Pacific Northwest Woodchip Market

Pacific Northwest Woodchip MarketMay 2008

Building a New BoiseNet

Boise | Building a New BoiseNetPage *

The Northwest Being Discussed

WashingtonOregonIdahoNo. CaliforniaW. MontanaPacific Northwest Woodchip Market



Who are the players in the Pulp & Paper sector?How much of what do they consume?What does the fiber balance look like?Pacific Northwest Woodchip Market



NW Softwood Chip Demand: 2008 Estimate - MBDU/YearPuget SoundKimberly Clark Everett 250Nippon Port Angeles 60Port Townsend P.T. 400Simpson Tacoma 540Evergreen Cosmopolis 300Export to B.C. 740 *Import From B.C.( 100) 2,190

Lower Columbia RiverBlue Heron Oregon City 70Boise St. Helens 300GP Camas 210GP - Wauna 300Longview Fiber 940SP News Newberg 180Weyco/Norpac Longview 1,170 3,170

* EstimateInlandBoise Wallula 510Inland Spokane 100Ponderay USK 180Potlatch - Lewiston 720Smurfit Missoula 620Export to B.C. 250 *Import From B.C.( 40) 2,340

Willamette Valley / No. Calif.Evergreen - Samoa 480GP Toledo 500Pope & Talbot 180International Paper - Albany 360International Paper - Springfield 500Export to Japan 6202,640

Pacific Northwest Woodchip Market



NW Hardwood & Sawdust Demand: 2008 Estimate MBDU/Year Puget Sound Hardwood (Chips & Sawdust) Sawdust (Softwood)Kimberly Clark 70 --Port Townsend -- 40 70 40 Lower Columbia RiverBlue Heron 20 --Boise 260 --GP Camas 180 50GP Wauna 110 150Longview Fiber 90 30Weyerhaeuser 50 -- 710 230 Willamette ValleyGP Toledo 100 --Pope & Talbot -- 180Export to Japan 30 -- 130 180 Inland Boise 60 80Potlatch -- 320 60 400Pacific Northwest Woodchip Market



NW Supply/Demand Estimate 2008 (MMBDU)Pacific Northwest Woodchip Market



NW Fiber Principal Woodchip Market DriversWhat are the key drivers of the woodchip market in this region?Housing StartsLumber Production Rates/Product Pricing/Log CostsPulpmill Operating Rates/Pulp & Paper PricesTransportation/Diesel CostsPulpwood availabilityResource constraintsPacific Northwest Woodchip Market



U.S. Housing Starts: Annual RatesPacific Northwest Woodchip Market



Western Lumber Production 1988 to DatePacific Northwest Woodchip Market



Western Lumber Production By Region 1989 to DatePacific Northwest Woodchip Market



Pacific Northwest Woodchip MarketBone dry units of chips produced per MBF lumber production



Green DF 2X4 Standard & Better: Nominal Sales Price 1988 to DatePacific Northwest Woodchip Market



Green DF 2X4 Lumber Price Portland: 2005 to DatePacific Northwest Woodchip Market



Pulp prices:NBSK up 15%NBHK up 18%Paper prices:Newsprint down 5%All uncoated, coated white papers up 2 17%Liner, medium, kraft, boxboard, etc. up 4 12%Pacific Northwest Woodchip MarketPulp and Paper Prices Year Over Year (Feb, 2008)



Western US Pulp Mill Operating Rates: 2006 to DatePacific Northwest Woodchip Market



