by Web Editor | Dec 7, 2015 | News
Increasing housing starts and higher consumer spending will drive anticipated operating income growth for the global paper and forest products industry of 1%-3% in 2016, underpinning the current stable outlook for the sector for the next 12 months, says Moody’s Investors Service in a report published today. However, the outlook for the Printing and Writing Paper segment is negative as digital alternatives continue to curb paper demand.
“Our outlook for the global paper and forest products sector over the next year remains within our stable range as increasing home construction and economic growth drive wood product, packaging and market pulp earnings growth in the low single digits in 2016,” says Ed Sustar, a Moody’s Vice President — Senior Credit Officer and author of the report.
The outlook for the Paper Packaging and Tissue segment will be stable with operating earnings forecast to grow by 0%-4% on the back of increased (1) packaging demand, driven by modest economic uptick and stable food consumption; and (2) tissue demand, driven by population growth and improving hygiene standards.
Expected improvements to US housing starts will likely prop up end-market demand for timber, lumber, oriented strand board and engineered wood products in 2016, which will in turn support the stable outlook for the Wood Products/Timberland segment. However, lower Chinese infrastructure spending is pressuring North American log and lumber exports. Operating earnings in this sector are expected to grow by between 0%-4% in 2016.
Operating earnings growth for 2016 in the 1%-3% range will support the Market Pulp segment’s stable outlook. Prices across most grades (hardwood, softwood, dissolving pulp) will remain flat or decrease as capacity increases outpace demand. As additional pulp capacity comes on-line, inventory management across the fragmented global pulp industry will remain critical to balancing supply and demand.
From Moody’s: https://www.moodys.com/research/Moodys-Stable-2016-outlook-for-global-paper-and-forest-products–PR_340351
by Web Editor | Jul 6, 2015 | News
APA – The Engineered Wood Association has released its 2015 Market Outlook report.
Similar to 2014, extremely harsh weather caused home building to stall in the eastern half of the U.S. during the first quarter of 2015. However, with mortgage rates below 4 percent, new home sales rose 9 percent versus the fourth quarter of 2014, an indication that new home demand is improving. Brighter employment prospects for young adults is leading them to head out on their own, adding to the strength in the demand for new apartment buildings. These forces point to the recovery in residential construction getting back on track in the second half of this year.
“The biggest changes in the economic environment since a year ago are the strength of the U.S. dollar, the drop in oil and gasoline prices, and efforts by central bankers to stimulate their economies by driving down long-term interest rates,” said Joe Elling, market research director for APA. “This mix of events is likely to support lower interest rates in the U.S. than what was expected a year ago at this time. We are still in an unprecedented situation with respect to Federal Reserve policy though, and I remain concerned about the ability of the Fed to return its balance sheet to a more normal state without a major disruption in financial markets here and abroad.”
Critical to the strength in the demand for new housing is the ability of young adults to have the economic wherewithal to be on their own and, ultimately, to be able to own a home. Despite very favorable affordability conditions from a monthly standpoint, tight lending standards and heavy student debt burdens are constricting that group’s home-buying power. These conditions are expected to persist through the rest of the decade; thus, as housing starts return to their anticipated 1.5 million level by 2018-2019, multifamily starts are expected to account for roughly 36 percent of the total.
Housing starts in Canada totaled just over 198,000 units in 2014. Canada did not experience a housing bubble like the U.S did, but, similar to the States, multifamily unit structures are accounting for a greater share of new residential construction compared to 10 years ago. The forecast calls for starts in Canada to run in the 180,000-190,000 unit range, with multifamily units accounting for around 40 percent of the starts.
From APA – The Engineered Wood Association: https://www.apawood.org/market-outlook-2015
by Web Editor | Apr 6, 2015 | News
A gradual increase in housing starts across the U.S. and better timber prices are two factors behind Plum Creek Timber Co.’s decision to invest $10 million in plant improvements at its Northwest Montana manufacturing plants.
“We’re optimistic overall for another good year,” said Tom Ray, Plum Creek’s vice president of northwest resources and manufacturing. “The largest single concern is the lack of raw materials, but we’re hoping Congress will address that.”
One of the largest landowners in the U.S., Plum Creek had a strong year in 2014, reporting earnings of $214 million on $1.48 billion in revenues. Harvest numbers were 13 percent over 2013. But timber resources in Northwest Montana can be a concern. Last year, Plum Creek cut back hours for workers at the Columbia Falls sawmill from 40 hours per week to 36 after a federal court ruling blocked several timber sales on state forest land. “We had a decline there, but once we get past breakup and into early summer, we’re hopeful to go back to a regular schedule,” Ray said.
Plum Creek plans to invest $6 million at its medium-density fiberboard plant in Columbia Falls. The No. 1 line, which was built in 1974 and manufactures panels up to 1 1/4 inches thick, will see $1.6 million for improvements to reliability and efficiency. Another $300,000 will be spent on computer equipment and monitoring cameras.
The company also plans to spend $2 million on the MDF plant’s No. 2 line, which was built in 2001 at a cost of $80 million and produces thin panels one-tenth of an inch thick. The furniture industry is a major customer, but other businesses now use MDF products.
From Hungry Horse News: https://www.flatheadnewsgroup.com/hungryhorsenews/plum-creek-to-invest-mil-in-local-plants/article_e8e443a2-d883-11e4-ad41-cfbdb6471aba.html
