More Mill Closures - UPM (temporary)

[SwampDonkey]

The UPM Mill in Mirimachi will close indefinately on Dec 23. This followed the end of a recent strike at the mill. Company officials say markets where lost during the strike.

[farmerdoug]

You are lucky if it is temporary.  We are losing 12 GMC plants with four of them in Michigan.   30,000 GM workers are getting special Christmas presents soon. :

Farmerdoug

[SwampDonkey]

I know what ya mean Doug. I been watching that on the news also.  :'(

[Furby]

Wait a minute, you are leaving out the best part!
They KNEW they were closing those plants, that's why the scared the plants near GR and got them to take a huge pay cut.
Now they can close the plants AND pay less to the plants they are keeping, including anyone that displaces from the closing plants. :

[SwampDonkey]

UPM of Finland announced Monday June 4 they will be closing their pulp and paper operations in Miramichi, NB for a minimum of 1 year.


Weyerhaeuser closed it's OSB mill in Miramichi permanently on Monday.

[farmerdoug]

It is hard to beleive with the fuel prices, pulp is cheaper from South America.  They must charge the land owners to cut it from their land down there. :

Farmerdoug

[sawguy21]

Canfor has shut down their Mackenzie B.C, plant indefinitely, one of three mills in the town of 5000. The other two are on life support. Other small town mills are shutting down or cutting back, it is ugly. Due to the lumber agreement, export duties are up because of the low prices.

[TW]

Over here the big forest companies (including UPM) tell that there is a global shortage of sawn timber and pulp. Therefore they urge the forest owners to clearcut more in already overharvested forests. The sawmills are sawing all they can get. The prize of sawn timber is record high locally.
Somebody is apparently lying on either side of the Atlantic. Has this something to do with an attempt to get the wages down? Or is it a way to put pressure on some politicans. Or a way to get the log prizes down?
My 5!@#%^&* alert system is beeping frenetically.

I am not in the forest business myself but I read the papers and know many who are in this branch. This is how I have understood it.

[SwampDonkey]

Well I do know that Kraft pulp is at an all time high - over $800 a tonne, $430 just 3 years ago. We have the supply of pulp here to meet demand, but the companies won't pay enough for private wood for owners to expect a reasonable profit. Apparently, 25% of the pulp is imported, but that is because they can get it cheaper, so they go around the local supply even if it costs more in transportation, just to bring everyone to their knees. We have all kinds of pulp if they want to buy it. They are used to the government giving them fibre off crown, below the cost of production from private lands. I say let them go to $%^$^% and we'll develop biomass energy. We (private) have 30 % of the land base, and I would say even more volume per acre, because a lot of Crown includes non productive bogs and boulder fields. The land is more intensively managed on private and has been cut several times where as most crown lots have been only harvested once.

[farmerdoug]

I have been reading that the biomass industry has the milling industry really worried but what it will do to the prices.  I say let it be free market but they are tying to bully the government on the issue.

Farmerdoug

[SwampDonkey]

Yup, worried because they have competition. These boys hate competition because it might push the price up to where it should be. Now wouldn't that be too bad if the private owners had more influence on the price, they might actually make a buck. ;)

[Cedarman]

Our best logs go to veneer buyers overseas.  The local veneer companies want the landowners to sell locally to keep jobs here and say whatever they think will get the logs.  They want the government to stop the exporting of the good veneer logs. Translated, (not much needed) , its more important that mill owners make big bucks than land owners getting top dollar.

If you have an auction and only one bidder shows up, the seller is in big trouble. Now with biomass coming along, a second bidder has shown up.  No wonder the first buyer is starting to scream.  Let them scream all they want.

We are paid to take cedars off some lands so that it will grow something else.  So it does happen that companies are paid to remove trees.

[Gary_C]

The pulp mill closures in this area have been primarily due to the OSB markets collapsing from $15 per sheet to $4 per sheet due to the slump in the housing markets. The paper and other fibre mills have been running OK but do not need to pay much for pulp anymore so I suspect their profitably is up significantly. The other factor is there have been newer state of the art mills built in the southern US that are more efficient so the future of those old mills is in serious question without some investment of serious capital.

The only factor that could change that outlook is another strong hurricane season. However the OSB demand from Katrina never materialized as much of that rebuilding has not yet been done.

Biomass markets have the potential to change the demand for pulp significantly, but have not yet had much effect. I have heard of one large logger that produces clean chips who when faced with cutbacks and quotas from the pulp mill that has now contracted all his output to a power plant that used to burn coal. There is going to be more power plants switching to biomass when these long term coal contracts expire.

[SwampDonkey]

Gary, where are you buying OSB for $4 a sheet or even $15 a sheet. It's $25 a sheet or more in these parts, even at Lowes in Presque Isle, Maine. I guess if I was building a new home and wanted OSB, I'd truck my own in and save a fortune.

[Gary_C]

Those are the prices the OSB mills are or were receiving. The local Home Depot was selling OSB last winter for just over $5 per sheet and I have not looked lately.

Send your semi over to LP in Hayward, WI and get a load. Bet I could get you a good price on a load any you could at least triple you costs.   :D :D

[SwampDonkey]

Some industry info.

http://foresttalk.com/index.php/2007/05/

[SwampDonkey]

Yeah, I see it's $4.80 a sheet (7/16") on one site, but I sure can't buy it for that. No where even close.

[Ron Wenrich]

I was around when we had the last bunch of talk about biomass production.  We were going to build power plants that would be burning wood waste.  We even sited some plants.

The ultimate effect on the local markets was nil.  We put one in that burns around 200,000 tons of chips and sawdust.  We never had to go to the woods for material.  There was plenty of material at the mill level.

Firewood continues to be an alternative market and offer higher prices than chips.  But, there are too few movers in the market. 

My guess is that a biofuel plant would use waste wood long before they would be competing on the stump.  With the high costs of establishing an operation, my guess is they won't pay much more than existing markets.  When you come in to set up a plant, you are looking for cheap resources.  You're not looking to raise the market price - it effects your profitability and the ability to lure investors.

[SwampDonkey]

That's true Ron. But, I think the price will increase some because there is competition for the resource to produce different products. I don't expect the price to go through the roof as some might assume. I agree with you there. Also, I'm not sure were the wood pellet industry will go because of the traditional stove wood users that can get their wood supply for half the price of pellets. The local biomass plant that is generating power is paying more than the pulp mill, but it isn't a wide margin. Just tells me there is all kinds of pulpwood, plus the closure of mills continues to ease the supply so the price isn't jumping much. Also, that plant does not use material that can be used as pulp, they take the junk and undersized material in which there is a never ending supply of. Also, the largest forest company in NB is also building a pellet plant. They will sell below production costs to put the little operators out of business. But, I would buy from the little guy first, while others only look as $$ without realizing they are cutting their own fool throats.