timber mart south sample 1q 2012 news

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1 st Quarter 2012 -- Vol. 17 No. 1 Timber Mart-South Market News Quarterly The Journal of Southern Timber Market News A Quarterly Report of the Market Conditions for Timber Products of the US South Copyright © 2012 by Timber Mart-South, Inc.

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Timber Mart South Sample 1Q 2012 newsJournal of Southern Timber Market NewsA Quarterly Report of the Market Conditionsfor Timber Products of the US South

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Page 1: Timber Mart South Sample 1Q 2012 News

1st Quarter 2012 -- Vol. 17 No. 1

Timber

Mart-South Market News

Quarterly

The Journal of Southern Timber Market News A Quarterly Report of the Market Conditions

for Timber Products of the US South

Copyright © 2012 by Timber Mart-South, Inc.

Page 2: Timber Mart South Sample 1Q 2012 News

Page 2 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Tom Harris, Publisher (706)542-2832 (706)542-4756 Jacek Siry, Research Editor Sara Baldwin, Robert Simmons & Jonathan Smith, Editors Staff: Peyton Ellis, Harrison Hood, Russell McCarty, Joseph Morris, Stephen Smith, Tim Smith, and Caleb Warnock Mailing address: Timber Mart-South, 1860 Barnett Shoals Road, PMB 103-598, Athens, GA 30605. Phone: (706)542-4756 • Fax: (706)542-1670 • E-mail: [email protected] Web site: www.TimberMart-South.com Copyright © 2012: This publication is copyrighted under the statutes of the United States. The compilation of facts and information herein contained are the subject of private property rights of the publisher. Reproduction or transmission, either manually or electronically, in whole or in part, without express permission of the owner or other unauthorized use, is not permitted. Publisher provides the information herein as a convenience to its readers. Publisher does not represent or endorse the truth, accuracy, reliability or completeness of any of the information contained in this publication. PUBLISHER PROVIDES THE INFORMATION IN THIS PUBLICATION ON AN ‘AS IS’ AND ‘AS AVAILABLE’ BASIS, WITH NO WARRANTIES WHATSOEVER. THOSE WHO USE PRICES PUBLISHED HERIN FOR A SPECIFIC PURPOSE, SALE OR CONTRACT DO SO AT THEIR OWN RISK. UNDER NO CIRCUMSTANCE WILL PUBLISHER HAVE ANY LIABILITY FOR ANY LOSS OR DAMAGE WHATEVER CAUSED BY ANY READER’S RELIANCE ON INFORMATION OBTAINED THROUGH THIS NEWSLETTER.

ISSN 1945-4082

The University of Georgia Warnell School of Forestry & Natural Resources is under contract with the Frank W. Norris Foundation to compile and publish the TMS Market News.

Page 3: Timber Mart South Sample 1Q 2012 News

Page 3 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Featured In This Issue

Prices & Market Conditions on page 4

Top Timberland Owners in 2011 on page 14

Gerry Van Leeuwen on China’s Housing Policy 17

Top US Softwood Lumber Producers 2011 on page 18

Table of Contents

Prices & Market Conditions ....................................................................................................4 Market Indicators ....................................................................................................................5 Lumber & Panel Indicators, US Building Construction, Pulp & Paper Indicators,

Energy & Carbon Markets, Equity Markets, Manufacturing Activity Timberland Transactions .......................................................................................................10 Plum Creek Timber, Molpus Woodlands, Other Transaction Details, Outside the South Top Timberland Owners in 2011 ..........................................................................................14 Timberland Proffered 1st Quarter 2012..................................................................................15 China’s Housing Policy Changes Will Drive Demand in 2012-15..........................................17 Top US Softwood Lumber Producers 2011............................................................................18 Openings & Closings .............................................................................................................18 Pulp & Paper, Wood Products: Sawmills, OSB & Panels , Other Biofuel & Bio-Energy.............................................................................................................21 Projects in the South, BCAP Returns, Biomass Harvesting, Carbon Cycle 101 Restructuring .........................................................................................................................25 IP & Temple-Inland, Great Southern, Resolute & Fibrek, Sino-Forest, Other Changes Other News ...........................................................................................................................30 Hardwood Promotion, Recovery & New Disasters, US-Canada SLA, Design Values for SYP, Policy

Issues, USDA GAIN Reports, USDA Forest Service News & Publications Weather Etc...........................................................................................................................35

Timber Mart-South

Market News Quarterly 1 st Quarter 2012 – Vol. 17 No. 1

Page 4: Timber Mart South Sample 1Q 2012 News

Page 4 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

South-wide Pine Stumpage Prices quarterly averages

$0

$10

$20

$30

$40

$50

2007 2008 2009 2010 2011 2012 2013

$/to

n

Timber Mart-South

Pulpwood

Sawtimber

Chip-n-saw

South-wide Hardwood Stumpage Prices

quarterly averages

$0$5

$10$15$20$25$30

2007 2008 2009 2010 2011 2012 2013

$/to

n

Pulpwood

Mixed Hardwood Sawtimber

Timber Mart-South

Prices & Market Conditions

South-wide timber markets remained subdued this quarter. Average stumpage prices for four of the five major timber products increased but less than a dollar per ton. Changes in delivered prices were only a few cents per ton, with pine and mixed hardwood sawtimber down slightly, while prices for pulpwood and chip-n-saw were up.

Seasonal factors such as wet weather in the west influenced markets. However, prices are still low. Compared to the same quarter last year, four of the five major stumpage products and three of the five major delivered products were below levels a year ago.

South-wide Average Stumpage Prices $/ton one quarter year ago 1Q 12 4Q 11 up/(dn) 1Q 11 up/(dn)

Pine Sawtimber $24.15 $23.54 +$0.61 $25.94 -$1.79

Pine Chip-n-saw $14.91 $14.26 +$0.65 $15.52 -$0.61

Pine Pulpwood $8.56 $8.20 +$0.36 $8.71 -$0.15

Hardwood Sawtimber $21.32 $22.02 -$0.70 $21.20 +$0.12

Hardwood Pulpwood $6.95 $6.41 +0.54 $7.37 -$0.42

Pine Stumpage Prices The average pine sawtimber stumpage price increased this quarter. Chip-n-saw turned upward following seven straight quarters of declining prices1. South-wide average stumpage prices for pine pulpwood increased quarter-over-quarter but only a few cents per ton.

1 Prices had jumped for most timber products in the 1st Quarter of 2010 on low inventories and unanticipated extremely wet weather.

Stumpage prices for all three major pine products were lower than a year ago, disappointing those who had hoped for a strong Spring Rally.

Hardwood Stumpage Prices

Mixed hardwood sawtimber, the only major product to decrease this quarter, changed little and prices remained higher than pine chip-n-saw, a premium held since mid-2007. The average hardwood pulpwood stumpage price increased for the first time in two years as precipitation returned to areas of the South where drought had previously prevailed.

Page 5: Timber Mart South Sample 1Q 2012 News

Page 5 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Market Indicators

Positive indications emerged this quarter, but could be only temporary. Mixed messages exist in the overall economy, with interest rates at exceptionally low levels while fuel costs are rising. By March, both paper and wood products manufacturing sectors reported growth. Softwood lumber and panel prices had a Spring Rally that, though not so great as the surge two years ago, appeared to give evidence of stronger markets. In March, hardwood lumber and pulp prices lost their downward momentum and eased upward. Some analysts pointed to the warm winter and early spring, suggesting that accelerated projects instead of sustained demand were responsible for the growth. Housing starts and remodeling expenditures both showed promising increases this quarter while paper and paperboard manufacturing slowed slightly.

Lumber & Panel Indicators The Random Lengths Framing Lumber Composite (FLC) increased this quarter, ending March at $298 per thousand board feet (mbf), up 10 percent for the quarter and up slightly over a year ago. The Southern Pine Composite (SPC) increased more than the FLC, ending March at $302 per mbf.

Random Lengths Framing Lumber Composite $/mbf 30-Mar-12 30-Dec-11 % +/- 25-Mar-11 % +/-

298 270 10.4% 291 2.4% Random Lengths Southern Pine Composite $/mbf

30-Mar-12 30-Dec-11 % +/- 25-Mar-11 % +/- 302 251 20.3% 284 6.3%

Random Lengths Framing Lumber Weekly Composite Price ($/mbf)

$150$260$370$480

2007 2008 2009 2010 2011 2012 2013

While not surging as high as in the 1st Quarter 2010, prices ended the quarter above those of a

year ago. Southern pine 2x4 lumber prices increased about 22 percent this quarter, in line with the SPC trend and 2x10 lumber prices increased about 25 percent for the quarter. Both were up more than 10 percent year-over-year.

The Structural Panel Composite price ended March at $342 per thousand square feet, 3/8 inch basis (msf), up about 12 percent over last quarter as well as March of last year.

Random Lengths Structural Panel Composite $/msf 30-Mar-12 30-Dec-11 % +/- 25-Mar-11 % +/-

342 305 12.1% 304 12.5%

Random Lengths Structural Panel Weekly Composite Price ($/msf)

$200$325$450$575

2007 2008 2009 2010 2011 2012 2013

Southern pine plywood prices and Oriented Strand Board (OSB) prices generally followed the structural panel composite, up for the quarter and year-over-year.

The Southern Forest Products Association (SFPA) reported that southern pine lumber production was 13.47 billion board feet (bbf) for 2011, a 9 percent increase over 2010. Production was about 70 percent of 2006 levels.

Southern Pine Lumber Production billion bf, ytd 2011 2010 % +/- 2006 % +/- 13.47 12.35 9.0% 18.57 -27.5%

SFPA Annual Southern Pine Lumber Production (bbf)

05

101520

2001 2003 2005 2007 2009 2011

January 2012 shipments, the latest available, continued the upward trend and were about 10 percent above shipments in January 2011. For more details on mill activity this quarter, see Openings & Closings on page 18.

Page 6: Timber Mart South Sample 1Q 2012 News

Page 6 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

According to the latest report from the APA Engineered Wood Association, combined southern panel production declined in 2011, to 13.8 billion square feet, down about 2 percent from 2010. OSB production in 2011 was down 4 percent compared with 2010. Plywood production was up slightly. Both were less than 70 percent of 2006 production and about 74 percent of 2001 production.