West Coast No. 2 Retail Diesel Price HistoryPacific Northwest Woodchip Market


Chart1

2.019

2.259

2.462

2.557

2.413

2.382

2.513

2.821

3.051

3.122

2.707

2.517

2.582

2.621

2.712

2.868

3.161

3.123

3.056

3.199

3.061

2.674

2.691

2.884

2.762

2.768

2.806

2.933

2.929

2.954

3.022

3.014

3.002

3.241

3.572

3.45

3.471

3.42

3.327

3.301

3.325

3.347

3.454

3.609

3.736

3.885

4.018

4.056

4.049

4.052

4.176

4.255

4.312

4.303

4.454

4.61

4.883

$/gallon

West Coast No. 2 Diesel - Retail

Sheet1

West Coast No. 2 Diesel Retail

January-052.019

February-052.259

March-052.462

April-052.557

May-052.413

June-052.382

July-052.513

August-052.821

September-053.051

October-053.122

November-052.707

December-052.517

January-062.582

February-062.621

March-062.712

April-062.868

May-063.161

June-063.123

July-063.056

August-063.199

September-063.061

October-062.674

November-062.691

December-062.884

January-072.762

February-072.768

March-072.806

April-072.933

May-072.929

June-072.954

July-073.022

August-073.014

September-073.002

October-073.241

November-073.572

December-073.450

07-Jan-083.471

14-Jan-083.420

21-Jan-083.327

28-Jan-083.301

04-Feb-083.325

11-Feb-083.347

18-Feb-083.454

25-Feb-083.609

03-Mar-083.736

10-Mar-083.885

17-Mar-084.018

24-Mar-084.056

31-Mar-084.049

07-Apr-084.052

14-Apr-084.176

21-Apr-084.255

28-Apr-084.312

05-May-084.303

12-May-084.454

19-May-084.610

26-May-084.883


A few comments about transportation costs, pulpwood availability, and resource constraints:Companies are having difficulty in managing costs in light of escalating fuel pricing.The Pacific Northwest is not a pulpwood economy the current scenario is not sustainable.Resource constraints will continue to be an issue for providing economic wood fiber (particularly hardwood) for the pulp and paper industry.Pacific Northwest Woodchip Market



In light of the fiber balance and the key drivers:Where have we come from and what do things look like at this point in time?Pacific Northwest Woodchip Market



Softwood & Hardwood Woodchip Receipts: MBDT per Day 2006 to DatePacific Northwest Woodchip Market



Softwood Receipts: Residuals MBDT per Day 2006 to DatePacific Northwest Woodchip Market



Softwood Receipts: Whole Log Chip Percentage 2006 to DatePacific Northwest Woodchip Market



