GLOBAL TRENDS DRIVING FOREST INDUSTRY IN THE LAKE STATES

Transcription

1 GLOBAL TRENDS DRIVING FOREST INDUSTRY IN THE LAKE STATES PETER COUTU OCTOBER 18, 2016

2 GLOBAL TRENDS DRIVING FOREST INDUSTRY IN THE LAKE STATES Forest2Market Overview Global Growth North America Overview o Housing Starts o Paper Production Lake States Focus o Advantages o Challenges 2

3 A HISTORY OF POSITIVE CHANGE Our customers make better-informed decisions and thrive because they have reliable and consistent measures of their performance compared to the broader market. Our commitment to deliver the most accurate, credible and quantitative market insight to our customers has never wavered. 3

4 MARKET COVERAGE Helsinki, FI Kennewick, WA Charlotte, NC Curitiba, BR 4

5 DELIVERED RAW MATERIAL COST BENCHMARKS 5

6 FOREST2MARKET S DATA The depth and breadth of data Forest2Market collects allows for unparalleled insight into wood supply chains, from the source to final consumption. The data we collect represents: 10,000,000+ loads of wood raw materials per year U.S. Lake States and Northeast: 1,000,000 U.S. Pacific Northwest: 1,100,000+ U.S. South: 8,000,000+ For each transaction, our data includes: Total delivered price per ton Seller type Geographic origin Total tons Source cost Commission cost Freight cost and distance Harvest cost 6

7 FOREST2MARKET REGIONAL BENCHMARK 7

8 MACRO ECONOMIC DRIVERS OF THE FOREST INDUSTRY Population Growth o Accelerated growth occurring outside of North America Millennial Behavior o Dampens housing demand Increase in Use of Digital Devices o Decreases use of the printed page Long Fiber (Softwood) Supply Squeeze o Leads to cost structure changes European Pellet Demand o Increases U.S. South pine consumption Strength of U.S. Dollar 8

9 POPULATION GROWTH OUTSIDE OF NORTH AMERICA By billion; 4-7% GDP +125 million; 2-4% GDP +400 million; 7% GDP And -34 million; 7% GDP Increasingly urbanized population (1.3 billion) will drive consumption. 9

10 CANADIAN POPULATION GROWTH By million; 2-3% GDP 10

11 MODEST POPULATION GROWTH AT HOME By 2050 Theoretically should add ,000 new single family starts annually to baseline, but +70 million; 2-3% GDP 11

12 MILLENNIALS: 92 MILLION BETWEEN Peak home buying years: years Marriage (averages) o 1970: 23 years old o 2010: 30 years old Married and own a home (18-31 years) o 1968: 56% o 1981: 43% o 2012: 23% Urban Centric 93% want to own their own homes, but the financials may not make sense: o 41% work full-time o 50% have less than $5,000 in savings o Average student loan debt $33,000 12

13 HOUSING MARKET HAS REBALANCED 13

14 HOUSING MARKET FORECAST

15 Millions of ST PAPER A GROWING INDUSTRY Global Paper Production = 450 million tons Middle East Africa Latin America North America Europe Asia Pacific

16 GROWTH IN DEMAND BY GRADE AND MARKET Demand by Market and Grade World View 15.00% 10.00% 5.00% 0.00% Africa Asia Pacific Europe Latin America Middle East North America Global -5.00% % Courtesy of Fisher International Market Pulp Newsprint Packaging Printing and Writing Specialities Tissue and Towel 16

17 DECLINE IN DEMAND BY GRADE AND MARKET Demand by Grade North America View 1.00% 0.00% -1.00% -2.00% -3.00% -4.00% -5.00% -6.00% -7.00% Market Pulp Newsprint Packaging Printing and Writing Specialities Tissue and Towel Courtesy of Fisher International 17

18 GLOBAL PULP AND PAPER PRODUCTION Courtesy of Fisher International 18

19 PULP & PAPER CONSUMPTION 19

20 MERGERS, ACQUISITIONS, AND CLOSURES 2016 Weyerhaeuser/Plum Creek merger UPM Madison, ME mill announces closure Covanta bioenergy plants close in Maine 2015 Verso merges with New Page Expera closes Old Town, ME mill Verso closes Bucksport, ME mill Lincoln Paper and Tissue closes 2014 Resolute closes Fort Frances, ON mill Expera purchases Old Town, ME mill 2013 Expera emerges from Thilmany/Mosinee merger 2012 Great Northern Paper Mill closes in Millinocket, ME 2011 Wausau Paper closes Brokaw Mill 2010 Smurfit Stone closes Ontonagon, MI mill 20

21 WHAT IS HAPPENING IN THE NORTHEAST? 21

22 DRIVERS OF THE FOREST INDUSTRY IN THE US AND THE LAKE STATES Housing Starts o Returning to historical normalcy Furniture, Cabinets, flooring o Tied to housing starts o Remodeling is key for Cabinets, flooring, and even furniture Printing Paper Demand Decreasing o Increased use of Electronic Media 22

23 CONCLUSION: GLOBAL TRENDS North American Housing Demand o Tepid housing recovery o Lots of sawlogs for a long time o No price appreciation in sight Pulp & Paper Demand o New demand outside North America o Long fiber (softwood) squeeze, short fiber (hardwood) abundance o Tissue demand will increase globally o Packaging demand steady to decreasing in North America, but increase globally Changing pulp cost position o Both globally and locally o Supply Chain efficiency is key 23

24 CHALLENGES FOR LAKE STATES FOREST INDUSTRY Pulp and Paper Industry Focus o o o Harvest systems o Focused on printing papers Awareness of global trends Understand your customers cost position and exposure to global trends High raw material supply chain costs Lack of economical access to ports Lack of long fiber, softwood fiber Strong US dollar (USD) 24

25 ADVANTAGES FOR LAKE STATES FOREST INDUSTRY High quality, modern pulp & paper mills High quality, unique hardwood resource Diverse land ownership that includes: o NIPF o Large institutional investment o Government ownership Relatively cheap energy Rail system still available 25

26 SUPPLY CHAIN COST 26

27 FIBER SUPPLY CHAIN Utilize Chainsaw Harvester Merchandise Chainsaw Delimber Slasher Merchandise Merchandise Harvest Skid Load Haul Grow Trees Chainsaw Fellerbuncher Harvester Cable Grapple Forwarder Yarder Ground Truck Mount Treelength Cut-to-Length Trailer Plant Trees 27

28 CONTACT Peter J Coutu Director of Sales North America peter.coutu@forest2market.com Forest2Market Brixham Hill Ave Suite 550 Charlotte, NC