Top Ten Questions for 2014

On this New Year’s Eve, here are the Top Ten Questions that Harderblog will be watching in 2014, in search of answers:

  1. Is there a real shortage of fibre supply looming?
  2. Is B.C. doing enough to restore/replant forest that was degraded/destroyed by the Mountain Pine Beetle?
  3. Is the northern pipeline a relevant issue of interest to forestry in this province?
  4. Will Canadian Softwood lumber shipments to the United States be ‘duty-free’ for all twelve months in 2014?
  5. Is there a housing bubble developing in Canada?
  6. Will U.S. housing starts reach 1.25 million in 2014?
  7. What does the emerging Super Cycle mean to lumber distributors in North America?
  8. Who benefits from lumber and log exports to China?
  9. Is the gap likely to narrow between Lulongo’s income in 2014 and the average lumber trader’s income?
  10. Will West Fraser and Canfor ship enough wood to China in the New Year to renovate the Great Wall?

………. I invite your comments, suggestions, and input!

~Sawdust~

Vancouver’s Orpheum Theatre holds 2,780 people. This blog was viewed over 14,000 times in 2013. If it were a concert at The Orpheum, it would take about five sold-out performances for that many people to see it; the audiences would include people from 103 different countries. In 2013, there were 177 new posts, growing the total archive of Harderblog to 574 posts. There were 326 images uploaded, taking up a total of 719 MB. That’s about six pictures per week. The busiest day of the year was June 14th with 334 views. The most popular post that day was 33rd Annual BCWLA Lumberman of the Year Roast. Happy New Year!
(Hat Tip: WordPress.com)

2014 Market Outlook

There were a couple of interesting interviews over the holidays on the Business News Network (BNN). The video clip of West Fraser CEO Ted Seraphim’s December 24th interview is available here. CIBC’s Mark Kennedy was interviewed on the same day here. The prevailing themes in their lumber market outlooks for 2014:

  1. The U.S. housing market recovery will continue. “We’re still early in the recovery,” says Seraphim. Mark Kennedy remains very bullish, but alludes to some market “headwinds” due to Fed tapering and higher mortgage rates. His forecast has housing starts climbing to 1.130 million next year.. which Mark notes is still “25% below the norm of 1.5 million.”
  2. Demand from Asia will remain strong. In the face of China’s fibre deficit, Kennedy projects that China’s record 2013 imports of both logs (+18%) and lumber (+17%) will grow another 5-10% next year. Seraphim notes West Fraser is “very confident of the future (growth) in China.”

Mark Kennedy projects that lumber prices will average $400/M next year, up from $350-355 this year. There are some noteworthy quotes from Ted Seraphim concerning mid-term timber supply. He defines the medium term as “not five years, but 10, 20, 30 years.” He considers the Mountain Pine Beetle epidemic “over” and predicts that B.C. mills will complete their shift “entirely from MPB-killed wood to green wood” within the next 5 to 7 years. “The industry is smaller today and it’s going to be smaller tomorrow in British Columbia.” In the face of shrinking timber supply in B.C., we’re told that West Fraser has grown their footprint in Alberta and the U.S. South. Regarding West Fraser’s 14 Pine mills in the U.S. South, Seraphim confirms this is “one of the few regions in North America where the timber base is growing.”

Seasonal Endings

As the year comes to a close, developments in B.C. woods may have some observers scratching their heads with bewildering questions. In a comprehensive report over the weekend in The Vancouver Sun here, the following statement stands out: “Profitable companies are closing mills in the midst of an industry recovery.”

On the one hand in the report, we’re told there’s “reason for optimism in B.C.’s forest sector”. Says James Gorman, CEO at COFI: “Everyone is glad to have 2009 behind us. We’re seeing production numbers improve, pricing improve, demand improve and we’re moving in the right direction.” On the other hand, we’re reminded that 433 jobs will be eliminated due to the permanent mill closures in Quesnel and Houston. The pine beetle has “gutted” their timber supplies. “There is simply not enough fibre remaining in the Quesnel area” explained Canfor CEO Don Kayne when the closures were announced back in October. Added Forest Minister Steve Thomson, from China: “There will probably be some further (mill closures).”

In conjunction with the two mill closures, we’re also told that a “timber swap” between Canfor and West Fraser is still awaiting approval by regulators. The mayor of Houston outlines his concerns as to how such a deal would impact the community. Thomson meanwhile, points to “policy tools that provide for full utilization (of timber).. building the bio-energy sector and making sure we get the best value.” The report also touches on the acknowledged shortfalls in replanting.

The story concludes by noting that the global industry has long been anticipating B.C.’s shrinking fibre supply. Hakan Ekstrom, a consultant at Wood Resources International, quite matter of factly confirms that “lumber prices over the next year or two will go up, and it’s good to start getting into the (U.S.) market and get market share (as supply conditions) line up.”