Southern OSB Production billion sf 2011 2010 % +/- 2006 % +/- 7.99 8.30 -3.8% 11.21 -28.7%

Southern Plywood Production billion sf 2011 2010 % +/- 2006 % +/- 5.81 5.73 1.4% 9.31 -37.5%

APA Engineered Wood Association US Southern Panel Production (Annual billion sf, 3/8" basis)

08

1624

2001 2003 2005 2007 2009 2011S. Plywood S. OSB

The Hardwood Review US Kiln Dried Hardwood Lumber Index ended its eighteen month decline this quarter at $1,077 per thousand board feet (mbf) for the end of the March. Prices were up from the end of December but still lower than prices a year ago.

Hardwood Lumber Price Kiln dried Index $/mbf 30-Mar-12 30-Dec-11 % +/- 25-Mar-11 % +/-

1077 1055 2.1% 1103 -2.4%

Hardwood Review Kiln-Dried Hardwood Weekly Lumber Index

($/mbf)

$900$1,100$1,300$1,500

2007 2008 2009 2010 2011 2012 2013

US Building Construction According to the US Census, housing starts increased slightly in 2011 over 2010. Total starts nation-wide for 2011 were 607,000, up 3 percent from 587,000 in 2010. Starts in 2011 were about 34 percent of starts in 2006 and less than 40 percent of starts in 2001. The US South followed the same general trend.

US Residential Housing Starts, 000 units 2011 2010 % +/- 2006 % +/- 607 587 3.4% 1801 -66.3%

South Residential Housing Starts, 000 units 2011 2010 % +/- 2006 % +/- 307 298 2.9% 910 -66.3%

US Census Bureau US Housing Starts (Annual million)

0.00.51.01.52.02.5

2001 2003 2005 2007 2009 2011

Total US privately-owned housing starts surged this quarter, with starts at 95,000 units through February 2012, more than 30 percent above starts

Page 7: Timber Mart South Sample 1Q 2012 News

Page 7 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

in the same period of 2010. Analysts attributed the increase, in part, to mild winter weather. However, economic conditions have improved and the inventory of existing housing has decreased. Housing starts for 2012, if they follow this trend, would be about 798,000, still only about half the units started in 2001.

http://www.census.gov/const/newresconst.pdf

http://www.census.gov/const/newressales.pdf

Residential remodeling activity in 2011 increased slightly over 2010 according to the US Census. Expenditures were about $115 billion, up nearly $3 billion from 2010 but still down more than $30 billion from 2006. Expenditures on remodeling in 2011 were nearly $30 billion more than in 2001.

US Improvement Expenditures (Billion $) 2011 2010 % +/- 2006 % +/- 114.6 111.6 2.8% 144.9 -20.9%

$0$60

$120$180

2001 2003 2005 2007 2009 2011

US Census Bureau Residential Improvements(Billion US$ annually)

Expenditures year-to-date through February 2012 were $14.5 billion, up slightly from early 2011 but still more than $3 billion below the same period in 2006. If continued at the same rate, expenditures in 2012 would be about $117 billion.

http://www.census.gov/const/www/c30index.html

The Harvard University Leading Indicator for Remodeling Activity (LIRA) predicts decreased activity in early 2012 followed by a recovery later in 2012.

http://www.jchs.harvard.edu/media/lira/

Mortgage activity was subdued this quarter according to the Mortgage Bankers Association (MBA) with refinance activity remaining low.

Mortgage rates continue near record lows. The March average for 30-year fixed-rate mortgages was 3.95 percent according to the Federal Home Loan Mortgage Corp. (Freddie Mac), nearly unchanged from December 2011 but well below March 2011.

30-year Fixed US Mortgage Rates (percent) Mar-12 Dec-11 Δ +/- Mar-11 Δ +/-

3.95 3.96 -0.01 4.84 -0.89

Freddie Mac 30-year Fixed US Mortgage Monthly Average Rates

(percent)

3.54.55.56.57.5

2007 2008 2009 2010 2011 2012 2013

The Federal Open Market Committee (FOMC) continued its “accommodative” position, committing to maintain the federal funds rate at zero to 0.25 percent again this quarter and possibly through 2014. The FOMC continues a policy begun last September to extend the average maturity of its holding, buying longer term US Treasury bonds with proceeds from shorter term bonds.

Pulp & Paper Indicators US paper and paperboard production decreased slightly in 2011 compared to 2010 according to the American Forest and Paper Association (AF&PA). Total production was 81.5 million tons, down less than 2 percent from 2010. Paper production was 34.1 million tons, down about 4 percent with paperboard production at 47.4 million tons, nearly unchanged. Total production was down about 11 percent in 2011 from 2006.

Total US paper and paperboard production was flat in early 2012 compared to early 2011. Paper production was down slightly year-to-date through February, and paperboard production was up. For more details on mill activity this quarter, see Openings & Closings on page 18.

Page 8: Timber Mart South Sample 1Q 2012 News

Page 8 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

US wood-based pulp production more or less tracks paper and paperboard production trends. TMS estimates 2011 production at about 53.3 million tons. The US South produces about 60 percent of US wood pulp.

AF&PA Pulp Production million tons (2011 TMS est.)

2011 2010 % +/- 2006 % +/- 53.3 54.2 -1.7% 58.7 -9.1%

AF&PA US Annual Pulp Productionmillion tons

40506070

2001 2003 2005 2007 2009 2011

Softwood pulp prices ceased their decline this quarter. The FOEX Ltd. Northern Bleached Softwood Kraft (NBSK) pulp price index ended March at $844 per ton, up slightly from the end of December, although down more than $130 per ton from the same period in 2011. Bleached hardwood kraft pulp prices, at $753 per ton increased more than 15 percent for the quarter and were less than $100 per ton lower than a year ago.

FOEX NBSK Index $/ton 27-Mar-12 27-Dec-11 % +/- 29-Mar-11 % +/-

844 834 1.2% 977 -13.6% FOEX BHK Index $/ton

27-Mar-12 27-Dec-11 % +/- 29-Mar-11 % +/- 753 652 15.5% 849 -11.4%

FOEX Ltd. NBSK Pulp Index $/ton

$500$700$900

$1,100

2007 2008 2009 2010 2011 2012 2013

Recovered corrugated container prices increased this quarter according to Official Board Markets. The Old Corrugated Container (OCC) monthly average price in the South was $130 per ton in March, up $25 per ton from December but still about $5 per ton lower than a year ago.

Old Corrugated Containers - US South in $/ton Mar-12 Dec-11 % +/- Mar-11 % +/-

130 105 23.8% 135 -3.7%

Official Board Markets U.S. Southern OCC Prices ($/ton)

$0$50

$100$150$200

2007 2008 2009 2010 2011 2012 2013

Energy & Carbon Markets Fuel prices increased this quarter, with diesel and gasoline transportation fuel prices increasing along with crude oil. In contrast, natural gas prices have hit ten-year lows. Carbon markets weakened in Europe and remained almost non-existent in the US.

The March 2012 monthly average Gulf Coast diesel price was $4.04 per gallon, exceeding $4 per gallon for the first time since August 2008. Prices were up 20 cents per gallon or about 5 percent from prices a year ago.

Gulf Coast #2 Diesel – Retail ($/ gallon) Mar-12 Dec-11 % +/- Mar-11 % +/-

4.04 3.76 7.4% 3.84 5.3%

Gulf Coast No 2 Diesel Retail Prices Monthly ($/gallon) US EIA

$1.00$2.50$4.00$5.50

2007 2008 2009 2010 2011 2012 2013

http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/psw18vwall.xls

Page 9: Timber Mart South Sample 1Q 2012 News

Page 9 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Crude Oil prices were up this quarter, with higher prices attributed to sanctions the US and its allies have placed on Iran, the second-biggest producer in the Organization of Petroleum Exporting Counties (OPEC). Spot prices for West Texas Intermediate Crude (WTI) were at $104 per barrel at the end of March, up slightly from the $102 per barrel February average.

W Texas Int Crude Oil ($/ barrel) Feb-12 Nov-11 % +/- Feb-11 % +/-

102 97 5.2% 89 15.4%

Crude Oil - W Texas Int Spot Price Monthly ($/ barrel) US EIA

$0$40$80

$120$160

2007 2008 2009 2010 2011 2012 2013

http://tonto.eia.doe.gov/dnav/pet/xls/PET_PRI_SPT_S1_M.xls

Prices for carbon credits continued at the low levels set last November. At €6.93 per ton (about $9.24 per ton) prices are less than half of those a year ago. The drop was partly due to a mild winter in Europe and an increased supply of credits. Critics blame European Union policy for undermining the program.

http://www.pointcarbon.com/news/

Nine Northeast US states have capped CO2 emissions and carbon allowances for those states brought $1.93 per ton at the quarterly auction in March.

http://www.rggi.org/home

Equity Markets Stock markets surged this quarter, beginning to challenge peak levels of 2007. The Dow Jones Industrial Average (DJIA) ended March at 13,212, up nearly 1,000 points or about 8 percent from the end of December.

Dow Jones Industrial Average 30-Mar-12 30-Dec-11 % +/- 31-Mar-11 % +/-

13,212 12,218 8.1% 12,320 7.2%

Dow Jones Industrial Average

6,000

9,000

12,000

15,000

2007 2008 2009 2010 2011 2012 2013

The S&P 500 ended March up 12 percent from December at 1,408 and the NASDAQ Composite ended March up nearly 19 percent for the quarter at 3,092.

Manufacturing Activity Manufacturing activity grew again this quarter, expanding for 32 consecutive months since August 2009. The Institute for Supply Management’s Purchasing Managers Index (PMI), which aggregates activity in US manufacturing, was 53.4 in March, about average for the past 12 months but below the 61.2 rate in March 2011. A PMI above 50 indicates economic expansion, and a lesser value indicates contraction.

