Tuesday, February 14, 2012

Rayon - The Rising Forestry Fabric?


If you are in the forestry business, you may also be in the fashion business and not know it.

Forest products are often thought of as lumber and paper, and beyond that the list gets thin.  Fortress Paper has been betting that the production of rayon, a fabric used to make clothing, will be another successful forest product.  They have bought another old mill in Quebec and will change it's production to dissolving pulp in order to make rayon.  The process is different than producing pulp for paper, but with some investment it can be done.

Though rayon may not be a huge market now in forestry, it's always great to see another use for wood fibre.  Any time another product can be produced from wood fibre, it helps the forest industry and creates a demand for the available timber resource.  To see a mill that's been shut down for 6 years have a new life is a great story for the town in Quebec where it's happening.

The rayon market is seeing an increase because cotton crops and production haven't been able to meet all the demand in recent times.  Rayon material also has different properties than cotton.  It doesn't retain heat as well as cotton does, but this is a good feature to have in warmer climates, which is where many emerging markets in Asia, the Middle East and South America happen to be.


Fortress Paper Ltd. plans to transform yet another old Quebec forest-products mill into a facility that makes pulp used in the production of rayon instead of paper.

The old Domtar mill has been shut for more than six years and is now to get a new lease on life by producing dissolving pulp used in the manufacture of rayon, a product that has been in huge demand especially in Asia.

The project is the second such endeavour by Mr. Wasilenkoff in Quebec, after the transformation two years ago of a mothballed hardwood pulp mill in Thurso to pulp-for-rayon.

To read the full news, click below:

Foretress Paper Rayon Pulp Mill


Monday, February 13, 2012

Pulp maker Fibrek bought by Mercer International


This news caught my eye because Mercer International operates a pulp mill in Castlegar BC, close to where I live.  They also have two mills in Germany, and it looks like they are now ready to expand.  Fibrek, the company they seek to acquire, has three mills in Quebec, West Virginia and Michigan.

Another interesting aspect of this deal is that there was another competing bid for Fibrek valued at $130 Million.  Mercer's offer provides a significant premium at $170 Million.  The pulp business to me is a difficult one, it's very capital intensive but this also acts as a barrier to competition.  For Mercer to build three new pulp mills would have cost a lot more in time and money than their bid to buy Fibrek, so for them I think it will be a good deal.  Especially since they are already very experienced in the pulp market.  This deal is also a sign that the future might be good for pulp, since companies in this industry are looking to expand.

Mercer International isn't a household name, but they are important to the Castlegar and Kootenay areas of BC for the mill and forestry jobs they provide or create, and the taxes they pay to local government.  To see Mercer in a position to expand and grow is a good sign for the people in these areas.


Pulp producer Fibrek Inc. says it has struck a friendly $170 million deal to be acquired by Vancouver-based Mercer International Inc.

Mercer Inc. operates in the pulp business and produces market northern bleached softwood kraft, or 'NBSK', pulp for export around the world. The company employs nearly 1,500 people and has a mill in British Columbia's interior, and two in eastern Germany.

Mercer president and chief executive Jimmy Lee welcomed the deal and said it benefits both pulp makers, their customers employees and shareholders.

"The acquisition of Fibrek clearly fits within our strategy of focusing on world-class production assets that produce high quality pulp," Lee said in a release.

"Additionally, the ability of Fibrek's St. Felicien mill to produce and sell surplus renewable energy is in line with our goal of increasing our revenues from energy sales."

To read the full news release, click below:

Mercer International buys Fibrek Inc


Sunday, February 12, 2012

China-Canada Green Building Design Center


Prime Minister Stephen Harper recently untook a trade mission to China.  Part of the mission involved forest products and lumber.  China is one of Canada's most important customers for wood products, and according to the release below Canada is now the largest supplier of lumber to China. 

Initiatives like the China Canada Green Building Design Center highlight wood frame construction, which still isn't widely used in China.  If the use of wood in construction continues to grow in China, Canadian lumber mills should benefit along with the jobs they bring.  The bottom of the release has some interesting stats on exports to China for 2009, 2010 and 2011.  I wonder what kind of year 2012 will be?

PMO press release:

Langfang, China
Feb 9, 2012
Prime Minister Stephen Harper today visited the China-Canada Green Building Design Center – one of China’s largest wood frame buildings – to highlight Canada’s achievement as China’s largest supplier of lumber. “Our Government is committed to helping the Canadian forestry industry to diversify and succeed in priority markets around the world. With Canadian lumber exports to China at a record high, our efforts are paying off, creating jobs and economic opportunities for Canadians,” said Prime Minister Harper. “The China-Canada Green Building Design Center is just one of the ways Canada is promoting its world class environmentally-friendly wood frame technologies and materials in this rapidly growing market.”

The Government of Canada and the Province of British Columbia, in partnership with Canadian lumber suppliers, are working with several countries to further promote Canadian wood frame technology by developing building codes, training designers and builders to use wood and educating institutions on the benefits of building with wood.

Thanks to their versatility and environmental benefits, wood frame construction, such as that used for the Green Building Design Center, has become more prominent throughout China and has led to a major boost in Chinese demand for Canadian wood and wood frame technology. As a result, 18 Canadian mills have reopened or dedicated part of their production to servicing the Chinese market.

The China-Canada Green Building Design Center is a 2,500 square-meter facility which features environmentally friendly, seismically stable, and energy efficient Canadian wood frame technologies and materials.

Canadian wood exports to China grew to $835 million in 2010, up 119 percent from 2009. During the first eleven months of 2011, wood products were Canada's third largest export to China, totalling $1.36 billion and expected to exceed $1.5 billion in 2011.