THE BIG PICTURE: NORTH AMERICAN LUMBER SUPPLY. Duncan Davies

Transcription

1 THE BIG PICTURE: NORTH AMERICAN LUMBER SUPPLY Duncan Davies 1

2 ITEMS FOR DISCUSSION Interfor s Platform North American Lumber Supply Protecting (and Growing?) the Market for Softwood Lumber 2

3 INTERFOR S PLATFORM - POST SIMPSON BC Coast 320 MMbf (10%) BC Interior 720 MMbf (23%) Longview Tacoma US Northwest 900 MMbf (29%) US Southeast 1,200 MMbf (38%) Georgetown, SC Meldrim, GA CAPACITY: Bbf 3

4 BC COAST Terrain Climate Mountainous Temperate Rainforest Species Products Markets Western Red Cedar, Hem-Fir, Douglas-Fir Specialty North America, Japan, Europe & Asia 4

5 BC INTERIOR Terrain Climate Species Products Markets Mountains & plateaus Semi-arid to humid continental Douglas-Fir, Fir- Larch, Hem-Fir, SPF, Western Red Cedar Dimension North America, Asia 5

6 US NORTHWEST Terrain Mountains & plateaus Climate High desert to temperate rainforest Species Products Markets Hem-Fir, Douglas- Fir, Specialty Pines Studs, Dimension, Specialty United States, Asia 6

7 US SOUTHEAST Terrain Climate Flat Humid subtropical Species Southern Yellow Pine Products Dimension Markets United States, Caribbean, Asia, and India? 7

8 DIVERSE PRODUCT LINES Volume by Product* 4% Boards 5% Cedar 2% Industrial 82% Commodity 7% Structural Specialty *Pre Simpson 8

9 DIVERSE MARKETS 2014 Shipments By End Market 2% Pacific Rim 10% Canada 13% China 69% US 6% Japan *Pre Simpson 9

10 NORTH AMERICA LUMBER SUPPLY 10

11 NORTH AMERICAN SUPPLY Region 2006 BC 17 RoC 16 US West 17 US South 19 RoUS 3 Net Export (<1) Total: 71 Bbf 11

12 LUMBER CAPACITY AND PRODUCTION North America Lumber, Bbf Capacity North America Lumber, Bbf Production Bbf of sawmilling capacity was lost during the Financial Crisis (20%); production fell 45% Source: FEA 12

13 BC S MOUNTAIN PINE BEETLE 13

14 45 MILLION ACRES IMPACTED 14

15 MORE THAN HALF OF BC S PINE DESTROYED Million m 3 Source: FEA October

16 INTERIOR HARVEST WILL DROP 70,000,000 60,000,000 50,000,000 40,000,000 AAC m 3 /yr 30,000,000 20,000,000 10,000,000 Interior harvest will drop 33% over next 10 years. - Source: FLNRO AAC: Allowable Annual Cut 16

17 THE COMPLEXITY OF PUBLIC LANDS % of Public Lands Sweden Finland UNITED STATES Germany Brazil 75 CANADA Russia BRITISH COLUMBIA China

18 MANAGING MULTIPLE VALUES: BC COAST Allowable Annual Cut / Timber Harvesting Landbase AAC m 3 /yr THLB hectares Timber landbase and harvest down 1/3 over past 30 years and will continue to drop. 18

19 ONTARIO & QUEBEC: A SIMILAR STORY Land use initiatives to strike balance between stakeholders. Harvest Level Review Canadian Boreal Initiative North for ALL Ecosystem Based Management Will constrain area and reduce harvest levels. 19

20 LOGGING SUSPENDED: 70 MILLION ACRES (SIZE OF NEVADA)

21 QUEBEC S DECLINING ANNUAL CUT Quebec s cut will drop 45% from 1990s peak. Source: FEA 21

22 THE UNITED STATES 22

23 SOUTHEAST HARVEST VS. GROWTH Source: FEA 23

24 INLAND WEST HARVEST VS. GROWTH Source: FEA 24

25 WEST COAST HARVEST VS. GROWTH Source: FEA 25

26 PNW LOG EXPORTS ON THE RISE 1,200 1, Mbf Log exports have doubled in past 5 years Source: US Forest Service 26

27 CHINA S BUILDING BOOM 33% of all the buildings built globally in 2013 were in China. 10 million rural residents move to cities annually. 60% of housing stock is substandard.

28 CHINA S BUILDING BOOM 28

29 NORTH AMERICAN LUMBER EXPORTS TO CHINA Source: Wood Markets International Monthly Report March

30 NORTH AMERICAN SUPPLY 2014 Region 2014 Change vs BC 13 (4) RoC 12 (4) US West 14 (4) US South 16 (3) RoUS 1 (1) Net Export (7) (7) Total Bbf: 49 (23) 30

31 US HOUSING STARTS ON THE RISE 1.8 million starts projected for Source: FEA 31

32 NA LUMBER CONSUMPTION IS GROWING Bbf Consumption is projected to rise to 65 Bbf by 2018 (FEA) Source: FEA Q

33 NORTH AMERICAN SUPPLY 2018 Region 2018 Change vs BC RoC US West US South RoUS 2 +1 Net Export (4) +3 Total Bbf: 66* +17 *Includes building of inventory. 33

34 CONSTRAINTS TO AVAILABLE SUPPLY Log Supply 3 Bbf ex Canada?? 4 Bbf ex US West?? 5 Bbf ex US South?? Capacity Utilization 80 90% = 7 Bbf?? Additional Capacity 10 Bbf = 40 world class mills ($4B+)?? Lumber Imports 2-3 Bbf ex Europe, SA?? 34

35 WE HAVE COMPETITION 35

36 LOST GROUND US Residential New Construction (single & multi-family) Structural Wood Materials Floors, Walls & Roofs Billions square feet Wood lost >5% market share in key segments in 10 years % 80% 79% 78% 77% 76% 75% 74% 73% 72% 71% Source: NAHB - MC 36

37 MARKET THREATS More multifamily houses. Smaller houses. Increased substitution. 37

38 MARKET OPPORTUNITIES More wood in nonresidential. More wood frame, multi-family residential. More wood in appearance applications and decking. Tall Wood Buildings!! Source: SLB, Softwood Lumber Board 38

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44 TALL WOOD THE GAME CHANGER 42 Story Prototype. 70% timber. Carbon footprint reduced by 60 90%. 44

45 PRODUCT INNOVATION IS KEY 45

46 INNOVATION London, UK 8 stories CLT (+ 1 Concrete) Melbourne, AU 10 stories CLT Bergen, NO 14 stories hybrid/modular 46

47 STRONG SUPPORT FOR WOOD 47

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49 THE BIG PICTURE: SUPPLY & DEMAND Canadian supply is constrained; US has more potential. The forecasts are optimistic demand expected to outstrip supply. Prices expected to rise. 49

50 WE HAVE WORK TO DO We can t wait for the US housing recovery. We need to: Protect the landbase. Develop new markets. Drive innovation/new products. Address fire concerns. Ensure fair building codes. Industry collaboration is key. 50

51 THE STAKES ARE HIGH 51

52 THANK YOU 52