Currently, slowing lumber production on the West Coast and strikes at multiple Weyerhaeuser sawmills have made chips harder to source. Japanese demand is also up thanks to black liquor green energy credits being offered to Japan’s paper sector. Complicating the market, there are also West Coast chip mill projects currently hit with construction delays, the newsletter said.
Longer term, there are ongoing pulp capacity expansions in China, according to Fastmarkets RISI analyst John North. Those capacity increases will greatly expand demand for chip imports and that will have long-term impacts on global markets going forward, he added.
Remember these market dynamics are occurring without a major wood energy demand from Asia. If economies such as Japan, Korea and China move toward signifi cant pellet consumption as Europe has it would be a fi ber market game changer on the West Coast.
Highest Value Use Wins?
The other news item that bears watching in context of larger developments is the recent purchase of 29,000 acres in Michigan that will be used to create “carbon projects” by a joint venture and management company that’s already managing more than 90 forest carbon projects across 4 million acres.
So far, so good, until you read that no logging is planned until some level of forest growth is achieved, and then a selective logging program will be offered at some future date. Again, so far, so good—everyone pursuing their economic interests—until you realize that’s 30,000 acres essentially taken out of production.
A future selective logging program is on the drawing board, but nothing is planned.
At the ALC meeting in 2021 in Couer d’Alene, Id., ResourceWise CEO Pete Stewart (parent of Forest2Market) spoke on this very topic of carbon credits and said it bears watching closely: That the fi nancial industry’s expansion of carbon credit markets may eventually lead some to view forestland as valued more as an accounting entry that mitigates polluters’ smokestack impacts than as a source of sustainably managed forest products and associated businesses and jobs.
It’s defi nitely a trend that bears watching closely.