PNW Pulpwood Price HistoryPacific Northwest Woodchip Market


Pulpwood

2625

2625

2425

2424

2624

2624

2728

2726

2930

2930

3731

4338

4140

3540

3042

3141

4142

Source: Wood Resources International, LLC

SW PW-LCR

HW PW-LCR

US$/Green Ton

PNW Pulpwood Price HistoryLower Columbia River

Woodchips

83103105.25

84103105.25

84103105.25

84102105.25

84102106

84104107

85104110.25

87104110.25

91106110.25

95109110.25

107121117.5

142.5150133

167.5160151

141150167.5

116160157.5

117162147.5

159164165


DF-LCR

HW-LCR

EXPORT

US$/BDU DELIVERED or FOB VESSEL

PNW Woodchip Price HistoryLower Columbia River & Export

Sheet1

Woodchip Price History - Lower Columbia River

US$/BDU DeliveredUS$/BDU FOBUS$/GT

DF-LCRHW-LCREXPORTSW PW-LCRHW PW-LCR

1Q04$83.00$103.00$105.25$26.00$25.00

2Q04$84.00$103.00$105.25$26.00$25.00

3Q04$84.00$103.00$105.25$24.00$25.00

4Q04$84.00$102.00$105.25$24.00$24.00

1Q05$84.00$102.00$106.00$26.00$24.00

2Q05$84.00$104.00$107.00$26.00$24.00

3Q05$85.00$104.00$110.25$27.00$28.00

4Q05$87.00$104.00$110.25$27.00$26.00

1Q06$91.00$106.00$110.25$29.00$30.00

2Q06$95.00$109.00$110.25$29.00$30.00

3Q06$107.00$121.00$117.50$37.00$31.00

4Q06$142.50$150.00$133.00$43.00$38.00

1Q07$167.50$160.00$151.00$41.00$40.00

2Q07$141.00$150.00$167.50$35.00$40.00

3Q07$116.00$160.00$157.50$30.00$42.00

4Q07$117.00$162.00$147.50$31.00$41.00

1Q08$159.00$164.00$165.00$41.00$42.00


PNW Woodchip Price HistoryPacific Northwest Woodchip Market


Pulpwood

2625

2625

2425

2424

2624

2624

2728

2726

2930

2930

3731

4338

4140

3540

3042

3141

4142


SW PW-LCR

HW PW-LCR

US$/Green Ton

PNW Pulpwood Price HistoryLower Columbia River

Woodchips

83103105.25

84103105.25

84103105.25

84102105.25

84102106

84104107

85104110.25

87104110.25

91106110.25

95109110.25

107121117.5

142.5150133

167.5160151

141150167.5

116160157.5

117162147.5

159164165


DF-LCR

HW-LCR

EXPORT

US$/BDU DELIVERED or FOB VESSEL

PNW Woodchip Price HistoryLower Columbia River & Export

Sheet1

Woodchip Price History - Lower Columbia River

US$/BDU DeliveredUS$/BDU FOBUS$/GT

DF-LCRHW-LCREXPORTSW PW-LCRHW PW-LCR

1Q04$83.00$103.00$105.25$26.00$25.00

2Q04$84.00$103.00$105.25$26.00$25.00

3Q04$84.00$103.00$105.25$24.00$25.00

4Q04$84.00$102.00$105.25$24.00$24.00

1Q05$84.00$102.00$106.00$26.00$24.00

2Q05$84.00$104.00$107.00$26.00$24.00

3Q05$85.00$104.00$110.25$27.00$28.00

4Q05$87.00$104.00$110.25$27.00$26.00

1Q06$91.00$106.00$110.25$29.00$30.00

2Q06$95.00$109.00$110.25$29.00$30.00

3Q06$107.00$121.00$117.50$37.00$31.00

4Q06$142.50$150.00$133.00$43.00$38.00

1Q07$167.50$160.00$151.00$41.00$40.00

2Q07$141.00$150.00$167.50$35.00$40.00

3Q07$116.00$160.00$157.50$30.00$42.00

4Q07$117.00$162.00$147.50$31.00$41.00

1Q08$159.00$164.00$165.00$41.00$42.00


Woodchip Inventory and ConsumptionPacific Northwest Woodchip Market


Chart1

323.64101.5109.2659.78961.3953.1

301.27101.0477.6756.46909.1666.1

255.3389.0960.6459889.2146.6

273.0683.1762.7373.97905.9253.2

286.8887.4573.9186.8844.1238.5

386.7135.2797.76110.67842.4143

403.04178.9697.8179.05798.2847.22

428.24187.9495.6997.7856.7646.91

543.05240.978.33149.62766.2974.2

605.17274.0489.59168.86781.0172.68

696.92362.19101.12165.51794.7568.1

715.79383.46116.5140.44828.475.4

828.83434.56122.64184.07833.3987.57

903.41467.62125.81215.85843.4394.13

906.45478.8110.33216.2859.06101.11

898.8473.5694.66221.21891.61108.67

821.79427.1584.65211.25829.1398.73

838.54389.9281.03245.24831.34122.34

753.35344.7262.67241.21856.27104.75

551.93232.1747.38187.11868.8285.27

540.79183.22115.9165.92902.2475.75

596.55197.78123.66168.42757.35106.69

623.84229.29140.81147.28865.49106.46

769.89359.84155.12134.42819.92120.51

2006

2007

2008

Total Inventory

Lower Columbia River

Greater Willamette Valley

East of Cascades

Consumption

Puget Sound

Thousand Bone Dry Tons

Graph

WESTERN MONTHLY FIBER SUMMARY

*APRIL 2008*

Forest Resources Association

1825 Leslie Road #136, Richland, Washington 99352

Phone: (509) 396-2478 FAX: (509) 396-2481 E-mail: [email protected]

2007 TOTAL CONSUMPTION: 9,983.47 (Thousand Bone Dry Tons)

2006 TOTAL CONSUMPTION: 10,553,80 (Thousand Bone Dry Tons)2008 data based on2008 YTD CONSUMPTION:3,345.00(Thousand Bone Dry Tons)

2005 TOTAL CONSUMPTION: 10,979.95 (Thousand Bone Dry Tons)22 mills in reporting2007 COMPARATIVE TOTAL:3,170.45(Thousand Bone Dry Tons)

2004 TOTAL CONSUMPTION: 10, 832.87 (Thousand Bone Dry Tons)region (19 providingPercent Change:5.22%

2003 TOTAL CONSUMPTION: 10, 739.90 (Thousand Bone Dry Tons)actual data, 3 are estimated)

&CPage 1 of 4

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0

-174.55

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#REF!