Paper & Paperboard Products reported growth for all three months this quarter. Wood Products reported contraction in both January and February but showed growth in March.

http://www.ism.ws/index.cfm

Page 10: Timber Mart South Sample 1Q 2012 News

Page 10 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Timberland Transactions

At press time, there had been no ordinary timberland sales reported in the 1st Quarter that included price information. Two large transactions occurred this quarter but one was Plum Creek Timber’s timber deed acquisition, on the equivalent of about 50,000 acres, and the other was Molpus Woodlands Group’s acquisition of about 42,000 acres for which price and seller were not provided.

To see how much timberland was on the market in the South and at what price, see “Timberland Proffered 1st Quarter 2012” on page 15.

Timberland Sales Summary for 2011

Due to transactions announced this quarter that occurred in 2011, TMS revised US transactions in 2011 upward to 2.3 million acres, at an average of $822 per acre. Transactions in the South in 2011 were 702,000 acres at an average price of $1,393 per acre. The table below shows historical values since 2001.

Plum Creek’s Timber Deed In January, Plum Creek Timber announced its purchase of approximately 4.7 million tons of mature southern yellow pine timber located in the Gulf South region from an undisclosed timber investment fund. The timber deed transaction was valued at $103 million.

When asked the number of acres involved, the company said the deal would be comparable to about 50,000 acres of a pure pine plantation, keeping in mind that a tract would typically have about 25 percent hardwood. To compare with other timber-only sales, this values the transaction at about $2,060 per acre.

Forest Investment Associates bought a “one harvest cycle” timber only deal from Potlatch in AR in 2009 that was over 50,000 acres for $990 per acre. The trees were 10-years old or less.

Resource Management Service bought a 20-year timber lease from St. Joe in early 2011 on 41,000 acres in Florida at $1,365 per acre.

The $22 per ton average for the Plum Creek deal compares to our $24 per ton South-wide average for pine sawtimber stumpage in 2011 and $15 per ton for Chip-n-saw.

Large Timberland Sales 2001-2011

Year South 000 acres

sold

South Price

(Million US$)

South Weighted Average Price/Ac

US 000 acres

sold

US Price (Million

US$)

US Weighted Average Price/Ac

2001 1,114 $1,010 $906 1,561 $1,635 $1,047 2002 1,183 $1,002 $847 2,628 $2,050 $780 2003 2,077 $1,645 $792 4,506 $3,298 $732 2004 1,282 $1,303 $1,016 3,660 $2,796 $764 2005 2,043 $2,411 $1,180 6,197 $5,503 $888 2006 5,461 $6,859 $1,256 7,054 $8,218 $1,165 2007 2,820 $4,238 $1,503 4,682 $8,371 $1,788 2008 1,619 $2,870 $1,773 3,363 $4,883 $1,452 2009 698 $1,120 $1,604 1,549 $2,158 $1,393 2010 666 $919 $1,380 1,089 $1,258 $1,155 2011 702 $978 $1,393 2,297 $1,888 $822

Page 11: Timber Mart South Sample 1Q 2012 News

Page 11 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

The properties are located in Mississippi, Louisiana and Arkansas. The timber is composed of standing mature and nearly-mature plantation timber, ranging in age from 24 to 32 years. The purchase does not include any hardwood volume. The company estimates that with biological growth, this timber will produce between 700,000 and 800,000 tons of annual harvest over the duration of the eight year lease.

Plum Creek’s conference call with analysts included a discussion about why the company purchased a timber deed and not the dirt. The deal was negotiated, not bid, and purchase of the underlying land not considered. Chief executive officer Rick Holley said that the company perceived an opportunity to buy a very attractive timber asset in a market which is priced low today. The company expects that those prices will increase over the next eight years.

Molpus Adds More Timberland The Molpus Woodlands Group announced the purchase of 42,464 acres of timberland in northern Tennessee from an undisclosed seller. The timberland is located in Morgan and Scott Counties in north-central Tennessee, northwest of Knoxville. Terms of the transaction were not

disclosed. Including this transaction, Molpus has about 900,000 acres under management in fifteen states.

Other Transaction Details The following transactions occurred in 2011:

Hancock Timber Resources Group sold 26,000 acres of timberland in Florida to Focus Global Forests (FGF), a German investment fund, for approximately $1,000 per acre. FGF’s parent company is Catella Real Estate AG of Munich, Germany. The transaction took place in late 2011.

Resource Management Service (RMS) sold about 13,000 acres in three states to Timbervest in the 4th Quarter at an average price of $1,290 per acre. The timberland was located in Louisiana (4,900 acres), North Carolina (2,500 acres) and Texas (5,700 acres).

Timbervest sold about 42,000 acres of timberland in Tennessee to an undisclosed buyer for approximately $1,220 per acre near the end of 2011.

Page 12: Timber Mart South Sample 1Q 2012 News

Page 12 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Page 13: Timber Mart South Sample 1Q 2012 News

Page 13 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Outside the South Transaction Details The following five transactions were announced this quarter: two in the US and three outside the US.

Fibria Celulose SA, based in Sao Paulo, Brazil, announced that it had received and accepted a binding offer from Fundo Florestas do Brasil FIP, through its subsidiary Corus Agroflorestal S.A., for the purchase of 16,500 hectares (40,800 acres) of forestry assets and land located in the state of Bahia, for an aggregate purchase price of R$235 million (about $3,150 per acre). The forest asset consists of eucalyptus for timber and pulp, having an average annual production of 565,000 cubic meters of wood. The parties expect the transaction to close before June 30th 2012.

A fund managed by The Forestland Group of Chapel Hill NC sold 2,484 acres in Kentucky to the Kentucky Division of Forestry and the Kentucky Department of Fish and Wildlife Resources for $6.68 million ($2,690 per acre). TFG purchased the tract in the Kimball divestiture (TMS reported in 4th Quarter 2008) of its undeveloped landholdings in Kentucky and Indiana. The property, located in Union County at the confluence of the Ohio and Tradewater Rivers, will become Kentucky’s newest wildlife management area (WMA) and state forest. The transaction took place in late 2011.

In January, New Forests Pty Ltd (New Forests) of Sydney announced the completion of its previously announced acquisition of the 46,000 hectare (114,000 acre) Taswood softwood plantation estate in Tasmania from Forestry Tasmania and GMO Renewable Resources on behalf of the Australia New Zealand Forest Fund (ANZFF). The forestry estate is on Tasmanian government-owned land and will be managed under a long-term agreement through 2069.

In March, funds managed by New Forests including ANZFF, also acquired a controlling interest in 46,000 hectares (114,000 acres) of the former Auspine forest estate from Gunns Ltd of Tasmania for an undisclosed price. The timberland is mostly radiata pine plantation forest in the Green Triangle region of Australia. Gunns retained an equity interest in the new ownership structure equivalent to the value of the underlying land assets, reportedly AU$120 million (US$ 124 million or $1,090 per acre). The properties will continue to supply local mills that process domestic structural timbers through long-term agreements. Including these transactions, New Forests will manage approximately 375,000 hectares (927,000 acres). Gunns announced its intent to sell its interest separately to other investors.

Plum Creek Timber completed the sale of 18,000 acres in western Oregon for $60 million (approximately $3,300 per acre) to an undisclosed buyer in the 4th Quarter of 2011. The company said the sale represented about 4 percent of its holdings in that state. These particular lands generally have a lower value species mix than the rest of Plum Creek’s Oregon portfolio.

Pending Transaction in Australia South Australia’s state-owned agency, Forestry SA, received bids for harvesting rights on 71,000 hectares (175,400 acres) of its South Australian forestland this quarter. Hancock Timberland Investment Group and The Campbell Group, as well as other international Timberland Investment Management Organizations (TIMOs), have expressed interest in ForestrySA. Later in 2012, companies are expected to submit formal expressions of interest for cutting rights to three forward rotations of the plantations.

Page 14: Timber Mart South Sample 1Q 2012 News

Page 14 Timber Mart-South ~ Market News Quarterly 1st Quarter 2012

Top Timberland Owners 2011

The timberland market in 2011 was relatively calm, only slightly more active than 2010, which was the slowest market in ten years.

The top ten forest industry timberland owners held 21.7 million acres at the end of 2011, relatively unchanged from the 21.5 million acres at the end of 2010. Holdings of Plum Creek Timber, Weyerhaeuser and Potlatch all declined, while Rayonier, Sierra Pacific and JM Huber had net increases.

At the end of 2011, the top ten forest industry owners held 17 million fewer acres than the top ten held in 2000. Only Rayonier held more timberland in 2011 than in 2000. Three former owners no longer hold any timberland assets: International Paper, Temple-Inland, and Boise Cascade. Four have merged with or been acquired by other companies: Temple-Inland, Mead, Bowater, and Willamette.

The top ten timberland investment managers had 20.8 million acres under management in 2011,

down more than a million acres from 22.0 million acres in 2010. The Forestland Group remained at the top rank this year, with The Campbell Group and Hancock Timber Resources Group close behind. RMK Timberland rose in the ranks from #10 to #7 on net acquisitions while GMO Renewable Resources dropped back to #10, mostly due to the one million acre sale to Malone/BBC Land early last year. Molpus Woodlands Group

Top Ten Timberland Investment Managers 2011

Rank Company Acres

Millions1 The Forestland Group 3.1 2 The Campbell Group 3.0 3 Hancock Timber 3.0 4 Resource Management Service 2.6 5 Forest Investment Associates 2.0 6 Forest Capital Partners 1.9 7 RMK Timberland 1.7 8 Wagner Forest Management* 1.3 9 Seven Islands/Orion Timberland* 1.2 10 GMO Renewable Resources 1.0

Total 20.8

* A management group but not a “TIMO”.

Top Ten Forest Industry Timberland Owners 2000 to 2011

Rank REIT or C-Corp Acres

(Millions) 2000

REIT or C-Corp Acres

(Millions) 2010

1 International Paper* 11.7 Plum Creek Timber (REIT) 6.6 2 Plum Creek Timber 7.9 Weyerhaeuser (REIT 5.4 3 Weyerhaeuser 5.9 Rayonier (REIT) 2.3 4 Temple-Inland* 2.2 Sierra Pacific Industries 1.8 5 Boise Cascade* 2.0 Potlatch (REIT) 1.4 6 Mead 2.0 JD Irving 1.3 7 Rayonier 2.0 Green Diamond 0.8 8 Bowater 1.8 MeadWestvaco 0.7 9 Willamette 1.7 JM Huber 0.7 10 Potlatch 1.5 Roseburg Forest Products 0.6

Total 38.7 Total 21.7

End of 2000 End of 2011 * No longer owns timberland

Page 15: Timber Mart South Sample 1Q 2012 News

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divestitures were less visible, but Molpus reduced its acres under management to about 840,000 acres, close to its holdings in 2009.

