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Top 3 Stories from the June Issue
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INDUSTRY AT A
GLANCE
From Forest2Market's Economic Outlook
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Factory output continues
to be a bright spot, but construction spending--especially the residential component--is unlikely
to add substantially to GDP growth for quite some time.
Although the Institute for Supply Management's reports on manufacturing and service-sector
activity showed stable or slightly slower rates of growth in May, new orders across all of the
industries related to the forest products sector showed promise.
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HOUSING MARKET
UPDATE
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The bottom fell out of
new home sales in May, a direct result of the expiration of home buyer tax credits. Existing home
sales weakened as well. (Table 1).
New home sales fell by a staggering 32.7 percent in March, more than twice the decline that
analysts expected. Because new home sales are counted when the contract is signed, not at closing
like existing homes, the expiration of home buyer credits had a more dramatic effect on new home
sales. Months of new home inventory increased 46.6 percent in May, jumping from 5.8 months to 8.5
months. Despite this poor showing, new home sales are still 7 percent higher than they were in May
2009.
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NEW IB MACT
STANDARDS
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Will They Affect You? If So, Act Now.
In 2007, the U.S. Court
of Appeals issued a decision to vacate the 2004 National Emission Standard for Hazardous Air
Pollutants (NESHAP), more commonly known as the Industrial Boiler Maximum Achievable Control
Technology (IB MACT or MACT) Rule. Part of the ruling required that the EPA craft a new rule to be
approved no later than Dec. 16, 2010. To meet that deadline, the EPA issued the draft version of
the new MACT rule on April 29, 2010. The comment period about the proposed rules has now been
extended to Aug. 3, 2010.
The proposed rule creates work-practice standards of annual tune-ups for natural-gas and
refinery-gas-fired units and biennial tune-ups for boilers that have a heat-input capacity of less
than 10MMBtuh. However, boilers that have a capacity of equal to or greater than 10MMBtuh are
subject to emission limits on particulate matter, mercury, hydrogen chloride, carbon monoxide and
dioxin/furan. Also, the rules affect boilers previously referred to as multi-fuel by reclassifying
them as incinerators.
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PACIFIC NORTHWEST
UPDATE
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Following impressive
gains in lumber and plywood prices, Douglas fir log prices delivered to mills in western Oregon and
Washington increased from $432/MBF to $528/MBF, up more than 20 percent since the beginning of the
year. For May, Southwest Oregon led log price levels, with increases of 10 percent on Douglas fir
during the month.
For the first time in several years, the premium for export logs nearly disappeared over the
past month. From January to May 2010, the average log length for 2S Douglas fir delivered for
domestic use in the Lower Columbia region increased from 33.5 feet to nearly 35 feet. This
additional 1.5 foot of average length indicates that sawmills have been challenging exporters for
higher quality logs. However, this trend is quickly reversing. Even as dimension and stud lumber
prices decline, export demand remains strong for most Doug fir and hem-fir log grades. Over the
summer, the export premium spread will widen, making life tougher for mills struggling to stay in
the black.
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USDA APPROVES ARBORGEN
TESTS
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Location of Genetically Modified Eucalyptus Test Sites
In May, the US Department
of Agriculture approved requests by Arborgen, a company created by MeadWestvaco, International
Paper, and Rubicon, a New Zealand company, to plant 260,000 genetically engineered, sub-tropical
Eucalyptus trees throughout the South.
According to the Environmental Assessment conducted by the USDA's Animal and Plant Health
Inspection Service (APHIS), the trees planted will be genetically modified in the following
ways:
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Biomass Harvest
Guidelines
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Despite a barrage of bad
news in June, biomass energy markets are showing signs of maturing. As more facilities gain support
and acquire permits and funding, timberland owners will be faced with new decisions. First, they
will need to decide whether to manage their lands for both timber and biomass production.
Certainly, timberland owners can realize additional revenue if biomass demand exists locally. Many
landowners, concerned about the ramifications of removing this material, will choose to leave
logging slash in the forest as they have always done to improve soil conditions and provide animal
habitats.
Biomass can be harvested in such a way that allows timberland owners to improve
profitability and preserve their forests. Many states--especially those with mature biomass energy
markets--have adopted or begun developing biomass harvesting guidelines. From Washington state to
Alabama and Maine to California, states with significant forest resources have begun taking a
serious look at what best practices should be in place to ensure sustainability.
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