#REF!

#REF!

1998 WESTERN MONTHLY FIBER SUMMARY

Data


*APRIL 2008*

Forest Resources Association, Inc.

(Thousand Bone Dry Tons)ReceiptsConsumptionInventory*Adjustments**

Lower Columbia393.93310.66359.84-47.87

Greater Willamette Valley198.04179.65155.124.08

Puget Sound134.15125.06120.51-4.96

East of the Cascades216.02204.55134.4224.33

TOTAL WESTERN:942.14819.92769.89-24.42

Westwide

Receipts - Domestic:Softwood Whole-log Chips355.10

Softwood Residual Chips500.70

Hardwood Whole-log Chips49.04

Hardwood Residual Chips27.48

Receipts- Import:9.82

TOTAL RECEIPTS:942.14

Consumption:Softwood Chips748.94

Hardwood Chips70.98

TOTAL CHIP CONSUMPTION:819.92

Sawdust65.10Adjustments**

Inventory - Month End:Softwood Chips522.31-1.25

Hardwood Chips29.62-8.97

Pulp Logs217.96-14.20Days Of Use***

TOTAL MONTH END INVENTORY:769.89-24.4228.40

Westwide Chip Consumption:BudgetedActual

Total (Monthly)Chip/Sawdust/Shavings% of TotalChip Only% of Total

Budgeted Consumption, 2008 ****942.45885.0293.91%819.9287.00%

*As reported by 19 mills, estimated for 3 mills

**Calculated inventory variance; i.e. beginning inventory + receipts - consumption

***Total Month End Inventory expressed as "days of use", based upon rolling three months average consumption

**** based on 22 mills in reporting region, consumption of chips, sawdust, & shavings


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Total Inventory

Lower Columbia River

Greater Willamette Valley

East of Cascades

Consumption

Puget Sound


MAY

MAY

MAY

MAY

MAY

MAY

JUN

JUN

JUN

JUN

JUN

JUN

JUL

JUL

JUL

JUL

JUL

JUL

AUG

AUG

AUG

AUG

AUG

AUG

SEP

SEP

SEP

SEP

SEP

SEP

OCT

OCT

OCT

OCT

OCT

OCT

NOV

NOV

NOV

NOV

NOV

NOV

DEC

DEC

DEC

DEC

DEC

DEC

JAN

JAN

JAN

JAN

JAN

JAN

FEB

FEB

FEB

FEB

FEB

FEB

MAR

MAR

MAR

MAR

MAR

MAR

APR

APR

APR

APR

APR

APR

MAY

MAY

MAY

MAY

MAY

MAY

JUN

JUN

JUN

JUN

JUN

JUN

JUL

JUL

JUL

JUL

JUL

JUL

AUG

AUG

AUG

AUG

AUG

AUG

SEP

SEP

SEP

SEP

SEP

SEP

OCT

OCT

OCT

OCT

OCT

OCT

NOV

NOV

NOV

NOV

NOV

NOV

DEC

DEC

DEC

DEC

DEC

DEC

JAN

JAN

JAN

JAN

JAN

JAN

FEB

FEB

FEB

FEB

FEB

FEB

MAR

MAR

MAR

MAR

MAR

MAR

APR

APR

APR

APR

APR

APR

323.64

101.5

109.26

59.78

961.39

53.1

301.27

101.04

77.67

56.46

909.16

66.1

255.33

89.09

60.64

59

889.21

46.6

273.06

83.17

62.73

73.97

905.92

53.2

286.88

87.45

73.91

86.8

844.12

38.5

386.7

135.27

97.76

110.67

842.41

43

403.04

178.96

97.81

79.05

798.28

47.22

428.24

187.94

95.69

97.7

856.76

46.91

543.05

240.9

78.33

149.62

766.29

74.2

605.17

274.04

89.59

168.86

781.01

72.68

696.92

362.19

101.12

165.51

794.75

68.1

715.79

383.46

116.5

140.44

828.4

75.4

828.83

434.56

122.64

184.07

833.39

87.57

903.41

467.62

125.81

215.85

843.43

94.13

906.45

478.8

110.33

216.2

859.06

101.11

898.8

473.56

94.66

221.21

891.61

108.67

821.79

427.15

84.65

211.25

829.13

98.73

838.54

389.92

81.03

245.24

831.34

122.34

753.35

344.72

62.67

241.21

856.27

104.75

551.93

232.17

47.38

187.11

868.82

85.27