This year TMS included Seven Islands/Orion Timberlands, which has managed a number of large holdings in Maine for years. Without Orion in the list, Brookfield Asset Management would have been #10 with its 960,000 acres under management. Together with Wagner Forest Management, Brookfield and Orion are not considered “classic” TIMOs because they manage timberland assets in different corporate structures.

Timberland Proffered 1st Quarter 2012

By Russell McCarty & Sara Baldwin

The number of timberland properties proffered2 for sale in Timber Mart-South’s eleven-state region increased since December of 2011, and prices were higher on average. Our survey for the 1st Quarter of 2012 found that 1,081 timberland tracts fell within the parameters of our study, which remained the same as in previous quarters. Results were limited to timberland properties proffered in Timber Mart-South’s eleven-state region that were greater than or equal to (≥) 100 acres in size, proffered for less than or equal to (≤) $3,000 per acre, and located in non-metropolitan counties (as determined by the US Census).

http://www.census.gov/population/www/metroareas/metrodef.html

2 proffer The word proffer is derived from Anglo-French “por-”, forth, and “offrir”, to offer. The act of proffering involves making an offer prior to any formal negotiations. Synonyms include offer, tender and present. http://www.merriam-webster.com/dictionary/proffer

Quarter

Number of

Tracts Acres in Survey

South-wide Avg

Price per acre

Average Size

(Acres) 2Q 11 1,220 577,000 $2,030 474 3Q 11 1,119 482,300 $2,060 437 4Q 11 1,056 465,700 $1,925 440 1Q 12 1,081 506,240 $1,980 468

A total of 506,240 available acres fell within the constraints of our survey this quarter, down 12 percent from the 577,000 acres proffered in the 2nd Quarter of 2011, but up 9 percent from last quarter. The average, proffered price-per-acre was $1,980 per acre, a drop of $50 per acre since the 2nd Quarter of 2011. The average price-per-acre increased $55 per acre since last quarter.

South-wide Tract Size (Acres)1st Quarter 2012

0%10%20%30%40%50%60%

100-200 201-500 501-1,000 > 1,000

Approximately 50 percent of the properties proffered this quarter were smaller than 200 acres in size, and 82 percent of the properties were smaller than 500 acres. Timberland tracts exceeding 1,000 acres accounted for only 7 percent of the proffers, but they accounted for nearly 43 percent of the acreage on the market. These numbers have all remained relatively unchanged since the initiation of the survey.

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South-wide Proffers (per Acre)1st Quarter 2012

0%5%

10%15%20%25%30%35%40%

<$1,500 $1,501-$2,000

$2,001-$2,500

$2,501-$3,000

As for pricing, the majority (approximately 61 percent) of the properties in our survey were proffered at prices between $1,501 and $2,500 per acre. This distribution has also remained relatively unchanged since our first survey in the 2nd Quarter of 2011.

Tract size, again this quarter, appeared to have a minimal affect on proffered price-per-acre, but tracts with fewer than 1,000 acres were generally proffered at a slightly higher price-per-acre than larger tracts. The average 1st Quarter price-per-acre of tracts ≥1,000 acres was $1,770, down 11 percent from the 2nd Quarter of 2011, and the average price per acre of tracts between 100 and 999 acres was $2,000, down 3 percent from the 2nd Quarter of 2011.

The number of large tracts (≥1,000 acres) proffered in the South dropped from 110 in the 2nd Quarter 2011 to 88 in the 1st Quarter of 2012. These larger tracts accounted for 218,726 of the 506,240 available acres this quarter and had a total proffer value of $379 million. Since last quarter, the number of acres proffered has increased by 35,926 acres.

The geographical distribution of proffered timberland remained similar to past quarters: Alabama, Georgia, and Mississippi again had the largest number of timberland proffers. Florida, North Carolina (replacing Louisiana), and Virginia had the fewest number of listings. The weighted-average price-per-acre in Texas increased to $2,350 per acre since last quarter and maintained the lead as the highest in the South. South Carolina, Mississippi and Georgia continued to follow closely behind Texas in highest price-per-acre rankings. Arkansas replaced North Carolina as having the lowest average price-per-acre proffers in the South, at $1,335 per acre.

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China’s Housing Policy Changes Will Drive Demand in 2012-15

House-Price Decline & New Home Construction

By Gerry Van Leeuwen, Vice President, International WOOD MARKETS Group

China wants to accommodate a long term plan to meet rapid urban population growth and allow an orderly migration of some 200 million people from rural areas to urban centers over the next 10 years. The Chinese government hopes to orchestrate a change in the Chinese housing-market by stabilizing and reducing house prices along with a massive expansion of the number of “affordable”

housing starts. Such a plan is unheard of in the free-market Western world where falling house prices would normally indicate supply exceeding demand.

The new housing policy directives, implemented gradually during 2010 and 2011, began to have a noticeable impact in the third and fourth quarters of 2011. Price growth has been slowing (Figures 1 and 2).

Directives included:

Restrictions on the purchase of multiple homes by one individual;

A requirement for larger down-payments;

A reduction in access to bank lending by developers;

Limited opportunities for speculators to “flip” properties;

Encouragement of city property taxes.

Chinese directives in recent years also included an increase in the construction of government-financed low-cost housing. In 2010, the Chinese government introduced its five-year plan to build 36 million affordable houses in China between 2011 and 2015. The policy objective is to build a large number of smaller and less expensive new houses (apartments) that can be afforded by the average Chinese household.

The government also wants to discourage the overbuilding (seen in the last few years) of higher-end apartments by the private sector. The price declines that began in the 4th Quarter of 2011 should persist until house prices have corrected (by an estimated 15-20 percent) in 2012. Industry experts say the government’s policies have already led to real estate speculators in Beijing becoming “nearly extinct”.

According to International WOOD MARKETS GROUP, official government targets for housing starts for the next four years remain very bullish. The construction industry will receive a massive boost. By 2013, as the number of government-financed units begins to decline, private investment in the housing industry is projected to

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recover and carry a growing share of total forecast housing starts.

The beginning of 2012 has seen a return of Chinese demand for West Coast logs and lumber. This may be a sign that China’s central government can successfully engineer its ambitious economic targets. If it does, the outlook for new housing starts, and therefore wood consumption, looks very optimistic indeed for the next four years.

For projected Chinese housing starts and expected further changes in Chinese government policy, see the full article, reprinted here in part by permission from WOOD MARKETS Monthly International Report, Vol. 17 No.1 February 2012.

Top US Softwood Lumber Producers 2011

US softwood lumber production in 2011 increased to 26.8 billion board feet, up 7.6 percent over 2010. The top five companies produced 30 percent of the lumber, about the same as in 2010 according to an analysis by International WOOD MARKETS Group.

Weyerhaeuser, Sierra-Pacific and West Fraser remained the top US producers with Georgia-Pacific returning to 4th place after having been

edged out by Hampton Affiliates in 2010.

More than half of the mills operated by the top five producers are in the South. Weyerhaeuser, West Fraser and Georgia-Pacific remain the South’s top producers.

Canadian lumber production increased to 22.5 billion board feet in 2011, up about 2.5 percent over 2010. West Fraser and Canfor remain the top lumber-producing companies in Canada. When ranked for total North American production, West Fraser is first with 4.9 bbf, followed by Weyerhaeuser and Canfor with about 3.5 bbf each.

Information is based on Vol. 17 No.2 March 2012 issue of WOOD MARKETS Monthly International Report and reprinted by permission.

Openings & Closings

The 1st Quarter was relatively quiet in the South, with some market-related downtime and a few unexpected shutdowns to address emergency situations. There were also restarts and announced expansions. Outside the South, there were more mill closures plus fire and earthquakes in Chile that shut down some production. See the related item in Other News on page 30.

US Top Softwood Lumber Producers - 2011 Rank Number of Mills Production mmbf

2010 2011 Company US Total South 2010 2011 %

Change1 1 Weyerhaeuser 15 11 2,550 2,759 8% 2 2 Sierra-Pacific 14 1,672 1,800 8% 3 3 West Fraser 15 15 1,365 1,503 10% 5 4 Georgia Pacific 16 16 1,074 1,074 n/c 4 5 Hampton Affiliates 5 1,100 1,000 -9% Total Top 5 65 42 7,761 8,136 4.8% Total Top 20 124 73 14,048 14,825 5.5% Total US 24,896 26,793 7.6% Total Top 5 as % US 31% 30% Total Top 20 as % US 56% 55%

Note: Includes lumber produced only at primary sawmills and excludes all Canadian and offshore production

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Pulp & Paper There was one temporary shutdown in Florida this quarter and a start up in Alabama. Outside the South, Braxcel announced details of its proposed new mill in Brazil, while Kimberly-Clark exited the pulp business by shutting down its last mill, located in Washington State.

For pulp prices and industry production, see “Pulp and Paper Indicators” on page 7.

Buckeye Florida experienced an unplanned full shut down of its Foley pulp mill in Perry FL (TMS FL2) on February 17th due to an electrical failure. The mill, which manufactures specialty wood cellulose and fluff pulp, returned to normal operations over the next few days, with one line starting up on Sunday, February 19th and the other on Wednesday, February 22nd. Separately, Buckeye announced the closure of its Americana cotton linter pulp mill in Sao Paulo, Brazil, citing high input costs. The company expects its Memphis TN mill to meet demand after the closure, and plans to sell the Brazilian facility.

Resolute Forest Products, formerly AbitibiBowater, restarted its Coosa Pines AL (TMS AL1) pulp mill in late January after having temporarily shut down the facility in mid-December due to challenging market conditions. The mill consumes about 1.5 million tons per year of pine pulpwood to make about 298,000 tons per year of fluff pulp. The company also restarted its Fort Francis Ontario kraft pulp mill in January, which shut down in November. That mill has about 389,000 tons of annual pulp capacity.

