AUGUST 2018
Brambles Discusses Lumber Supply and Alternative Materials
CHEP is diversifying its lumber supply, according to Carmelo Alonso-Bernaola, Senior VP, Global Supply Chain for Brambles. He spoke recently Brambles presentation in London. While the company has traditionally sourced lumber in regions where lumber was needed, he said that the practice left them heavily exposed to any market fluctuations within those regions.
“So, the first action we're putting in place if diversifying the supply of our lumber needs in the different regions,” he said. “For example, in the U.S. we are today procuring significant volumes from Latin America. With inflation in the U.S. we are divesting more volumes towards Latin America and importing into the US market.”
In Europe, the company is exploring Russia as a lumber source. Alonso-
Bernaola stressed that the initiative is still in the early stages as no tall lumber coming from Russia is yet certified. Another challenge is sawmilling quality. However, they “partnering with local players there to develop them as a way to create alternatives for the European Market.”
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sawmill residuals) deducted from lumber revenues and is a reliable indicator of the changing trend in profitability in a region's sawmill sector.
In the 2Q/18, profits for sawmills in North America reached their highest levels since at least 2005, primarily because lumber prices have risen faster than sawlog prices. In Europe, the gross margins in early 2018 were close to the highest they have been in four years in the Nordic countries, while they reached levels not seen in over a decade in other parts of the continent.
However, not all countries have experienced positive earning trends the past few years. Sawmills in Eastern Russia, New Zealand and Brazil saw their gross margins decline from 2015 to early 2018 as sawlog prices rose faster than lumber prices. In Siberia, the gross margin has fallen 21% in three years with the 2Q/18 levels being the lowest since 2013. Most of the decline has been the result of higher costs for sawlogs for a growing sawmilling sector in Eastern Russia.
Global lumber, sawlog and pulpwood market reporting is included in the 56-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, wood chip, lumber and pellet prices, trade and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.WoodPrices.com
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