Growing an overall healthy forest resource pie that benefits all holds opportunities and challenges. Competing forces shaping supply and demand will continue to lend complexities to realities of our lumber business going forward.

~Sawdust~

MM CoverSome lumbermen become authors in their retirement!
While my dad likes to say that his book “was written for the family, relatives, and a few friends,” the hard copy quickly sold out – an indication of wider interest.
The Kindle Edition of Mostly Mennonite, Ernie Harder’s memoir of his parents, is now available at Amazon here.

Winter Snow


Photo Credits: Stan Harder – this afternoon, Abbotsford, B.C.

Winter Snow

Winter snow can be at once soothing or terrifying. It can depend on where it finds you; or, whether or not you own a warm coat. Your feelings may be influenced by the nature of the snowfall, or plans for skiing, or driving in it.
When you hear mostly wheels spinning, snow calls for a new definition of progress, or a shovel. Canada’s economic, political winterscape of record bankruptcies and constitutional crisis suggests we’re in deep – snow that is.

Globally, the revolution we’re experiencing in the organization of human affairs is like the howling blizzard. It transcends recession. It disregards national or international boundaries. It commands the strongest sense of urgency to adapt resources for personal and corporate direction. In a whiteout the best knowledge, instrumentation, experience and courage are all critical to survival. Nature – even frozen – is in pain. In every snowdrift – confusion. Humankind is affecting change at rates that outstrip our ability to adapt.

The child in us is awed by snow when it falls – fresh, lazy, fluffy flakes – late at night. All is calm – with built-in promise of enchantment at dawn. All is bright. Then, unsightly backyard corners and alleways – even surplus, stained lumber piles – are transfigured. Snowflakes – in quiet concert, transforming instruments of harmony – affording wholeness and peace to life itself. This is the snow of Christmas: How soft; how silently, how silently.. it melts.. the heart.

– Ernie Harder (Dec. 1991)

Picking the Perfect Christmas Tree

Whoever said it was easy? Picking out the ‘right’ Christmas tree, that is. Traditionally, when I was growing up it usually came down to whether or not Mom agreed with the selection. In fact one now-retired lumber wholesaler (who shall go unnamed) in years past was known to have once even returned the carefully selected family tree to the lot, because it failed to pass re-inspection upon delivery at home.

Some tips on picking the right tree from Reader’s Digest are worth noting here. Good Housekeeping meanwhile, leans toward the green variety: “Most Christmas trees are now raised on established farms, meaning deforestation isn’t an issue, but they must be shipped, often from long distances. They do require pesticides and fueled vehicles to maintain, and may end up taking up space in landfills. Most artificial Christmas trees are made in China, typically from oil-derived, pollution-releasing polyvinyl chloride (PVC). A number have been found to contain lead. Once finally disposed of, artificial trees will last for centuries in landfills. These days, roughly 70% of Americans choose artificial.”

Here in Vancouver, it was shocking to discover that real trees are illegal in many downtown condo buildings. Just this week, some nervous tenants were seen smuggling very suspicious-looking large garbage bagged shapes with the unmistakable aroma of fresh green Fir.

“Never worry about the size of your Christmas tree. In the eyes of children, they are all 30 feet tall.”
– Larry Wilde

photo-001

A fine Fraser Fir stands ready..

Starts

This morning, Mark Kennedy, CIBC Equity Research, added meaning to the promising U.S. housing starts data as follows: “If we start 2014 with housing starts at or near 1.1 million – then our estimate for 2014 of 1,130,000 starts could begin to look very conservative. We will wait and see. The encouraging news is the big uptick in November starts to nearly 1.1 million. Within this number, single family starts jumped a significant 21% from 602,000 in October 2013 to 727,000 in November 2013. This uptick in single family is good for lumber consumption – every 100,000 single family homes represents about 1.6 billion FBM of lumber demand.”

“Housing has started to recover, but we are still very much in the early stages. While the exact shape of the recovery is difficult to predict, there’s really no disagreement that the overall direction is up. We believe housing will be very positive going forward.” (Bloomberg)
– Patty Bedient, CFO Weyerhaeuser Co. – Dec 17.

Very Cool Yule Logs

logs
This image arrived by way of a series of forwarded emails. I have so far been unable to verify the original source for credit and date taken. Perhaps someone can confirm those details? The subject line was Roseburg Log Yard. (Hat Tip: Tom Davis)
Updated (12/17): 
A comment at this post led to Eileen Burmeister, Communication Director at Roseburg Forest Products. Eileen confirms the photo was taken last week by a team member in their Dillard (Oregon) Sawmill log yard. It is posted here with permission.