The log market is in the toilet

[Gary_C]

The last thing some of these large paper companies want right now is for another player in the markets trying to take away some of their existing market share.

One of the big pulp mills here is preaching about how they need a low cost supply of pulp wood. Then they go out and bid up the larger pulp wood sales to levels where no one can make any money. They think nothing of bidding against their own suppliers. One large mill even wound up with two buyers at the same auction and got first and second place in the bidding. 

[SwampDonkey]

Those big outfits get to be like government. No department knows what the other is really doing.  The board of directors are only looking at the money. I learned this a long time ago with Frasers. The Woodlands Office had no idea about the status of their roads, whether gated, temporarily down for repair and so on. You could be given maps to a block an hour's drive away and they never had the where-with-all to inform you it was gated and padlocked. They didn't care neither. People are being paid by peace work to do a lot of silviculture work, so no one was being paid for lost time and delays that could be prevented. One day I went right into the office and told them what a bunch of idiots they were that they couldn't radio someone to check that day whether a road was accessible. They basically told me there are roads everywhere, we have no idea at any time what their status is. I said, this place will soon be closed up. And it has been off and on. Too many leaks, the ship won't float. It's under bankruptcy protection right now, with government recently buying shares the TSX delisted a year ago. 

Then they blat about cheap wood?

[240b]

The last thing some of these large paper companies want right now is for another player in the markets trying to take away some of their existing market share.

One of the big pulp mills here is preaching about how they need a low cost supply of pulp wood. Then they go out and bid up the larger pulp wood sales to levels where no one can make any money. They think nothing of bidding against their own suppliers. One large mill even wound up with two buyers at the same auction and got first and second place in the bidding. 

The one I like is when the mills bid jobs and pay more for the wood on the stump than they offer for it delivered. than hire some poor guy to do the job.

[WDH]

How does the cost of pulp in the south compare with the cost in the north? What do mills in the south pay per cord for their supply?

The lower cost mills have averaged about $25/ton delivered or about $67/cord.  That may have changed in the last couple of years.  You may have better data.

[jim king]

WDH

Brazil's wood costs are also among the lower tier, so that makes it an attractive place for investment.  However, the political environment is not as favorable or stable.

I think it would be difficult for Brazil to be competitive in paper or timber products.  The cost of timber production in Brazil as with the entire Amazon is very high and that is just one of the reasons why the timber industry is so dismal and insignificant here.  The Amazon is and always will be a producer of niche market products only.    The Amazon simply does not have species condusive to pulp/paper production .   Maybe in the huge temperate plantation  forests of Brazil it could be possible but the country is growing so fast it will probably consume its entire production.

I personally don`t think anyone in the world is capable of producing a 2 x 4 or news print at a lower cost than North America.   That statement does not include the rats nest of government subsidies but only true costs of production.  

Here is a link that can give you an idea of the problems in making paper in the Amazon.

http://en.wikipedia.org/wiki/Jari_project

[SwampDonkey]

Maybe in the huge temperate plantation  forests of Brazil it could be possible but the country is growing so fast it will probably consume its entire production.

That is what I've always been told about Brazil to. They have to eat first and many of those plantations are going back to food crop fields.

[jim king]

SwampDonkey:

I did not make myself real clear about Brazil.  I was referring only to timber production.  In the Amazon logging is different that in temperate climates.  If you can imagine a forest where the species you are looking for grows to a density of one tree to every several acres and sometimes one every 100 acres or more you began to see the difficulty.

Now to add onto that you are in the biggest swamp in the world and it is constantly raining.  The belly of a skidder is constantly dragging and a skidder trail is rarely good for two trips.  Then the fact that the river drops 40 feet from one season to another and most of the tributaries are to low for barge and tugboat traffic it is not easy.  The level of the Amazon is mostly due to the snow melt in the Andes and not from rain.  Three to four months a year are ruled out due to low water.

As for food Brazil is actually a major producer of many commodities,  soybeans ( number one or two in the world) , rice , orange juice (number one or two in the world) and citrus , beef , coffee , black pepper etc..  It also is a major world class producer of iron ore and steel , airplanes , weapons  etc..  Brazil is also a leader in biofuels from sugar cane.

Brazil is an amazing country, in the South if you were to visit you would think that in many places you were in the States.  The people are light hair and skin wearing plaid shirts and blue jeans.  The villages and cities look European and everything works and a nice climate.
 Then working your way north you pass thru many changes until you get to the Amazon where not much of anything is produced and not much works.

Brazil is always called the country of the future.  The only problem is that no one knows when their future is.  What is making them go better than ever now is the low debt they have compared to many years ago when they were borrowed into a hole.  As you can see on the CIA fact page below the in country government cash reserves are close to their total debt.

One of the most important changes in Brazil has been oil .  Twenty years ago the lack of oil was killing them.  Now they find more yearly and are developing the reserves of oil and natural gas in Bolivia and Peru which are significant.

