same, saying Canada would rather go past the October deadline than settle for a bad deal.


“We’re not going to be bound by any particular deadline,” Freeland said in an interview on Tuesday. “We’re going to try and reach an agreement, and we’re working hard now in the fall to do that.”

If the deadline is missed, the U.S. is expected to begin a process to enact new tariffs, which would be a barrier to Canadian producers including major players such as Canfor Corp., West Fraser Timber Co. and Interfor Corp. Exports from Canada accounted for most of the increased lumber demand from U.S. builders this year through April, Bloomberg Intelligence estimates.


The previous softwood lumber deal -- which included export quotas for Canadian producers -- expired in October, triggering a one-year standstill that includes a tariff freeze. Monthly softwood exports to the U.S. are up 23 percent on average, on a seasonally adjusted basis, since the pact expired, data compiled by Bloomberg show.


The value of softwood lumber exports to the U.S. is up 25 percent to C$3.6 billion ($2.8 billion) in the first six months of 2016, compared with C$2.9 billion in the same period last year, according to trade data compiled by statistics Canada. In 2015, Canada exported C$5.9 billion to the U.S.

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Britain Flexed It with EU Exit; Forisk Checks Its Implications for Forest Markets and Bioenergy

Britain Flexed It with EU Exit; Forisk Checks Its Implications for Forest Markets and Bioenergy | Timberland Investment | Scoop.it

What does Brexit imply for U.S. timberland investors and forest industry firms? Probably not much. Brexit implications concentrate on markets with strong exposure to wood pellets. Since U.S. wood pellet producers represent a small portion of the U.S. forest products industry, any impacts would be felt locally in key pulpwood markets, if at all. Even here, the risks reside within the context of increased uncertainty in three key areas: EU/UK energy policy, trade, and currency valuation (FX).

 

The main policy driving wood pellet demand is the EU’s implementation of its 2020 climate and energy package. It remains unclear if further policy changes will ensue with the exit or new political leadership following the resignation of PM David Cameron. The 2009 EU Renewable Energy Directive (RED), which is part of the energy and climate package, sets binding renewable energy targets for each EU member state. The RED set a target of 15% energy consumption from renewables by 2020 for the United Kingdom. Efforts to meet this target pushed biomass-based electricity generation from 3.8% of the national total in 2010 to 8.6% in 2015, with forecasts of 11% by 2020.
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A UK departure from the EU would release the UK from the RED obligations, unless the UK maintains economic trade ties with the EU as part of the European Economic Area (EEA). An exit from the EU also releases the UK from compliance with EU State aid rules, which could simplify subsidy programs in the UK. The UK has developed its own climate change goals in the Climate Change Act of 2008 and has established programs to meet carbon reduction requirements, including the Contracts for Difference (CFD) program that provides subsidies for renewable energy technologies. Recent CFD budgets favor “less established technologies” such as offshore wind and biomass combined heat and power rather than biomass conversions, which have been driving the U.S. pellet export sector.
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Finally, Brexit could tighten financing for unfinished projects if capital markets step back. Projects that plan to source wood pellets, such as Lynemouth and MGT, may face increased delays. Technically, nothing will formally change until the UK invokes Article 50 of Lisbon Treaty and begins the withdrawal process (a process that could take two years). In sum, the future of subsidy programs and funding efforts for renewable energy rest with Britain’s government and commitment as a country to continue supporting renewable energy and low carbon technologies, regardless the recent vote.

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U.S., Canada lumber talks stalled, litigation looms

U.S., Canada lumber talks stalled, litigation looms | Timberland Investment | Scoop.it

Talks between Canada and the United States to resolve a dispute over exports of softwood lumber are making little progress and the matter likely will return to the courts, sources familiar with the negotiations said on Friday.

 

U.S. producers complain that Canadian softwood lumber is subsidized, and have in the past launched trade challenges that resulted in the United States imposing billion of dollars in tariffs.

 

The most recent round of arguments ended with a 2006 deal that expired in October 2015. Both sides agreed to take no action for a year after that, but without a new agreement, U.S. firms look set to file new damage claims.
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As the U.S. economy recovers, Canadian firms could benefit from more home construction. Exports of softwood lumber totaled US$5.9 billion in 2015, up from US$5.5 billion in 2014, according to Statistics Canada data.

 

The 2006 agreement said that if prices fell below a certain level, Canadian firms could pay export taxes or agree to quota limits while paying lower tax rates.