RockTenn announced plans to accelerate maintenance downtime at its Demopolis AL (TMS AL2) paperboard mill. Downtime scheduled for the 3rd Quarter will now occur in the 2nd Quarter. The mill has annual pulp capacity of about 391,000 tons. The company will also permanently shut down its Matane, Quebec, containerboard mill which has annual pulp capacity of approximately 132,000 tons. The Matane mill was part of the Smurfit-Stone acquisition in May 2011 and is the highest cost mill in the RockTenn system. The

company is seeking the best alternative use for the site.

Pulp & Paper Outside the South

Companhia Brasileira de Celulose (Braxcel) plans to build a 1.6 million ton per year bleached eucalyptus kraft pulp (BEKP) mill in Peixe, in southern Tocantins, Brazil. Grupo GMR, Braxcel’s parent company based in Madrid, estimates the project will require approximately 180,000 hectares (about 440,000 acres) of planted eucalyptus forest, of which the company currently has more than 100,000 hectares of land in the region. The mill is scheduled to start up at the end of 2018.

Kimberly-Clark (K-C) plans to permanently close its Everett, Washington, pulp and tissue mill in mid-April. The company has already ceased pulp production at the facility, and K-C will no longer make any of the pulp it uses. The Everett mill had annual wood pulp capacity of 173,000 tons. The company’s only other pulp mill in Tantanoola, South Australia, which had 70,000 tons of annual capacity, shut down last year. Plans to sell the Everett mill to Atlas Holdings LLC broke down in late 2011 allegedly due to cleanup requirements of an adjacent waterway. The mill was built in 1931 by Puget Sound Pulp and Timber Co. and was purchased by Scott Paper in 1951. K-C acquired the mill in its 1995 merger with Scott. K-C plans to demolish the facility; however, city and state officials are exploring options to keep the site productive. The mill employed about 750 people.

Wood Products: Sawmills Two sawmills, one hardwood in Alabama and one pine in North Carolina, shut down temporarily due to fire this quarter. One Mississippi sawmill announced market-related downtime. Potomac Supply, which shut down its Virginia sawmill last quarter, resumed manufacturing other products at the facility this quarter. A flooring manufacturer announced expansion while a cabinetry company closed two facilities, both outside the South.

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For more on lumber prices and production levels, see “Lumber and Panel Indicators” on page 5.

Armstrong World Industries, a major hardwood flooring manufacturer, announced in March that it would add a third shift and hire about 95 people to increase production at the company’s hardwood flooring plant in Jackson TN (TMS TN2).

American Woodmark, a major cabinetry manufacturer, announced in January that it would close two facilities and sell another due to poor market conditions. The facilities are in Kentucky, Oklahoma and West Virginia. The company operates facilities in eight states including Georgia, Tennessee and Virginia.

Hankins Lumber shut down its 120 mmbf per year capacity southern yellow pine sawmill in Elliott MS (TMS MS1) in January until market conditions improve. The shutdown affected about 150 employees.

Linden Lumber temporarily shut down its hardwood sawmill in Linden AL (TMS AL2) due to a fire on February 10th. The cause of the fire, believed to have started in the mill’s hydraulic room, is still under investigation. There were no injuries.

Potomac Supply, which shut down its sawmill in Kinsale VA (TMS VA2) at the end of 2011, also temporarily shut down other operations at the facility. By March, the company had restarted landscape timber production as well as pallet manufacturing and wood treatment.

Westervelt received a $1.4 million loan from the Alabama Department of Economic and Community Affairs to help install energy-saving upgrades to the company headquarters in Tuscaloosa and its 280 mmbf per year sawmill facility at Moundville AL (TMS AL1).

Weyerhaeuser temporarily shut down its 260 mmbf per year capacity sawmill in Plymouth NC (TMS NC2) due to a fire on Tuesday February 14th. There were no reported injuries and the mill partially restarted the next day. However, full operations did not resume for several days. The cause of the fire, thought to have started in the planer, is still under investigation.

Wood Products: OSB & Panels Other than announced maintenance downtime, the South’s plywood and OSB plants generally continued production at last quarter’s level. One manufacturer in the South plans to expand while Weyerhaeuser has responded to Japanese markets

by adapting production at one of its Canadian facilities.

Chester Wood Products applied for revised air emissions permits for its plywood plant in Chester SC (TMS SC2). The owners hope to increase production through longer operations per day. The plant currently has the capacity to produce about one million feet of plywood, pine or hardwood, per day for remodeling and furniture manufacturing.

Weyerhaeuser received a Japan Agricultural Standard (JAS Standards) certification from the American Panel Association (APA) in February. The company plans to produce JAS-certified OSB products

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for export to Japan, and the first plant to go into production will be the company’s Hudson Bay, Saskatchewan OSB mill in Canada. JAS panel dimensions differ from North American standards and according to press reports the mill will use a proprietary formulation to meet strength, stiffness, and formaldehyde emission criteria.

Biofuel & Bio-energy

Biofuel and Bio-energy continue to face increased scrutiny for economic and ecological reasons. The US government’s Biomass Crop Assistance Program (BCAP) re-emerged, but in a skeletal form with little funding. Reports on biomass harvesting and carbon accounting attempted to address perceived threats to biomass fuel use.

US pellet production is still dependent on European markets.

US biomass cogeneration projects compete with other fuels where costs have been dropping.

US biomass transportation fuels projects still face the technical challenge of taking laboratory success to commercial scale.

Power generation utilities claim that without policy incentives, biomass remains uncompetitive with other fuel options. Meanwhile uncertainty remains about implementation of greenhouse gas regulations for industrial boilers. These are not new issues. Oglethorpe Energy switched from biomass to natural gas when the company cancelled three proposed biomass plants in February 2011. The Southern Company put the biomass fuel conversion of its Plant Mitchell on hold in the early 2010 until the boiler emission rules were clarified.

Bio-Energy Projects in the South Of 14 project updates this quarter, six were wood pellet mills, three cogeneration facilities and five transportation fuel “bio-refineries” (replacing “ethanol” as a category.) There were no truly new projects.

Bio-Energy Project Updates - US South State/

Company Location Region Annual

Capacity Annual Wood Consumption Startup

Fuel Wood Pellets 000 Tons 000 Tons Zilkha Biomass (restart) Selma AL1 300 600 2013 Vega Biofuels Cordele GA2 n/a n/a 2013 Enviva Pellets Wiggins MS2 150 300 running Nature’s Earth Laurinburg NC2 120 240 running LowCountry Biomass (new owner) Ridgeland SC2 220 440 n/a German Pellets Woodville TX2 550 1,100 2013

Cogeneration/Biofuel Megawatts 000 Tons Ameresco/SRS Aiken SC2 10 100 startup Southern Company Sacul TX2 100 1,000 2012

Dominion Virginia Altavista, Hopewell,

Franklin VA2 150 (combined) 1,100 2013 Biorefinery/Ethanol Million Gallons 000 Tons

Buckeye Florida Perry FL2 n/a n/a startup LanzaTech (new owner) Soperton GA2 n/a n/a n/a KiOR Columbus MS1 11 330 2012 KiOR (new location) Natchez MS2 33 990 2014 VIrdia (HLC CleanTech) tba MS n/a n/a 2014

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There was one startup, a cogeneration project at the Savannah River Site. There were three shut downs due to facility fires. Two projects have new owners and one has a new name.

Wood Fuel Pellets/Briquettes In January, fire temporarily shut down production at Enviva Pellets in Wiggins MS (TMS MS2). There were no injuries and only minor damage. The fire reportedly began from a spark during work on a piece of equipment and spread to a storage silo. The Wiggins facility has annual fuel wood pellet capacity of 150,000 tons after an expansion completed since Enviva’s acquisition in October 2010. In March, Enviva announced a multi-year, 265,000 ton per year fuel wood pellet supply agreement with E.ON, a large European utility. The contract begins in early 2013 and Enviva plans to supply the wood pellets from its facilities in the South.

German Pellets Texas LLC plans to build a 550,000 ton per year fuel wood pellet plant at a former chip mill in Woodville, Texas (TMS TX2), with startup planned for early 2013. Local authorities have approved tax abatements and air quality permits for the facility.

LowCountry Biomass, announced in March that it plans to expand capacity at its recently-acquired Champion Wood Pellets facility in Ridgeland SC (TMS SC2). The $16 million investment will expand production at a facility which makes fuel wood pellets as well as equine bedding. Target production capacity is 220,000 tons per year and

the project is expected to generate 26 new jobs. Champion began operations at the site in 3rd Quarter 2010, shipping product to Europe as well as bagging for local consumption, but with no stated target capacity.

Nature’s Earth experienced a silo fire at its Laurinburg NC (TMS NC2) wood pellet plant in early March. There were no injuries; however, the plant has been shut down until the silo can be emptied and cleaned. The plant produces wood pellets used for horse bedding, kitty litter and biofuel. According to press reports when the plant started up in late 2009, design capacity for the plant was 120,000 tons per year.

Vega Biofuels of Norcross GA announced plans to build a bio-coal manufacturing plant in Cordele GA (TMS GA2) using timber waste in a torrefaction process. Vega has leased a facility in Cordele adjacent to the new Cordele Inland Port which provides direct rail access to the Port of Savannah. Startup is scheduled for the 1st Quarter of 2013 with unspecified production targeted for European markets. Power generators can process bio-coal briquettes through the existing fossil coal handling systems without modification.

Zilkha Biomass announced plans for the closed, former Dixie Pellets plant in Selma AL (TMS AL1) that it purchased at auction in May 2010. The company plans to convert the Selma plant to manufacture “black” wood fuel pellets such as the company currently produces at its Crockett TX (TMS TX2) plant that opened last year. Target production is about 300,000 tons per year. Dixie

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Pellets manufactured “white” pellets and had a target capacity of 500,000 tons. Zilkha plans to start up production in late 2013.