The list goes on.  This link may be interesting.  It shows 2008 and 2009 is much , much better.

https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

Under the map click on "Expand all"

[WDH]

Maybe in the huge temperate plantation  forests of Brazil it could be possible but the country is growing so fast it will probably consume its entire production.

Jim,

My comments were directed at the SE coast temperate plantation region where the best operations have among the most productive harvesting operations in the world, and they grow eucalyptus on 7 year rotations. 

From your previous posts, I can see your point about the Amazon Region.

[Ron Wenrich]

Those eucalyptus plantations have put all the Charmin and Kimberly Clark plants on South American processed pulp.  Plants that used to use local pulp and chips have now gone that route and have shut off all local input.  That happened about 10 years ago, if memory serves me correct.

I think I read somewhere that the largest port for wood chips is located in Brazil. 

[axeman2558]

 call the h.c.haynes company ..... 1 800-432 7867  they move alot of wood dont know the prices but kim can help you .... seems the old gp mill in baileyville mst be still taking some hardwood .... or hinckley ....    redbeard

[jim king]

Ron:

I do not know the current status of the paper production in Brazil but I am including a link about pulp and paper in Brazil which is old but I think still on track with current reality.  It is talking in tons of paper which I do not understand if the production is a little or a lot.

I dont have the information as to how many tons of paper a mill in the States would produce.

I have a freind here from Paraguay and he has large eucalyptus plantations in both Brazil and Paraguay which are mature.  He claims they now have the technology to saw the logs and produce lumber without the stress problems and he is milling about 30,000 bf a day.

http://www.forestnet.com/archives/Sept_97/brazil.html

[Ron Wenrich]

Here's a small snippet about Brazilian pulp exports.  http://www.webwire.com/ViewPressRel.asp?aId=103096

2008 production was 12.8 million tons.  From another report, US production in 1983 was 60 million tons, but had slipped to 52 million tons by 2003.  2003 Brazilian production was around 8 million tons.

Here's a report that was given back in 2005 about the status of hardwood chip and residue.  http://www.hmamembers.org/uploads/NatConPresentations/2005-BobFlynnPP.pdf  Its interesting to note that the US used to be the #1 supplier of chips to Japan.  That market had slipped to about 1-2%.  Eucalyptus fiber has taken the place of most hardwood chips from the US to other countries. 

So, it looks like the US and Canada have lost their marketplaces to those in the Southern Hemisphere and more importantly to eucalyptus.  I saw where they were opening up 3 pulp mills in Uruguay.  All were funded by European money. 

With money flowing in from Europe, will China be next?  Its thought they'll be an importer fairly soon.  One of the reports said 3-5 years.  Will Brazil or any of the other more tropical countries turn their back on foreign investment that will expand plantation forestry?  I'm not saying its good or bad, just that that's where the industry seems to be heading. 

[jim king]

Ron:

The Boston Strangler would be given sainthood and citizenship if he showed up here with money.

The Chinese are flooding South America with immigrants and when they get here they are all instantly in business importing something.  The Chinese products dominate the markets here.

The Chinese government has free trade deals with everyone and is either financing major projects that include Chinese exports or simply buying up the projects.  Thier influence grows daily.

[240b]

Would China be getting nice spruce pulp out of say, Far east Russia?  I'll bet that wood can be bought cheap.

[Ron Wenrich]

Why wouldn't the Europeans be buying spruce pulp out of Russia?  They're importing from South America.  Once its on a train, it costs no more to ship than on a boat.  Those Russians could put that spruce pulp right at the mill without double handling.  Yet, the Europeans still go for Eucalyptus.  Must be something to do with the quality of pulp and the end product. 

I think the same prospects hold true for China.

[jim king]

I have read a lot about the Russian forests going to the Chinese market also but I have never been there.    Even the ecologists donīt mention it much.    I don`t know if it is because the Russians would not take kind to them or the global cooling in Siberia makes it to cold.  I understand the Siberian forests are about the size of the Amazon.

[Jamie_C]

call the h.c.haynes company ..... 1 800-432 7867  they move alot of wood dont know the prices but kim can help you .... seems the old gp mill in baileyville mst be still taking some hardwood .... or hinckley ....    redbeard

I worked for HC Haynes up here in Nova Scotia about 8 yrs ago, good company to work for and they move a TON of wood.

[jim king]

Good old Google

China buying from Russia site
http://www.forestsmonitor.org/en/reports/548670/549168

http://www.pulpmillwatch.org/countries/china/

Imports of wood pulp reached 7.2 million tonnes in 2004, mainly coming from Canada, Indonesia, Russia, Brazil and the US. To provide more wood for the growing pulp industry, the Chinese government has ambitious goals to expand the area of industrial tree plantations, with plans to spend a total of US$ 8.65

[SwampDonkey]

Gathering from what gets reported here, I think the Brazil Eucalyptus plantations are nearing the end of their course. China too as you said is going to be a net importer of pulp. Russia, is still in chaos politically and no secure supply of pulp for any country to rely on.