Southern Forest Industry Braces for Bioenergy

New Study Details the Impacts of Emerging Biomass Markets
CHARLOTTE, N.C.--(Business Wire)--
Emerging biomass markets will significantly strengthen demand for
wood fiber in the South, driving prices higher for forest products as
the United States turns to alternative fuels for energy, according to
a study released Monday by Forest2Market.

The new demand will be fueled by wood-burning power companies that
produce and sell electricity to public utilities, as well as an
increasing amount of wood pellets that are exported to European energy
markets. The development of new facilities that turn biomass into
cellulosic ethanol for transportation fuel will also impact the forest
products industry.

As a result, demand for wood fiber from these emerging markets is
expected to climb from 2 million tons in 2008 to at least 13.5 million
tons in 2020, according to Forest2Market, a provider of pricing
information and analysis for forest products. However, the estimate is
conservative, and it could be adjusted higher as more companies
announce plans to build biomass facilities.

The new study, "Quantifying Forest Biomass Resources in the U.S.
South," is the first to analyze the impact of bioenergy markets on the
forest products industry. The report quantifies the industry's
changing landscape, looking specifically at the effects of forest
biomass on wood fiber supplies, demand and prices.

"The pace of the development of bioenergy markets and the resource
requirements to feed them will disrupt the entire southern wood fiber
market," said Pete Stewart, president and founder of Forest2Market.
"It will be much steeper and more disruptive than that of the OSB
market over the last 15 years. We recommend that forest products
companies begin planning for the future by establishing stronger
relationships with their suppliers and creating more efficient
transportation lines."

Faced with rising oil prices, an international push for clean
energy projects and a continued focus on reducing carbon emissions,
federal and state governments have spent millions on biomass research
and development. As a result, new energy markets are emerging that
rely on southern forests for resources.

The primary supply for the growing demand is pulpwood and wood
chips, and prices for pulpwood and chips are expected to rise.
Secondary sources include construction and demolition debris, as well
as leftover woody biomass from harvesting operations, such as tree
limbs.

"We were beginning to see the effects of new energy markets in the
delivered prices for pulpwood, chips and wood fuel in some areas in
the South," Stewart said. "We thought it was time to take a closer
look, using the breadth and depth of our data, to determine what the
competitive landscape for wood fiber might look like in 10 or 15
years."

The study is based on Forest2Market's unique database of
transaction-level information gathered from millions of shipments to
mills throughout the South. The study will help lay the groundwork for
strategic decision making that traditional forest products and new
bioenergy companies will need to survive in the future.

Based in Charlotte, N.C., Forest2Market has developed
sophisticated analytical tools to accurately forecast timber prices in
the U.S. South and Pacific Northwest. The company's delivered price
benchmark product is used by industry professionals to set timber
prices for contracts, supply agreements and bids. The price
information is more accurate because it is based on transaction-level
data - not surveys. For more information, visit www.forest2market.com.

For Forest2Market
Mike Reed, 704-376-3434
mreed@crown-com.com

Copyright Business Wire 2008