540.79

183.22

115.9

165.92

902.24

75.75

596.55

197.78

123.66

168.42

757.35

106.69

623.84

229.29

140.81

147.28

865.49

106.46

769.89

359.84

155.12

134.42

819.92

120.51

2006

2007

2008

&CPage 2 of 4

Statistics

WESTERN MONTHLY FIBER SUMMARY - STATISTICAL ROUNDUP

*APRIL 2008*

Forest Resources Association, Inc.

Period:18-Apr-08NBSK (Market Pulp):$880m. ton(Note: Delivered price in U.S. $, eastern U.S.)

18-Apr-0830# West Coast News:$660m. ton

18-Apr-0842# West Coast Liner:$620sh. ton(discounts noted to $570)

18-Apr-0820# Forms Bond:$980sh. ton

Period:11-Apr-08ONP #8(Deink news)$140 - $160sh. ton(FOB seller's dock San Francisco- Los Angeles)

11-Apr-08OCC #11:$160 - $175sh. ton

11-Apr-08DLK #13$190 - $195sh. ton

Week EndingFraming Lumber Composite:$270(Prices per thousand board feet)

2-May-082X4 S&B Green Doug Fir PDX:$258

2X4 S&B KD Western SPF:$216

April AverageWWPA Western Region

(5weeks)Weekly Lumber Production:264,082Thousand Board Feet

Previous month's weekly average250,873"

MarchNational Housing Starts:0.947Million Units (seasonally adjusted annual rate)

Previous month(Source: U.S. Dept. of Commerce)1.065"

&CPage 3 of 4

Statistics

840690675575

840720675575

840750675575

890750675575

890770675575

890770670575

880770665575

880770660575

880790640575

870790630575

870790625575

870810620560

870810600575

870810585575

870830580575

870830570620

870850565620

910850560620

920850570620

920870585620

920880600620

920880620620

940880640620

980880660620

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2006

2007

2008

20# Form

NBSK

#30 WC News

42# WC liner

KEY PULP AND PAPER MARKET INDICATORS

BC Southern Interior

707595

7090110

70100120

75100115

8090110

8085110

8080100

8590110

95100115

105115130

120145145

115125145

110115145

110115145

115135160

110135160

110135160

120145160

120145155

125135155

125135155

135165185

140175190

140160190

Source: Pulp & Paper Week

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FL COMPOSITE

2X4 S&B GRN DF PDX

2X4 S&B KD WESTERN SPF

KEY LUMBER MARKET INDICATORS

MAY

MAY

MAY

JUN

JUN

JUN

JUL

JUL

JUL

AUG

AUG

AUG

SEP

SEP

SEP

OCT

OCT

OCT

NOV

NOV

NOV

DEC

DEC

DEC

JAN

JAN

JAN

FEB

FEB

FEB

MAR

MAR

MAR

APR

APR

APR

MAY

MAY

MAY

JUN

JUN

JUN

JUL

JUL

JUL

AUG

AUG

AUG

SEP

SEP

SEP

OCT

OCT

OCT

NOV

NOV

NOV

DEC

DEC

DEC

JAN

JAN

JAN

FEB

FEB

FEB

MAR

MAR

MAR

APR

APR

APR

325

287

291

326

310

296

302

278

277

304

252

278

274

200

240

280

220

226

278

240

240

296

250

260

282

265

236

290

250

255

274

238

231

288

243

230

295

242

268

311

262

285

289

245

249

285

237

253

271

202

227

254

172

220

270

178

237

264

167

217

238

162

184

243

178

194

238

208

197

270

258

216

2006

2007

Source: Pulp & Paper Week

2008

ONP#8

OCC#11

DLK #13

KEY RECOVERED FIBER MARKET INDICATORS

Forest Resources Association


*APRIL 2008*Southern Interior1825 Leslie Road #136, Richland, Washington 99352

British ColumbiaPhone: (509) 396-2478 FAX: (509) 396-2481

E-mail: [email protected]

