Russia's Proposed Log Export Ban in 2022 to Have Far-reaching Impact on Global Forest Product Markets

Feb. 12, 2021 - Russia exported 15 million m³ of logs in 2020, which accounted for almost 12% of globally traded roundwood. Much of this trade may come to a halt next year when a new law proposed by Russia's president will ban the exportation of softwood logs and high-value hardwood logs as of January 1, 2022, according to a focus report released by Wood Resources International (WRI).

The Russian government is also considering new regulations aimed at reducing the exportation of green softwood lumber. This regulation is loosely planned to also commence in 2022 and is intended to incentivize investments in dry-kilns to produced dried lumber for exports. Reducing log and green lumber exports will likely stimulate further value-added processing within Russia and better control illegal logging, WRI said.

While the proposed ban is not yet law, it is widely expected to be implemented and passed into law in the second quarter of this year. If enacted, the law will most significantly impact Eastern Russia, where an estimated 10% of the timber harvest is exported in log form.

In the short-term, the Chinese lumber industry will be most directly impacted, as exports of softwood logs mainly from Russia Far East are likely to be prohibited. According to a just-released study, Russian Log Export Ban in 2022 - Implications for the Global Forest Industry , China will probably look to source more sawlogs from other regions of the world, such as Oceania, Europe, and the US. The increased competition for logs in those markets will likely put upward pressure on sawlog prices.

Mid-term, the study expects that China will evolve from importation of roundwood to importation of lumber. This shift will allow lumber manufacturers in Europe and Russia to increase shipments to China.

Although it is expected that the export ban will drive Russian investment in new lumber capacity, there might also be some impact on other forest industry sectors, for example those planning to co-locate pellet plants with sawmills. In addition, the possibility of restrictions in the exportation of green lumber will encourage more investments in kiln drying capacity, thus improving access to markets in Europe and the US.

NOTE: The excerpt above is from the just-released Focus Report "Russia Log Export Ban in 2022 - Implications to the Global Forest Industry", published by Wood Resources International LLC and O'Kelly Acumen.

Wood Resources International LLC (WRI), an internationally recognized forest industry-consulting firm established in 1987. To learn more, visit: woodprices.com.

SOURCE: Wood Resources International LLC

Paper Excellence Receives Favorable Ruling from Brazilian Arbitration Panel to Complete Acquisition of Eldorado Brasil

Feb. 5, 2021 - Paper Excellence on Feb. 4 announced that the International Chamber of Commerce (ICC) arbitration court in Brazil has ruled in favor of Paper Excellence in a case against J&F Investimentos SA, the parent company of Brazilian pulp producer Eldorado Brasil Celulose.

The court's ruling will allow Paper Excellence to acquire all of the remaining shares of Eldorado Brasil, of which Paper Excellence currently owns 49.41%.

History

On September 2, 2017, Eldorado Brasil informed its shareholders in a market announcement that the company's major shareholder J&F Investmentos, a holding company controlled by brothers Joesley and Wesley Batista, had agreed to sell its entire stake in the company to CA Investment (Brazil) S.A., a subsidiary of Paper Excellence. According to Eldorado, the purchase price for the company amounts to 15 billion reais ($3.61 billion), adjusted for working capital and net financial debt at completion.

Under the terms of the deal, the parties had one year from the date of the agreement to complete the transaction.

In a securities filing on Sept. 4, 2018, Eldorado Brasil announced that J&F had exercised its right to terminate the previously concluded agreement with Paper Excellence and CA Investment for the sale of its 50.59% shareholding in Eldorado. Eldorado Brasil said in the filing that it had been informed by J&F that a deadline to conclude the deal with Paper Excellence and CA Investment had expired on September 3, after a 12-months period, which triggered J&F to cancel the deal.

A bitter dispute ensued with both sides accusing each other of not complying with conditions set forth in the initial agreement. CA Investment then filed an arbitration claim against J&F.

Current

Eldorado Brasil has the installed capacity to produce 1.5 million tons per year of bleached short-fiber pulp. The mill is located in Três Lagoas, in the state of Mato Grosso do Sul, Brazil. According to Paper Excellence, in 2019, the mill produced 1.8 million tons of pulp.

"We welcome Eldorado's employees and all of its stakeholders to Paper Excellence," said Claudio Cotrim, Managing Director of Paper Excellence in Brazil. "Our immediate focus with Eldorado will be to integrate it seamlessly into the Paper Excellence Group, including evaluating how best to invest in expanding its capacity in a timely manner."

With the incorporation of Eldorado Brasil, Paper Excellence will have approximately 7,000 employees worldwide and an annual production capacity of 5.3 million tons of pulp and paper.

SOURCE: Paper Excellence and online news reports.

Wagenborg and SCA Renew Shipping Contract for Wood, Pulp and Paper to US East Coast and Mediterranean

Jan. 28, 2021 - After a tender process, Wagenborg Shipping and SCA have signed a contract for shipping services, regarding sea traffic volumes of wood, pulp and paper from the Baltic to the U.S. East Coast and multiple destinations in the Mediterranean.

Wagonborg noted that this contract is a renewal of an existing contract.

According to Wagenborg, the company’s geared A-type and T-type vessels will continue the Trans-Atlantic paper trade and the gearless vessels up to 14.000 dwt will service the trade to southern Europe and North Africa.

“The challenge of transporting SCA’s forestry-based cargoes is largely in the massive volumes and the amount of space required,” explained Bengt Meuller, Managing Director for Wagenborg Shipping in Sweden. “Our extensive fleet is therefore an excellent match.

“SCA is a great fit for our future and the aim is to continue our collaboration for a long time to come,” Mueller added.

SOURCE: Wagenborg Shipping

SCA to Invest SEK 460 Million in Expansion of Tunadal Port in Sweden

Feb. 1, 2021 - SCA said that it will invest approximately SEK 460 million (approx. USD 54.6 million) in Tunadal port, Sundsvall, Sweden, between 2021 and 2024. The investment will encompass a new container port and new cargo handling areas.

SCA explained that investments in its Östrand pulp mill, in addition to the ongoing investments in pulp production at the Ortviken industrial site, will more than double the volume of pulp to be shipped from the Sundsvall region. The increased volumes mean that the pulp will be delivered to new and more distant markets.

SCA said its Tunadal and Bollsta sawmills are also ramping up their production volumes.

SCA noted that containers are being increasingly used to transport pulp and solid-wood products. Over the past five years, the volume of containerized trade from Tunadal port has more than doubled.

“This development has meant that we need to be able to handle larger volumes of containerized cargo than previously and be able to accommodate larger ships – both container ships and break bulk vessels,” says Magnus Svensson, President Sourcing and Logistics at SCA.

SCA is now building out the port to be able to accommodate ships with a draft of 15 meters, compared with the current 12 meters. SCA also will build a modern container port with a capacity of 100,000 TEU (standard containers) per year. Finally, SCA intends to build land south of the current port to create new space for cargo handling.

“With this expansion of the port, we will be able to load significantly larger ships and be able to ensure the efficient and competitive transport of the products that are growing in volume in the region,” Svensson said. “Key parts of the port expansion will be ready in time for the new volumes from the Ortviken industrial site comprising pulp and recycled textile fibers from Renewcell.

“With the expanded port, the combined terminal being built by the Municipality of Sundsvall and the improved rail links to Tunadal port, we will have a transport infrastructure that will move Sundsvall closer to the global export markets and the Scandinavian domestic market, thereby benefiting industry and trade across Northern Sweden,” Svensson concluded.