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MANUFACTURING RESIDUAL SUPPLIES AND PULP MILL CAPACITIES BY BROOKS MENDELL AND AMANDA LANG
Figure 1: Recyled Fiber Consumption and Virgin Fiber Prices SOURCES: FORISK WOOD FIBER REVIEW, AMERICAN FOREST & PAPER ASSOCIATION
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he management of risk continues to dominate conversations with forest industry professionals, even as firms continue to invest capital into increasing capacity at sawmills, pulp mills and pellet plants. While North America’s forest industry demonstrated discipline and caution when expanding mills in 2020, they also took the opportunity to strengthen balance sheets (reduce debt) with the profits from building products sales. Still, executives feel the need to put available capital to work.
In the past 12 months, North America added 1.4 billion board feet (BBFT) of sawmill capacity, with another 1.6 BBFT of coming in the second half of 2021. A significant amount of softwood sawmill capital expenditure is in the queue, including Canfor’s recently confirmed plans for a new 250 million BF mill in Louisiana for 2022. The size and location of this capacity continues to influence the current availability and expected pricing for residual wood fiber and roundwood pulpwood by region.
Residual chip supplies in 2020 surged as sawmills worked hard to benefit from record lumber prices. This pushed prices of chips and roundwood pulpwood lower across the U.S. Meanwhile, closures of printing and writing paper and newsprint mills lowered total production capacity, and several paper mill investments and restarts are targeting increased recycled fiber usage, thus lowering potential virgin fiber demand. A cooling lumber market can quickly reorient the supply-demand balance, but over the past six years, a shrink-
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22 BIOMASS MAGAZINE | ISSUE 3, 2021
