This document summarizes trends in the wood supply industry in the U.S. South from 1995-2015. It finds that the export wood pellet market has led to the opening of 16 new pellet mills while some pulp/paper mills have closed. The growth of the pellet industry has increased demand for wood removals, especially pine, but overall removals have remained steady as a percentage of the total forest inventory. The increased demand from pellet mills has contributed to higher pulpwood and residual prices in the region.

1. Wood Supply Trends in the U.S. South
1995-2015
Dave Tenny
President & CEO
National Alliance of Forest Owners

2. Objective and Scope
Overall: Present factual information on the impact of the
export wood pellet market on American forests and other
forest products industries in the US South.
Three part study:
•Geographic Distribution of Operational and Closed
Wood Fiber Consumers: 1995-2015
•Wood Supply and Pricing Trends: 2000-2014
•Market Case Studies: 2006-2015

3. Study Area

4. Operating and Closed Mills 2015

5. Net Mill Openings and Closures 1995-2015
1995-2000 2000-2005 2005-2010 2010-2012 2012-2014 2014-2015
Total
Period
Panelboard: Hardboard and MDF 1 -3 -1 0 0 0 -3
OSB 4 4 -5 -2 3 0 4
Pulp/Paper -3 -7 -3 -1 0 0 -14
Pellet-Operating 0 0 6 1 9 0 16
Pellet-Construction 3
-20
-15
-10
-5
0
5
10
15
20
NetOpenings/Closings(NumberofFacilities)
1995-2000 2000-2005 2005-2010 2010-2012 2012-2014 2014-2015
Total
Period
Panelboard: Hardboard and MDF 1 -3 -1 0 0 0 -3
OSB 4 4 -5 -2 3 0 4
Pulp/Paper -3 -7 -3 -1 0 0 -14
Pellet-Operating 0 0 6 1 9 0 16
Pellet-Construction 3
-20
-15
-10
-5
0
5
10
15
20
NetOpenings/Closings(NumberofFacilities)
30 Miles 65 Miles 100 Miles 100+ Miles
Operational 18 7 (39%) 18 (100%) 18 (100%) 18 (100%)
Closed 18 8 (44%) 13 (72%) 16 (89%) 18 (100%)
Total Current
Export Pellets
Proximity AnalysisCompetitive
Mill Status 30 Miles 65 Miles 100 Miles 100+ Miles
Operational 18 7 (39%) 18 (100%) 18 (100%) 18 (100%)
Closed 18 8 (44%) 13 (72%) 16 (89%) 18 (100%)
Total Current
Export Pellets
Proximity AnalysisCompetitive
Mill Status

6. Pine Removals - Study Area
Year
US South
Pulpwood Sawtimber Total Pine
Inventory
Non-Pellet Mill
Removals Removals
% of Inventory
Pellet Mill
Removals Removals
% of
Inventory
Inventory Removals Removals
% of
Inventory
Inventory Removals Removals
(million tons) (million tons) (million tons) (million tons)
% of
Inventory
2000 1,007.9 96.6 9.6% 2,009.6 98.2 4.9% 3,017.5 194.9 6.5%
2001 1,013.3 94.6 9.3% 2,023.3 97.4 4.8% 3,036.6 191.9 6.3%
2002 1,025.0 95.9 9.4% 2,057.6 98.0 4.8% 3,082.7 193.9 6.3%
2003 1,032.0 97.2 9.4% 2,084.9 98.7 4.7% 3,116.9 195.9 6.3%
2004 1,050.0 100.2 9.5% 2,136.2 101.7 4.8% 3,186.2 201.8 6.3%
2005 1,054.2 103.1 9.8% 2,189.8 104.6 4.8% 3,244.0 207.7 6.4%
2006 1,060.9 106.9 10.1% 2,233.4 98.2 4.4% 3,294.3 205.2 6.2%
2007 1,076.2 110.7 10.3% 2,264.9 94.9 4.2% 3,341.1 205.6 6.2%
2008 1,083.8 111.8 10.3% 0.1 0.0% 2,295.4 71.2 3.1% 3,379.2 183.1 5.4%
2009 1,086.3 109.0 10.0% 0.3 0.0% 2,333.3 60.6 2.6% 3,419.7 169.8 5.0%
2010 1,090.8 116.6 10.7% 0.6 0.1% 2,398.3 64.3 2.7% 3,489.0 181.4 5.2%
2011 1,110.5 112.8 10.2% 1.7 0.2% 2,477.5 68.3 2.8% 3,588.0 182.8 5.1%
2012 1,129.6 114.9 10.2% 2.4 0.2% 2,563.6 71.1 2.8% 3,693.2 188.4 5.1%
2013 1,159.3 115.9 10.0% 3.3 0.3% 2,665.8 75.8 2.8% 3,825.2 195.1 5.1%
2014 1,178.5 117.7 10.0% 3.7 0.3% 2,772.8 78.1 2.8% 3,951.3 199.5 5.0%
Average 1,077.2 106.9 9.9% 1.7 0.2% 2,300.4 85.4 3.8% 3,377.7 193.1 5.8%
Trendline Growth Rate 1.0% 1.7% 0.7% 94.9% 81.3% 2.3% -3.2% -5.4% 1.9% -0.3% -2.2%

