The US South was the\u00a0highest margin sawmill region in North America \u2013 a place it has held since 2008 \u2013 as well as the top global earner again in 2016 and for the second quarter of 2017.<\/p>\n
All regions covered in the global sawmilling industry in 2016 and in 2017 showed good results; the average global earnings (EBITDA) at \u201caverage\u201d sawmills actually dipped slightly from US$21\/m3 (US$34\/Mbf \u2013 nominal) in 2014 to US$18\/m3 (US$29\/Mbf) in 2016 but improved to US$24\/m3 (US$39\/Mbf) by 2017-Q2.<\/p>\n
For best or \u201ctop-quartile\u201d mills, and depending on the region, earnings results were typically about double that of \u201caverage\u201d sawmills in each country. The fortunes of most regions improved significantly in 2017-Q2 from higher global lumber prices. The North American economy has been stable, boosting lumber demand and prices and the European economy improved in 2016 and especially in 2017 as many mills (and countries) had their best results in five years, Wood Markets' report shows.<\/p>\n
Out of 32 countries and\/or regions surveyed, \u201caverage\u201d U.S. South mills had highest earnings results in 2016 with a 25% EBITDA and \u201ctop-quartile\u201d mills earnings were off the scale.<\/p>\n
\u201cAs has been the case since 2008,\u201d<\/em> explained Russ Taylor, Managing Director of FEA-Canada and the principal author of the report, \u201cthe major operating advantage for U.S. South mills continues to be the region\u2019s low log-cost structure. With a surplus of timber and not enough sawmills operating in the aftermath of the housing market collapse, delivered log prices remain among the lowest in the world with margins being the highest in the world.<\/em>\u201d<\/p>\n \u201cAverage\u201d mills in the U.S. West Coast had earnings that below those in Western Canada in 2016, mainly due to tight log supplies and strong log export markets in Asia. EBITDA earnings at \u201caverage\u201d mills in Canada were strong, partly as a result improving prices and no U.S. import duties in place for all of 2016. Canada\u2019s earnings as a whole were above average on a global scale and also ahead of Europe and Russia (mills with logs at cost) but lagged the U.S. weighted average The Canadian average earnings comprised a wide range of regional results, with higher earnings in the west versus half of those seen in the east.<\/p>\n The Southern Hemisphere regions surveyed (Australia, New Zealand, Chile, Brazil and South Africa) achieved global average EBITDA earnings of 6% at \u201caverage\u201d sawmills, lower than in 2014. Three Southern Hemisphere countries achieved earnings results below the region\u2019s average, Brazil and South Africa were above the average.<\/p>\n European regions finally had improving markets starting in 2016, and especially in 2017. Overall EBITDA earnings for \u201caverage\u201d European sawmills results moved higher from a small gain in 2014 to US$7\/m3 (US$11\/Mbf) in 2016 and higher in 2017-Q2. \u201cAverage\u201d mills in Sweden and the Czech Republic achieved some of the highest earnings in Europe in 2016 partly from favourable log and operating costs. In the global survey, only Finland in 2016 and Finland and Siberia (with logs at market price) in 2017-Q2 recorded losses at \u201caverage\u201d mills.<\/p>\n Following the devaluation of the ruble, Russia had some of the best earnings in the world in 2014 but these slipped in 2016 and further in 2017-Q2. Russian mills that had to purchase logs on the open market achieved much reduced earnings, mainly due to rising log prices.<\/p>\n The introduction of import duties in 2017 on Canadian lumber to the U.S. significantly reduced sawmill margins and has stimulated large increases of lumber exports to the U.S. from Europe, Russia and the Southern Hemisphere.<\/p>\n \u201cWhat is most interesting<\/em>,\u201d commented Russell Taylor, \u201cis that net margin achieved by mills in Sweden (delivered to the U.S. Gulf region) is now higher than all calculated margins from Canadian top-quartile mills. With import duties on Canadian lumber, top-quartile sawmills in Sweden now have the lowest delivered lumber costs aside from the various U.S. regions.<\/em>\u201d The massive spike in U.S. imports of lumber from Sweden and Germany is, thus, no coincidence.<\/p>","protected":false},"excerpt":{"rendered":" The US South was the\u00a0highest margin sawmill region in North America \u2013 a place it has held since 2008 \u2013 as well as the top global earner again in 2016 and for the second quarter of 2017. All regions covered … Continue reading