Studies Archive

Southeast Texas, Southwest Louisiana Study
(April 2007)

Temple-Inland’s fee timberland is situated in two specific markets; Southeast Texas and Southwest Louisiana.  These markets are located in one of the most productive timber growing regions in the southern United States.  Some 47 manufacturing facilities rely on these wood basins for raw material; 29 lumber and plywood mills, five Oriented Strand Board (OSB) mills, six pulp mills and seven chip mills.  Combined, these facilities consume 25.6 million tons of raw material annually from the area.

Opportunities exist within these wood basins for large landowners to realize premiums above “ average market” prices.  Landowners can negotiate stumpage premiums through long-term supply agreements by identifying tracts close to specific mills; allowing the buyer to leverage incremental freight costs.  Other premiums can be realized by marketing higher quality timber and tracts with winter logging conditions.  As the market dynamic changes, so does the risk for the open market.  As more raw material continues to move through supply agreements, mills will put downward pressure on gatewood prices, forcing open market buyers to pay less for stumpage.  In addition, over supply may become an issue as raw material, previously held in captive supply, comes to market.

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East Central Alabama, West Central Georgia Study
(March 2007)

Mills use a variety of avenues to procure raw material, including wood from fee timberland, supply agreements, direct purchases and gatewood purchases.   The spin-off of fee timberland by integrated forest product companies has changed this dynamic across the U.S. South and this market is no exception.  Traditionally, wood sourced from fee timberland has been the least expensive from a cash-cost perspective for forest product companies.  As companies sell their fee timberland, mills have replaced this source with supply agreements.

MeadWestvaco’s fee timberland in East Central Alabama and West Central Georgia is located within the middle of a highly competitive landscape.  A total of 44 manufacturing facilities draw 11.1 million tons annually from the area.  Growth to drain ratios for pine pulpwood (1.6 ratio), hardwood pulpwood (1.7 ratio) and pine sawtimber (1.5 ratio) are favorable to support this consumption into the future.  Currently, the age class structure of the resource leans heavily to the younger age classes.  As more timberland is managed by investment models, more volume will be allowed to grow into sawlog furnish.

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Raw Material Cost Analysis: Fairfax South Carolina
(September 2006)

This study reports the findings of a market assessment of a 105-mile radius pine longwood supply basin centered on Fairfax, South Carolina.  Longwood in this study is defined as a combination of pulpwood and sawpulp (aka, superwood and superpulp).  The assessment reviewed current conditions and recent trends.  Based upon these conditions, market forecasts through 2012 were prepared, along with analysis indicating how several planned expansions will affect demand levels in the supply basin.

Analysis of current resource conditions in this wood supply basin suggests pine longwood supplies will expand through 2009.  Over two-thirds of the private pine pulpwood inventory in this market occurs in pine plantations. According to the 2004 (Georgia) and 2005 (South Carolina) Forest Inventory and Analysis survey data, plantation acreage for the 11 to15-year age class is nearly 30 percent lower than the 16 to 20-year class, and the 6 to10-year age class is lower still.  Even so, the continued development of the 16 to 20-year class will contribute an additional pine pulpwood supply of up to 1.9 million tons annually across the Market over the next five years.  However, we also expect this additional supply to decline after five years as the current 11 to 5-year age class matures and the present 16 to 20-year age class grows past the 25-year age point, at which time most growth occurs as sawtimber.

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South Georgia

This analysis evaluated future resource conditions for pulpwood, super wood, and chip-n-saw in a supply basin defined by a 100-mile circle centered on Emanuel County, GA under three different expansion scenarios.

Present resource conditions in supply basin are favorable for pulpwood, super wood, and chip-n-saw, with all three having growth/drain ratios exceeding 1.0. Further, the forest age class structure and significant proportion of plantation acres scheduled to become merchantable over the next 10 years suggests growth will continue to exceed harvest for some time. A projection where current harvest levels were maintained confirmed these observations. Under the "flat harvest" assumption, inventories for all three products rose through 2020 and were able to be maintained at those increased levels thereafter.  In terms of forest product costs, market conditions have been generally stable over the past five years.

The analysis evaluated effects on the resource supply under three different consumption scenarios.  The Base scenario applied creep consumption to base harvest levels and added a greenfield OSB mill in Emanuel County.  The second scenario, the Probable scenario, added consumption from the expanded Norbord OSB mill at Cordele and Grant Forest Products’ two greenfield OSB mills in Allendale and Clarendon Counties.  The Probable scenario also included some pulp mill curtailments and/or shutdowns: Augusta Newsprint, IP at Savannah, and Interstate at Riceboro.  The third scenario, the Worst scenario, added consumption from Huber’s Commerce, GA mill into the supply basin plus added another green field OSB mill in the vicinity of Macon, GA.

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