Cogeneration/Bio-energy Ameresco and the US Department of Energy (DOE) held a ceremonial ribbon cutting on March 12th to mark the successful startup of the new Biomass Cogeneration Facility in Aiken SC (TMS SC2) at the Savannah River Site (SRS). The plant has replaced an aged coal powerhouse and oil-fired boilers at SRS, and will generate 10 Megawatts of power initially, ramping up to 20-Megawatts at full production. The plant will use about 385,000 tons of wood furnish per year.

Dominion Virginia Power received state approval in March for plans to convert three coal-fired power plants to biomass fuel: Altavista, Hopewell, and Southampton County (TMS VA2). The power stations will generate about 50 Megawatts of electricity each, using primarily waste wood from timber operations. The company also received permission to charge its customers to cover the estimated $165.8 million cost to adapt the plants.

Green Energy Partners LLC received a commitment for a bond issue from Georgia’s

DeKalb County Development Authority to help finance its proposed $60 million 10 Megawatt wood-fueled biomass energy plant in Lithonia GA (TMS GA1). However, the future of the project remains uncertain. The project was put on hold in mid-2011 when the Georgia Environmental Protection Division highlighted deficiencies in Green Energy’s application to construct and operate the plant. In addition, a group of residents has sued the county for approving the plant.

Construction at Southern Company’s biomass-fueled power plant in Sacul TX (TMS TX2) temporarily ceased at the end of January when an explosion severely injured two workers, employees of Fagen, Inc., the construction contractor. Fagen closed the site to investigate the electrical-related accident and brief fire. The plant received its first load of fuel in November and was scheduled for startup in mid-2012.

Biorefineries Buckeye Technologies Inc. and the University of Florida’s Institute of Food and Agricultural Sciences marked the official startup of the Stan Mayfield Biorefinery Pilot Plant in Perry FL (TMS FL2) on January 9th. When fully operational, the

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biorefinery will produce up to 400 gallons per day of fuel ethanol and 5,000 pounds per day of organic acids for bioplastics. The researchers’ goals include testing a wide variety of feedstocks, such as crop residues and yard waste to find ways to save money on production costs.

KiOR, Inc. announced in January that it has new funding: a $75 million four-year term loan with a lender group comprised of an affiliate of Vinod Khosla and two Canadian corporations owned by pension fund clients of Alberta Investment Management Corporation. KiOR also said it is on time and on budget with its first facility under construction in Columbus MS (TMS MS1) and scheduled for start up in the second half of 2012. KiOR also announced it would locate its second Mississippi facility in Natchez instead of Newton (both in TMS MS2) as originally planned due to better logistical, infrastructure and tax incentives. The company expects to begin construction on the second plant after the first plant is completed, with startup scheduled for 2014.

LanzaTech, based in Chicago, purchased the idle Range Fuels facility in Soperton GA (TMS GA2) at auction in January for $5.1 million and announced plans to produce ethanol and other chemicals at the plant using woodchips. The company plans to take about six months to evaluate how existing equipment at the site, renamed the Freedom Pines Biorefinery, can be integrated with LanzaTech technology.

Virdia, Inc., formerly known as HCL Cleantech, announced in March that it has a $75 million loan and $155 million in tax incentives from the state of Mississippi for its planned commercial plant to convert wood into sugars for transportation fuel production, nutritional products and specialty chemicals. Even though the company has not yet selected a site, it expects to begin production in 2014. Virdia also said it received $20 million in venture capital from Khosla Ventures, Burrill & Co. and Tamar Ventures to fund engineering work for the plant, as well as $10 million in debt from TriplePoint Capital LLC.

Virdia together with Virent, Inc. based in Madison, Wisconsin, also announced the successful conversion of cellulosic pine tree sugars to hydrocarbon fuels by the BIRD Energy project, a joint program funded by the US Department of Energy, the Israeli Ministry of National Infrastructure and the BIRD Foundation. Virent used Virdia’s biomass-derived sugars to produce gasoline and jet fuel, the latter passing rigorous tests by the US Air Force Research Laboratory (AFRL) analysis.

Other News Outside the US, changing national policies affected plans for one biomass-fueled facility and another plant shut down due to fire in its wood pellet storage.

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Uncertainty regarding UK subsidies for biomass power caused Drax Power to cancel plans for a separate 290 Megawatt wood biomass fueled electrical station in North Yorkshire, England. The “Ouse” plant would have provided a market for about 3 million green tons of biomass annually, mostly fuel wood pellets. The company still plans to expand biomass co-firing at its existing coal-fueled Drax Power Station in North Yorkshire.

In February, RWE experienced a fire in the pellet storage area at its 750 Megawatt power plant in Tilbury, England. The plant had switched from using coal-fired generation to wood pellets fuel in January. While the company said turbines were not damaged, the plant may not be fully operational until July. Cause of the fire is not known.

BCAP Returns Again

On March 22nd the US Department of Agriculture Farm Service Agency (FSA) released FY2012 guidelines for the Biomass Crop Assistance Program (BCAP) authorized in the 2008 Farm Bill. Applications are due April 23rd. Financial incentives are available for biomass production and crop establishment; however, funds are limited. Compared to FY2010 and FY 2011, when funding was $552 million and $112 million respectively, funds for FY2012 are $17 million. For more information, contact the FSA office that serves the proposed location.

Biomass Harvesting & Supply in the South

The Forest Guild (FG) based in Santa Fe, New Mexico, has released two sets of biomass harvesting guidelines: one last year for the Northeast US and the other in March for the Southeast US. The authors intend the guidelines to fill a perceived gap between state-level biomass guidelines and existing best management practices. Some of the recommendations promote the value of leaving harvesting “waste” and non-merchantable trees un-harvested to benefit wildlife.

http://www.forestguild.org/publications/research/2012/FG_Biomass_Guidelines_SE.pdf

FG also released a separate report this year, Biomass Supply and Carbon Accounting for Southeastern Forests, which examines resource availability together with biomass energy technology in the South. The report suggests that meeting 20 percent of a 15 percent renewable electricity standard with woody biomass would be possible in the Southeast region; however, meeting 30 percent might strain supply. For carbon accounting, this report assumes that available forest resources not used for energy would likely be used in other products and uses a “comparative” approach on different technologies for effects of NO2 and CO2 emissions. The report also estimates the efficiency of the same technologies for electrical and thermal generation.

http://www.biomasscenter.org/images/stories/SE_Carbon_Study_FINAL_2-6-12.pdf

The Carbon Cycle & Forest Carbon Debate

Dovetail Partners of Minneapolis MN published Carbon 101 this quarter, an overview of carbon use by forests and forest use for products. A forest can be harvested for forest products and still sequester carbon. The “bottom line” is that growth in excess of removals over the long term is no more sustainable than when removals exceed growth. The report concludes that while it is critical that management be conducted responsibly and sustainably, choosing not to manage has its own potentially negative consequences.

http://www.dovetailinc.org/reportsview/2012/responsible-materials/pjim-bowyerp/carbon-101

Restructuring

The IP and Temple-Inland deal closed this quarter and is expected to generate related transactions before year end. Two contentious deals remained unsettled at press time: Resolute’s bid for Fibrek (in competition with Mercer) and Sino-Forest’s reorganization plans.

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IP Acquires Temple-Inland In early February, International Paper and Temple-Inland reached an agreement with the Antitrust Division of the US Department of Justice (DOJ) with respect to IP’s acquisition of Temple-Inland. The DOJ approval allowed the deal to proceed and on February 13th IP announced the deal was complete. Temple-Inland became a wholly owned subsidiary of International Paper. The total transaction value is approximately $4.5 billion, including the assumption of about $700 million in Temple-Inland net debt.

In accord with the DOJ approval, the combined company will sell 970,000 tons of containerboard mill capacity within four months of deal closure, with the possibility of two 30-day extensions. Even with these sales, IP will still operate about one third of North American containerboard capacity.

The facilities to be divested include Temple-Inland’s Ontario, California, mill that uses recycled furnish and its New Johnsonville, Tennessee, mill that uses both wood and recycled furnish. IP also plans to sell its Hueneme, California, mill which uses recycled furnish. According to press reports,

IP has reported strong expressions of interest for these mill assets as well as Temple-Inland’s Building Products business.

Separately, IP closed its previously announced agreement with Atlas Holdings to combine their consumer-packaging solutions businesses, AGI World and Shorewood Packaging, to become AGI-Shorewood.

Great Southern Expands Great Southern Wood Preserving, Inc. based in Abbeville, Alabama, announced its acquisition of Rocky Top Building Products and other subsidiaries of The Franklin Group, based in Rocky Mount, Virginia. The transaction expands Great Southern’s distribution coverage from Florida west to Texas and north to Canada, including all or parts of 27 states and the District of Columbia.

Great Southern acquired treatment facilities from Elder Wood Preserving in Mansura LA last year. Previous acquisitions include facilities from Bean Lumber in Glenwood AR in 2007 and Rex Lumber in Brookhaven MS in 2009.

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Resolute, Fibrek & Mercer Last quarter’s bid by AbitibiBowater Inc., doing business as Resolute Forest Products, for Fibrek Inc., of Montreal, resulted in a contentious exchange of offers, counter offers and days in court this quarter. Resolute’s take-over of Fibrek stalled in mid-February when Mercer International, based in Vancouver BC, announced an agreement to acquire Fibrek at a premium of 30 percent over the bid by Resolute. Mercer operates one northern bleached softwood kraft pulp mill in Canada and two in Germany with combined annual production capacity of 1.5 million tons.

Fibrek’s board of directors recommended that its shareholders reject the Resolute offer and accept the Mercer offer. Fibrek entered into “lock-up” agreement requiring at least 50.1 percent of Fibrek shareholders to tender under the Mercer offer, while Mercer agreed to purchase special Fibrek warrants to provide funding for strategic capital projects pending deal closing.

Conflicting court and regulatory decisions meant that Fibrek had received approval from the Toronto Stock Exchange for the private placement of special warrants to Mercer, but then approval was subsequently withdrawn. At press time, approximately 60 million common shares of Fibrek had been deposited to the Resolute bid, not enough to close the deal. Resolute extended its offer for Fibrek until April 11th and promised to continue to contest Mercer’s bid.