Chip Conversion FactorsReported Volumes in Thousand BDT's

1 Bone Dry Ton = .833 Bone Dry Unit; (1 BDU = 1.2 BDT)Softwood Whole-log Chips53.18

1 Oven Dry Metric Tonne = 1.1023 BDT; (1BDT = .9072 ODMT)Softwood Residual Chips157.90

1 ODMT = .9186 BDU; (1 BDU = 1.08864 ODMT)TOTAL RECEIPTS:211.8

Softwood Chips166.06

Log Conversion FactorsTOTAL CHIP CONSUMPTION:166.06Adjustments**Calculated inventory variance:

I metric tonne = 1000 kilograms; 2204.5855 pounds;Softwood Chips172.83-12.26i.e. beginning inventory

I cubic metre (m3) = 35.31 Cubic foot; 1 Cu ft = .0283 m3)Pulp Logs116.2326.21plus receipts

Cubic Metres to Tons of Logs is moisture, seasonal, and species sensitiveTOTAL MONTH END INVENTORY:289.0613.95minus consumption

2006

2007

Source: Random Lengths

2008

&CPage 4 of 4

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#REF!

#REF!

#REF!

1998 WESTERN MONTHLY FIBER SUMMARY

0.9071940488

0.8928571429

0.8836264028

0.9022013713

0.8975049363

0.8919015341

0.8816009874

0.8573388203

0.8456659619

0.8611039352

0.8651267411

0.8953353031

0.9316191541

0.9440196356

0.937470704

0.9425959091

1.0071507705

1.0474494606

1.0101010101

1.0183299389

1.0030090271

1.0216591745

0.977326036

0.9866798224


2006

2007

2008

2006

2007

2008

Cdn Dollar

Japanese Yen (in 100s)

Chinese Yuan (in tens)

Australia Dollar

Chilean Peso (in 1000s)