 

One challenge for Canada is that domestic lumber producers are split over the best strategy, say officials in Ottawa. Firms on the west coast — who have diversified operations by boosting exports to Asia — are more likely to agree to a deal limiting exports, while those in central and eastern Canada want no restrictions.

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Judge rules softwood lumber checkoff unlawful

Judge rules softwood lumber checkoff unlawful | Timberland Investment | Scoop.it
A federal judge has ruled the USDA violated the law in creating the softwood lumber checkoff, which raises money to promote the use of wood in construction.

Companies that manufacture more than 15 million board-feet of lumber a year — enough to build 1,000 homes — must pay an assessment of 35 cents per 1,000 board-feet to fund the program.

U.S. District Judge James Boasberg in Washington, D.C., has decided the threshold of 15 million board-feet, or 15 mmbf, was “arbitrary and capricious” in violation of federal administrative law.

“Nearly every calculation upon which the agency relies has significant mismeasurements or inaccuracies, and many of the agency’s explanations across its original rulemaking process, its briefings and its two responses to the court’s remand orders contradict one another,” Boasberg said.

Resolute Forest Products of Montreal, Canada, filed a lawsuit against the softwood lumber checkoff in 2014 seeking to void the program, stop the USDA from collecting funds and return the money that’s already been spent.

Although the judge has now ruled the checkoff program was “promulgated unlawfully,” the implications for the program’s future aren’t certain.

A hearing has been scheduled for June 1 “to discuss the appropriate next steps concerning the remedies sought by plaintiff.”
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MORE FOREST PESTS THAN EVER ARE ENTERING THE U.S., AND IT’S COSTING THE PUBLIC A FORTUNE

MORE FOREST PESTS THAN EVER ARE ENTERING THE U.S., AND IT’S COSTING THE PUBLIC A FORTUNE | Timberland Investment | Scoop.it

In the 20th century, chestnut blight and Dutch elm disease decimated billions of U.S. trees, in forests and along urban and suburban streets. The tree diseases, caused by invasive pests, effectively changed the face of one American city landscape after another—chestnut trees were virtually wiped out and elms diminished to but a few locations—and cost local governments and homeowners a fortune.

 

A paper published May 10 in the journal Ecological Applications illustrates how American homeowners today bear the brunt of the burden posed by current invasive forest pests. The emerald ash borer, hemlock woolly adelgid and others are costing Americans well over $2 billion dollars a year. Gary Lovett, a forest ecologist at the Cary Institute of Ecosystem Studies, based in Millbrook, New York, was inspired to pursue the study after realizing that in his field work he was coming across more and more hemlock and other Eastern U.S. trees that were dead or destroyed by forest pests.
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Lovett calls forest pests, present in all 50 states, the most pressing and underappreciated forest health issue today. Working with 15 other scientists to synthesize information found in previous scientific studies of invasive pests, Lovett found that, on average, 25 new pests become established in the country every decade. The scientists say efforts that exist to prevent new forest pests from entering the country are far too weak to keep up with escalating trade and an increased reliance on shipping containers—25 million enter the U.S. each year.

 

More than 90 percent of wood boring insects that have recently invaded the U.S. entered on wood packaging materials, mostly within shipping containers. And while the federal government does require that wood packaging material be treated to prevent pest importation and that plants are inspected upon entry to the U.S., there are simply too many shipments coming in each day to inspect everything.
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Lovett says we've been lucky not to have yet encountered an imported pest destructive to the Southeast’s loblolly pine or the Northwest’s Douglas fir, two of the country’s most commercially important trees. He estimates the economic damages would then be far greater than they already are.

 

However, the stakes are already higher than most people realize. Forest pests are the only threat that can decimate an entire tree species within just decades, as they did the American elm and chestnut.

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China Aims to Increase the Volume of Timber Imports from the U.S. Despite Stagnant Economy

China Aims to Increase the Volume of Timber Imports from the U.S. Despite Stagnant Economy | Timberland Investment | Scoop.it
Despite the currenteconomic stagnation, China plans to significantly increase the volume of timber imports from the U.S. during the next several years, according to recent statements by a spokesman of the Chinese Ministry of Forestry and Natural Resources.
This will be due primarily to several factors: modification of the Chinese export/import policy with regard to timber; a significant decline of further imports from tropical countries; and the recently announced plans of the Chinese government to have more than 30 percent of the buildings in the country environmentally-friendly by 2020.
At present, China consumes more than 169 billion board feet of timber annually, and it is predicted that these figures will remain at least the same level, despite the country’s economic downturn.
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