Sino-Forest Seeks Creditor Protection Sino-Forest, a forest products company that was formerly traded on the Toronto Stock Exchange under ticker “TRE”, requested and received creditor protection in the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA). The company sought approval for a court supervised restructuring process. Sino-Forest, conceived as an investment vehicle in Chinese forest and timber, said the process would involve either a sale of the company to a third party or a restructuring under which the

note holders would acquire substantially all of the assets of the company.

In the same announcement, Sino-Forest said that it has commenced a court action against Muddy Waters, Carson Block, and others, relating to allegations made against the company prior to and following the public release on June 2nd 2011 of a report prepared by Muddy Waters. The action seeks damages in the amount of $4 billion and the recovery of profits made by Muddy Waters and others in connection with the Muddy Waters report alleging “glaring inconsistencies” in Sino-Forest statements about its asset.

Sino-Forest, considered China’s largest private forestry company, has reportedly close ties to the Chinese government. Such close relationships may complicate the sale of assets in China where ownership rights are limited. Restructuring, too, could prove complicated with Chinese government involvement. Not all holdings are in China. Sino-Forest subsidiary Greenheart owns timberland in New Zealand and Suriname.

Other Changes Buckeye Technologies Inc. announced its agreement to sell the assets and ongoing operations of its Merfin Systems business to National Tissue Company, LLC of Cudahy, Wisconsin. Merfin, located in King, North Carolina, converts towels, tissue and napkins which it sells along with proprietary paper product dispensers in the away-from-home market. Terms of the transaction were not disclosed.

Catalyst Papers of Richmond, British Columbia, announced in January that the company had applied for and received an initial court order under the Canada Business Corporations Act (CBCA) to commence a restructuring process with its note holders. At the end of January, the company also obtained an initial order from the Supreme Court of British Columbia under the Companies’ Creditors Arrangement Act (CCAA). Catalyst also filed for Chapter 15 bankruptcy in the US, to ensure that its assets in the US are protected while it attempts to restructure under

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Canadian law. The company will continue to operate and satisfy its obligations to trade creditors, customers, employees and retirees in the ordinary course of business during this restructuring process. Catalyst manufactures specialty printing papers, newsprint and pulp.

CFP Components, a division of Columbia Forest Products, acquired Cabinotch, a company that has developed an innovative system for assembling face-framed cabinet boxes. The system will allow CFP to deliver a set of custom-sized American Hardwood parts, helping cabinet shops reduce costs and improve productivity. Terms of the transaction were not disclosed.

Domtar Corporation announced an agreement to sell its Lebel-sur-Quévillon, Quebec, assets to Fortress Global Cellulose Ltd, and with 9109-3294 Quebec Inc., a subsidiary of the Government of Québec. All pulp and sawmilling assets, including the buildings and equipment, will be sold to Fortress for the nominal sum of $1.00 and all lands related to the facilities will be sold to a subsidiary of the Government of Québec for the nominal sum of $1.00. The pulp mill ceased operations in November 2005 due to unfavorable economic conditions. Sawmilling operations at the

facility ceased in 2006. Fortress intends to invest approximately $222 million to convert the idle northern bleached softwood kraft pulp mill into a low cost, high quality dissolving pulp (DP) mill. Proposed annual capacity will be of approximately 236,000 air dried metric tons (ADMT). Fortress also plans to increase the capacity of the cogeneration facility at the site from 30 to 50 Megawatts. Startup is planned for late 2013. The parties expect the transaction to close in the 2nd Quarter of 2012.

Georgia-Pacific accepted a binding offer from Svenska Cellulosa Aktiebolaget (SCA) for G-P’s European tissue operations. G-P also announced that it had completed the sale of its Italian operations to Cartiera Lucchese (Lucart Group) based in Lucca, Italy. The sale includes G-P’s mills located at Castelnuovo and Avigliano, the Italian brands Tutto and Tenderly, related assets and administrative support. Terms of the agreement were not disclosed.

Graphic Packaging International, Inc. (GPI) announced plans to relocate its corporate headquarters from Marietta to Sandy Springs, Georgia, in January 2013. The new headquarters will enable GPI to consolidate its existing four-

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building campus into a single location. The company’s executive team, corporate staff, North American operational headquarters, Product Development Center, and Global Innovation Center will all relocate to the new complex.

On March 13th MeadWestvaco held the official opening of its state-of-the art pilot plant and Center for Packaging Innovation (CPI) located near Richmond, Virginia. In 2010, the company announced plans to move the facility from Raleigh NC to the company’s global headquarters in Richmond. Since then, MeadWestvaco has invested more than $13 million in infrastructure and equipment, creating 114 new jobs in the area. The pilot plant has five labs (Materials and Metallurgy Engineering, TAPPI Conditioned Materials Testing, Polymers and Packaging, Paper Science, and Coating). Close proximity to additional science and design labs and other CPI experts housed within company headquarters enables the plant and its employees to better collaborate with colleagues, customers and suppliers.

Svenska Cellulosa Aktiebolaget (SCA) announced several transactions this quarter. SCA completed its joint venture with Pacific Equity Partners of Sidney, Australia, through the sale of 50 percent of SCA operations in Australia. SCA also announced the sale of its packaging operations to DS Smith of the UK for EUR 1.7 billion (US$2.2 billion) on a debt free basis. The operations have approximately 12,000 employees. SCA plans to focus on growth in its hygiene business, supported by its acquisition of G-P’s tissue business (see item above.)The sale to DS Smith excludes SCA’s two kraftliner mills in Sweden as they are integrated with the company’s forest products operations. In March, SCA announced its acquisition of PLF, a distributor of timber products to the builders’ merchants sector throughout France. PLF also conducts timber-processing activities, including coating and surface treatment of timber products for interior and exterior use. PLF employs 70 people.

Hood Industries of Hattiesburg, Mississippi, expanded its custom milling operations this quarter

with the acquisition of a facility in Ayer, Massachusetts. Hood operates two plywood and three lumber mills in the South. The company’s Hood Distribution division has 18 specialty wood product distribution operations in 10 states, 5 in the South.

Weyerhaeuser Co. sold its idle OSB mill in Miramichi, New Brunswick, for C$31 million, to Arbec Forest Products of St. Léonard, Quebec. The mill has been shut down since 2007 and a previously announced sale of the mill to Arbec in 2009 failed to close. Arbec expects to restart the mill later this year and employ about 200 people.

Uniboard USA LLC announced in January that it has successfully closed the sale of its Moncure, North Carolina, panel mill (TMS NC2) to a subsidiary of Paneles Arauco of Santiago, Chile, for $62 million. Uniboard is a subsidiary of Pfleiderer AG, and manufactures particleboard, as well as high density and medium density fiberboard.

Norske Skog of Lysaker, Norway, has agreed to sell its Norske Skog Bio Bio operation in Chile to Group BO, a consortium of Chilean investors, for $56 million. Group BO plans to continue producing newsprint at the Concepción mill which has annual pulp capacity of 143,000 tons. The parties expect the deal to close in the 2nd Quarter.

Norske Skog also announced it would close its pulp and paper mill in Follum, Norway, and sell the site to Viken Skog of Hønefoss, Norway, a large forest owner cooperative. The mill produced newsprint and coated magazine paper, with annual wood pulp capacity of 385,000 tons. The net proceeds of the sale were NOK60 million (about US$10.5 million). The parties expect the deal to close in the 2nd Quarter.

Tembec Industries completed the sale of its British Columbia wood products business to Canfor Corp. for C$65 million. Assets sold included Tembec’s Elko and Canal Flats sawmills with annual capacity of about 420 million board feet and related volumes of timber supply on Crown and private land. The transaction includes a long term residual fiber supply agreement for

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Tembec’s Skookumchuck mill. The transaction brings Canfor’s total softwood sawmill capacity to more than 5 billion board feet. Tembec plans to use the proceeds to pay down debt.

Other News

Hardwood Promotion Success The Hardwood Federation (HF), an industry trade association based in Washington DC, reported a “success” story this quarter: the US Department of the Navy selected American Hardwood for a new gym floor. The original military purchase order to build a gym floor at the Marine Corps base in Camp Lejune NC had at first excluded US hardwoods in favor of “rapidly renewable” imported bamboo. HF reported that after its campaign which lasted several months, the Navy rescinded the initial purchase order and reopened the project to bids, including those specifying domestic hardwoods. The order was subsequently awarded to Southern Flooring Inc. based in Greenville SC.

Recovery & New Disasters Japan’s pulp and paper industry reports more work in store to recover from last year’s destruction. Chile’s fires and earthquakes this quarter destroyed a plywood plant and affected pulp production.

Japan’s Recovery Continues

Following the East Japan tsunami/earthquake disaster in March 2011, many Japanese pulp and paper facilities took on extra production to compensate for lost capacity at damaged mills. Estimated restoration of full capacity targets early 2013; however, restarts began in the second half of 2011 and continued this quarter.

Nippon Paper, for example, restarted one paper machine at its damaged Ishinomaki Mill, Miagi Prefecture, in September 2011, another in November 2011, a third February 2012 and a fourth in March. Three of the company’s

machines, started up last year at other mills to replace lost capacity, were shut down at the end of March: one each at the Iwanuma Mill, the Fugi Mill and the Yoshinaga Mill.

Chile’s Fire and Quake

Chile’s forest products industry suffered a double blow this quarter: massive forest fires and another severe earthquake. The forest fires began in late December 2011, and quickly spread to more than 20,000 acres due to hot, dry summer conditions.

By January 6th, fire had destroyed Arauco’s 500 bsf per year radiata pine plywood facility at Nueva Aldea. Press reports estimated the fire burned about 40,000 acres, much in Torres del Paine National Park in the Chilean Patagonia but also in Arauco’s 17,000 acres of plantation forest. There were no injuries and no further destruction at the Nueva Aldea complex, which has a pulp mill, sawmill and biomass power plants. Arauco temporarily shut down all facilities to join the fire-fighting effort and later announced plans to rebuild the plywood plant, with restart planned for late 2013.

