Southern Yellow Pine “Design Values”: Likely Impacts of Changes are Overstated

23 02 2012

Amanda Lang recently presented an overview of timber markets and wood bioenergy demand at the Southeastern Society of American Foresters Meeting at Jekyll Island, Georgia.  Here is an excerpt specific to the topic of Southern Yellow Pine “Design Values”:

The Southern Pine Inspection Bureau (SPIB) recently issued new design values effective June 1, 2012. We have fielded multiple questions from clients regarding the new design values and the potential effects on Southern pine sawtimber markets. Here is our take on the situation and potential effects.

The situation: The changes only apply to visually graded Southern Yellow Pine lumber in No. 2 and lower grades for 2×2’s through 4×4’s. The new design values are 20-35% lower than previous values for four strength properties. This means that, at a high level, 2x2s through 4x4s produced from Southern Pine visually graded lumber are not rated as strong as they were previously. Design values for other grades will remain the same pending 2012 testing.

Potential effects: It is our view that the overall market effect will be minimal. We do not foresee substantive changes to the overall prices or market demand for Southern pine sawtimber, although we could see some changes in the types of lumber produced. Building designers/mill customers will ultimately dictate these effects. We see some shifting from visual graded lumber to machine graded lumber. Conversely, building designers may change designs to accommodate new design values (and still use visual grades). Individual mills that produce majority visual grade could be affected the most by these changes, but the specific effects will be determined by mill customers.

For more information, please contact Amanda Lang, ahlang@forisk.com.





Over 200 Firms and Investors Own 25,000+ Acres Each of US Timberlands

5 02 2012

One reality of market and investment research is that if a data set “should” exist, it doesn’t.  And if it does exist, it’s probably out of date (especially in forestry).  Therefore, my team views the systematic aggregation, tracking and analysis of facts related to wood demand, wood bioenergy and timberland markets  as fundamental to conducting meaningful forestry investment research.

Part of Forisk’s research has focused on timberland investment vehicles and how private timberland ownership has changed over time.  On February 29, 2012, we will publish for the first time from our database a detailed listing of the primary owners of private timberland in the United States.  Estimates of the “investable universe” of timberland in the US range from 60 to 100 million acres; we count approximately 210 owners that each own and manage 25,000 acres or more for a total of ~82 million acres.  Of these acres, 20% are owned by the four public timber REITs (Plum Creek, Potlatch, Rayonier and Weyerhaeuser) and 37% are managed by 27 US-based TIMOs (see figure). The 43% of acres associated with “other private” owners include forest industry firms, private individual and families, conservation groups and other non-forest industry firms and institutions.

For detailed data on US timberland ownership and more information on Forisk’s 2012 US Timberland Owner List, click here.





Biomass Power Slowed, but Pellets Proceed; Biofuels Projects Change Hands and Persist

3 02 2012

The wood bioenergy sector in the United States continues its extended round of musical chairs.  As of January 30, 2012, Wood Bioenergy US reports that projected wood demand for all announced projects in the U.S. dropped 7.4 million tons year-to-date, a 6% decrease since December 2011. This is largely attributed to the removal of several large biomass co-fire projects from the Wood Bioenergy US database, particularly in Ohio. Utilities claim that biomass remains uncompetitive with other alternative compliance options (note: natural gas). Also, some coal units are scheduled to shut down to meet EPA MACT requirements.

In liquid fuels news, the USDA granted ZeaChem a conditional commitment for a $232.5 million loan guarantee from the 9003 Biorefinery Assistance Program. The loan guarantee could help fund a 25 million gallon/year commercial biorefinery. ZeaChem plans to build the commercial biorefinery at the same site as its demonstration plant in Boardman, OR. The company recently completed construction of the core operations at the demonstration plant and continues construction on the ethanol production units for a 2012 start-up. Meanwhile, LanzaTech purchased the former Range Fuels site in Soperton, GA for $5.1 million in a foreclosure auction. The company plans to use wood residues to produce fuels and chemicals. We continue to consider technologies to manufacture fuels from wood as speculative, until they perform at commercial scale.

Enviva’s first shipment of pellets left from the Port of Chesapeake on December 31. The vessel, bound for Europe, contained 28,000 metric tons of wood pellets. Enviva began operations at the Ahoskie pellet plant in November. Two additional plants are in the planning stages in North Carolina and Virginia; both will also use the same port.

For a complete Wood Bioenergy US summary of projects and associated wood demand, click here.