This post is the sixth in a series related to the Q2 2021 Forisk Research Quarterly (FRQ), which includes forest industry analysis, timber price forecasts and featured research on forest carbon.

North America’s forest industry is closing in on two decades of significant capacity relocation. Not only is this reflected in the expansion of sawmill, panel and pellet capacity in the South, but also in recent Weyerhaeuser timberland transactions that further shift its portfolio to that region as well.

Long-time mill managers and operators understand the cyclical nature of the forest industry and commodity businesses generally, and few people want to miss this market. Binderholz is reopening the Live Oak, FL sawmill (formerly Klausner) and cutting boards. And while most recent sawmill investments have been in the U.S. South (Mississippi!), other regions have put capital to work in lumber, as well. In the West, High Cascade is expanding the Mt. Hood, OR sawmill. In Canada, Interfor is expanding its Adams Lake, BC plant.

 

 

Since capital flows can signal what industry leaders and investors are thinking, we track these closely across sectors when assessing the current cycle. Capital investments in North America’s forest industry were estimated at $5.8 billion in 2020. Expected investments in 2021 are 29% higher, approaching $7.5 billion. The pulp/paper segment led capital investment activities for the past three years in North America at $15.1 billion invested from 2018-2020. The bioenergy sector took second place with $3.0 billion in investment over this time frame. Panel investments increased for 2021 as West Fraser acquired Norbord. In addition, Drax’s acquisition of Pinnacle contributes to the $1 billion of bioenergy investments in 2021, while Enviva expands capacity at three of its wood pellet mills in the South and continues to build new mills.

The Forisk Research Quarterly publishes analysis of the structural panels sector in North America and capital investment trends. To produce custom reports and maps, check out Forisk’s North American Forest Industry Capacity Database. Discounted rates available for companies that also subscribe to the Forisk Research Quarterly (FRQ). Email hclark@forisk.com for pricing information and to place an order.