On March 25th a 7.2 magnitude earthquake struck the Maule region of Chile, eighteen miles below the surface and was felt across a wide region. Two of Arauco’s pulp mills, Licancel and Constitución, were near the epicenter and temporarily shut down for inspection and possible repairs. The two mills have about 545,000 tons of annual pulp capacity. No other mills reported damage or disruption. This was the strongest of the many earthquakes that have hit Chile periodically since an 8.8 magnitude earthquake in February 2010 shut down all the pulp capacity in the region.

US- Canada SLA Extended The 2006 Softwood Lumber Agreement (SLA) between the US and Canada was set to expire in 2013; however, on January 23rd US Trade Representative Ron Kirk and Canadian Minister for International Trade Ed Fast signed a two-year extension. The SLA agreement will remain in force with no changes through October 12th 2015. Both

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countries view the agreement as a way to ensure predictability and stability in a historically contentious trade relationship.

Under the SLA, the US agrees to cease imposing antidumping and countervailing duties upon softwood lumber from Canada. In exchange, Canada agrees to apply combinations of export charges and volume limitations to shipments of softwood lumber from Canada to the US. These restrictions apply only when lumber markets are weak, specifically when the Random Lengths Framing Lumber Composite Price averages $315 or less.

Low lumber prices have prevailed in all but three months since the SLA began in 2006, so the most restrictive taxes and quotas have been in place for nearly all of the past six years. Lumber shipments from BC and Alberta are subject to a 15 percent tax. Those in Quebec, Ontario, Manitoba, and Saskatchewan pay a 5 percent tax and have quota restrictions.

The SLA provides for arbitration to resolve disputes between the US and Canada, conducted under the rules of the LCIA (the London Court of International Arbitration), and there is no appeal from the decision of the tribunal. The US has brought three disputes under the SLA since 2006:

In the first, a tribunal found that Canada had miscalculated quotas for exports from certain areas of Canada during the first six months of 2007, and found that Canada must impose additional export duties on softwood lumber as compensation. Canada notified the US that the full amount had been collected and ceased applying the additional duties in July 2011.

In the second, a tribunal found that certain provincial programs in Quebec and Ontario provided a benefit to Canadian softwood producers in breach of the SLA, and found that Canada must impose additional export duties on softwood lumber from those provinces as compensation. Canada began imposing the duties on March 1st 2011 and was due to cease at the October 2013 expiration of the agreement. The governments have not agreed

on the effect of the extension on this penalty tax.

The third dispute concerns the alleged under-pricing of public timber killed by pine beetle infestations in the interior region of British Columbia and has not yet been resolved.

Design Values for SYP 2x4s On January 11th, followed by a clarification on January 12th, the American Lumber Standing Committee (ALSC) ruled in favor of new design values for visually graded southern yellow pine 2x2 through 4x4 dimension lumber in #2 and lower grades. The new values take effect June 1st 2012. In March the ALSC added that the design values will apply to both dense and non-dense lumber products in these dimensions and grades. Design values for other products are under review.

http://www.spib.org/pdfs/Supplement-No-9-Tables-2002-sml-2x4-only.pdf

Response to the change in design values has varied. In March, Weyerhaeuser, which produces both visually-graded and mechanically-graded SYP lumber, announced that the new design value reductions could adversely affect demand for some of its visually-graded southern yellow pine products. Also in March, Random Lengths noted rising prices for low grade southern yellow pine lumber products, explaining that supplies were tight. Steady demand from industrial accounts and higher export volumes were both factors; however, mill upgrades were also affecting low grade lumber supply. Even though recently approved changes in design values of #2 and lower grades of 2x4 do not go into effect until June, some producers had begun to prepare for the change with mill upgrades that included the installation of new machine grading equipment. These machines can improve sawmills’ efficiency. If the percentage of #2 and better lumber produced increases, a consequence can be lower low-grade output and thus shorter supply.

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Policy Issues Litigation and rule-making continued this quarter on several issues affecting the forest products industry: property rights, boiler emissions, and immigrant labor

EPA on property rights: In March, the US Supreme Court held in Sackett vs. US EPA that landowners have a right direct judicial review if the US Environmental Protection Agency (EPA) takes control of their property, for example by declaring it to be “wetlands.”

EPA on Boiler MACT rules: The EPA’s maximum achievable control technology, MACT, standards for industrial boiler emissions under the Clean Air Act have been contested in court and their implementation as published is not assured. However, the EPA issued a letter to boiler operators stating its intention not to enforce deadlines until issues have been further resolved.

Industry on Boiler MACT rules: The Southern Lumber Manufacturers Association (SLMA), American Forest and Paper Association (AF&PA) and other industry leaders have recommended that facilities should be actively working on their compliance strategies. They warn that the court-set deadlines could hold.

DOL on H2B Wage Rules: The federal Department of Labor (DOL) is defending its new H2B Wage Rules, published last year, in a lawsuit filed by the Forest Resources Association (FRA) and other plaintiffs. Legislation passed in December prevents the DOL from implementing the new Wage Rule through September 30th 2012.

DOL on H2B Program Rules: On February 21st the DOL published its H-2B Final Program Rule in the Federal Register. That rule sets H-2B Visa Program guest worker housing requirements, transportation costs, work payment guarantees, and other provisions which could dramatically increase reforestation labor costs. The Program Rule becomes effective on April 23rd 2012.

The rule:

http://www.ofr.gov/OFRUpload/OFRData/2012-03058_PI.pdf

Materials, including fact sheets:

http://www.foreignlaborcert.doleta.gov/h-2b.cfm

Additional information:

http://www.dol.gov/whd/immigration/H2BFinalRule/index.htm

Your Ad Could Be Here Reach your target market:

Consulting foresters Timber companies Timberland owners Pulp and paper companies Bio-energy companies Investment managers Financial institutions State foresters & more

Contact us: [email protected] or 706-542-4756

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Global Agriculture Information Network (GAIN) Reports from USDA The USDA released three Attaché Reports for Wood Products in the 1st Quarter: reports on Japan’s “Promotion of Wood” act, wood markets in the Republic of Korea and wood products in New Zealand. Attaché Reports for Bio-fuel in the 1st Quarter included reports on bio-fuel development in Portugal, sustainable commodity markets in the European Union, biofuels in Italy and the ethanol import tariff in Brazil.

For the complete reports, access USDA, Foreign Agricultural Service GAIN network at http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx and search for Solid Wood Products reports or Bio-Fuels reports.

USDA Forest Service News: In January, Department of Agriculture Secretary Tom Vilsack appointed eight members to the Forest Resource Coordinating Committee (FRCC), which provides advice on private forestry and the USDA’s programs that assist landowners in managing their forests. The new committee members will be joined by the heads of four USDA agencies – the Forest Service, Natural Resources Conservation Service, Farm Service Agency and the National Institute of Food and Agriculture.

The appointed members are:

Linda Casey, Prattville AL, representing state foresters from the Southern U.S.

Mary Jane Packer, Trumansburg, NY, representing private forest landowners

Rob Olszewski, Marietta GA, representing private forest landowners

Michele Curtis, Perry FL, representing forest industry

Amadou Diop, Mableton GA, representing conservation organizations

Tom DeGomez, Flagstaff AZ, representing a land grant college or university

Clifford Rushton, Olympia WA, representing a conservation district

James Houser, Jacksonville TX, representing consulting foresters

New Publications: In February, US Forest Service National Timber Tax Specialist, Linda Wang, released the 2011 edition of Federal Income Tax on Timber: A Key to Your Most Frequently Asked Questions

http://www.fs.fed.us/spf/coop/library/taxpubfaqs.pdf

The US Forest Service published reports on the forests of the Northeast US, Lake States and Midwest.

Forests of the Northern United States. Stephen Shifley et al. 2012. US Forest Service, Northern Research Station. 202 p. GTR-NRS-90

The 20 Northern States have a larger population and a higher proportion of forest cover than other comparably sized US regions. Since 1953, the population in the North has increased by 40 percent, forest area by 28 percent, and timber volume by 140 percent. The increases in forest area appear to be leveling off as urban expansion overtakes about 1.5 million acres of forest land per decade. Seventy-four percent of forests are privately owned.

http://www.fs.fed.us/nrs/pubs//gtr/gtr_nrs90.pdf

The Forests of Southern New England, 2007: A report on the forest resources of Connecticut, Massachusetts, and Rhode Island. Brett Butler et al. 2011. RB-NRS-55.

http://www.fs.fed.us/nrs/pubs/rb/rb_nrs55.pdf

State by State:

The Northern Research Station published new (and some old) reports and research notes on state forest resources from West Virginia north to Maine and west to Nebraska. To find these new reports, use Treesearch:

http://www.treesearch.fs.fed.us/

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Weather, Etc.

General Weather: An early spring, with warmer than normal temperatures, characterized weather patterns across the South this quarter. Dry weather in the eastern states of the South was relieved by more normal rainfall in March. Texas and Louisiana had above normal rainfall for most of the quarter. Violent storms hit several states in early March, from southern Indiana and eastern Kentucky to northern Alabama and Georgia. While not as severe as last year’s April and May tornado damage, the storms did cause injuries, property loss and timber damage.

http://www.hprcc.unl.edu/maps/current/

Drought: Deep drought continues in Florida and southern Georgia. Texas, Louisiana and Arkansas had enough rainfall to relieve drought and conditions improved in eastern Texas.

http://droughtmonitor.unl.edu/

Fire: Both the number of fires and the number of acres burned in the South were well below average in the 1st Quarter. Nation-wide the number of fires was 72 percent of the 10-year average for January through March. Acres burned were approximately 40 percent of the 10-year average.

http://www.predictiveservices.nifc.gov/predictive.htm

Forecast: Fire risk will be high in the 2nd Quarter 2012 across the coastal plain of the South, with above normal fire potential in Florida and Georgia. Below normal fire potential is expected for interior areas including Tennessee and Arkansas.

http://www.cpc.ncep.noaa.gov/

List of Advertisers Page

AgSouth 16

Arborgen Supertree Seedlings 12

Cellfor Elite Seedlings 34

F&W Forestry 35

Forest Landowners Association 22

International Forest Company Seedlings 20

Wood Resources International 26

Larson & McGowin 28

Metlife 11

Southeast Wood Producers Association 6

Weyerhaeuser Seedlings 23

World Forestry Center 24