Euro

Ratio

Exchange Rates per US Dollar

May

May

May

May

May

May

June

June

June

June

June

June

July

July

July

July

July

July

Aug

Aug

Aug

Aug

Aug

Aug

Sept

Sept

Sept

Sept

Sept

Sept

Oct

Oct

Oct

Oct

Oct

Oct

Nov

Nov

Nov

Nov

Nov

Nov

Dec

Dec

Dec

Dec

Dec

Dec

Jan

Jan

Jan

Jan

Jan

Jan

Feb

Feb

Feb

Feb

Feb

Feb

March

March

March

March

March

March

April

April

April

April

April

April

May

May

May

May

May

May

June

June

June

June

June

June

July

July

July

July

July

July

Aug

Aug

Aug

Aug

Aug

Aug

Sept

Sept

Sept

Sept

Sept

Sept

Oct

Oct

Oct

Oct

Oct

Oct

Nov

Nov

Nov

Nov

Nov

Nov

Dec

Dec

Dec

Dec

Dec

Dec

Jan

Jan

Jan

Jan

Jan

Jan

Feb

Feb

Feb

Feb

Feb

Feb

March

March

March

March

March

March

April

April

April

April

April

April

1.1023

1.1217

0.8041

1.3136

0.5355

0.7798

1.12

1.1632

0.8007

1.37

0.5733

0.7969

1.1317

1.14658

0.7981

1.3034

0.56244

0.7838

1.1084

1.16937

0.79691

1.3101

0.554176

0.7795

1.1142

1.1793

0.79168

1.3394

0.537789

0.7883

1.1212

1.1745

0.78874

1.3008

0.52595

0.786

1.1343

1.16078

0.78466

1.2768

0.529355

0.759

1.1664

1.1911

0.78175

1.2685

0.5326

0.758

1.1825

1.2177

0.7786

1.2949

0.5447

0.7716

1.1613

1.1978

0.7752

1.2611

0.536

0.7573

1.1559

1.17928

0.77409

1.238

0.53928

0.75

1.1169

1.1967

0.7732

1.2056

0.5275

0.7327

1.0734

1.2159

0.76564

1.2204

0.52717

0.7442

1.0593

1.2332

0.76248

1.1784

0.5278

0.7422

1.0667

1.18525

0.75772

1.1752

0.52425

0.7324

1.0609

1.1573

0.75558

1.2234

0.5245

0.7328

0.9929

1.1491

0.75176

1.1269

0.5112

0.701

0.9547

1.1466

0.7482

1.0877

0.4945

0.694

0.99

1.0998

0.7392

1.1319

0.5134

0.6761

0.982

1.1235

0.7314

1.1419

0.4977

0.6794

0.997

1.0698

0.7202

1.1254

0.4646

0.6765

0.9788

1.0618

0.7123

1.0606

0.4584

0.6611

1.0232

0.9929

0.7022

1.0908

0.44

0.6333

1.0135

1.0406

0.6996

1.0697

0.456

0.6407

2006

2007

2008

Canadian Dollar in %

Percent

Canadian Dollar as a Percentage of US Dollar, (end of each month)

199.41231.62

226.62213.4

228.58169.24

232.13146.87

224.26161.12

208.18177.63

182.7188.21

216.65160

222.86146.64

192.39169.72

227.11174.44

204.74202.31

174.6266.97

207.88299.29

217.76290.41

235.7297.39

219.1347.03

223.9310.41

214.88284.02

233.69228.86

215.11226.7

212.13244.02

206.79257.99

166.06289.06

2006

2007

2008

Consumption

Ending Inventory


MBD0045F6C4.psd


Pacific Northwest Woodchip MarketNW Pulp Mills: Days of Inventory



NW Fiber Future Supply/Demand and Cost DriversHousing starts: Doldrums continue with current annual rate of 940K no end in sight; oversupply of existing and new homes; Heaven in 2011Pulp & Paper: Forecasts show weakening in markets in late 2008 and 2009; operating rates will not vary widely from current except if major recession is at hand; who will survive the cost crunch?Residual chips: Lumber production rates (housing starts); technology enhancements create higher recovery rates, lower chip outputs; super-mills; log costs need to align with product pricing; forest management/timber harvest politicsPulpwood availability/cost: Cyclical through the operating season; demands will remain high through 2009; competition with low value sawlogs; thank God for blowdownDiesel cost who knows? $7.00/gallon?Export chip volume: Can the Japanese continue to consume chips at delivered prices in excess of $240/BDU?; exchange rate impacts?Alder supply: Resource dwindles further over time; demand increases; planting programsCompeting uses: Board plants; pellet mills; cellulosic ethanol; biofuelsWood products business adaptations: Mill closures/consolidation of non-integrated mills; professional sellersPacific Northwest Woodchip Market



Hardwood ConsiderationsCurrent chip prices are high paper margins low drivers are haul costs, resource availability, softwood lumber business doldrums, blowdown species distributionHardwood demand long term no changeLumber markets will remain strong over time (product shifts)Wood chip usage by pulp mills will remain at current levels as mills continue to make value-added products that demand hardwood contentNo new sawmill residuals in short term (Independence, OR)Whole log chips will comprise +70% of the marketLog prices pulpwood value will remain higher than SW, lumber will vary with market demandsResource constraints will continueTotal growing stock will decline in next decade by +10% mainly in conifer/mixed conifer stands (mostly in smaller size classes)Land ownership changes of concern (TIMOs, REITs, etc; conversion to other uses)Total harvest levels will probably continue at the current levels for the next five to ten years10+ years - current harvest level not sustainable without intensive management of alder (10-15K acres planted annually?) currently disproportionate to conifer standsPacific Northwest Woodchip Market


Documents

Pacific Northwest Woodchip Market