7. Hardwood Removals - Study Area
Year
US South
Pulpwood Sawtimber Total Hardwood
Inventory
Non-Pellet Mill
Removals Removals
% of Inventory
Pellet Mill
Removals Removals
% of
Inventory
Inventory Removals Removals
% of
Inventory
Inventory Removals Removals
(million tons) (million tons) (million tons) (million tons)
% of
Inventory
2000 1,286.1 48.9 3.8% 2,113.6 27.5 1.3% 3,399.7 76.3 2.2%
2001 1,279.0 47.0 3.7% 2,120.8 27.7 1.3% 3,399.8 74.7 2.2%
2002 1,270.8 43.4 3.4% 2,130.0 28.2 1.3% 3,400.8 71.6 2.1%
2003 1,255.3 39.8 3.2% 2,139.8 28.7 1.3% 3,395.1 68.5 2.0%
2004 1,252.3 40.9 3.3% 2,154.9 28.5 1.3% 3,407.1 69.4 2.0%
2005 1,238.2 42.0 3.4% 2,161.7 28.3 1.3% 3,399.9 70.3 2.1%
2006 1,232.4 40.9 3.3% 2,181.7 26.8 1.2% 3,414.1 67.7 2.0%
2007 1,234.8 39.4 3.2% 2,213.1 25.2 1.1% 3,447.8 64.6 1.9%
2008 1,229.3 38.1 3.1% 2,414.6 20.8 0.9% 3,643.9 58.9 1.6%
2009 1,229.7 34.1 2.8% 2,431.8 16.5 0.7% 3,661.5 50.6 1.4%
2010 1,227.5 36.1 2.9% 0.0 0.0% 2,433.1 16.4 0.7% 3,660.6 52.6 1.4%
2011 1,230.8 34.7 2.8% 0.0 0.0% 2,438.6 16.4 0.7% 3,669.4 51.1 1.4%
2012 1,224.4 34.6 2.8% 0.5 0.0% 2,431.5 16.3 0.7% 3,655.9 51.5 1.4%
2013 1,218.1 33.8 2.8% 1.3 0.1% 2,429.8 15.3 0.6% 3,647.9 50.4 1.4%
2014 1,219.9 33.6 2.8% 2.4 0.2% 2,445.6 14.8 0.6% 3,665.4 50.8 1.4%
Average 1,241.9 39.2 3.1% 0.8 0.1% 2,282.7 22.5 1.0% 3,524.6 61.9 1.8%
Trendline Growth Rate -0.4% -2.6% -2.2% 117.7% 118.0% 1.3% -5.5% -6.8% 0.7% -3.4% -4.2%

8. Total Removals - Study Area
Year
US South
Pulpwood Sawtimber Total Pine and Hardwood
Inventory
Non-Pellet Mill
Removals Removals
% of Inventory
Pellet Mill
Removals Removals
% of
Inventory
Inventory Removals Removals
% of
Inventory
Inventory Removals Removals
(million tons) (million tons) (million tons) (million tons)
% of
Inventory
2000 2,294.0 145.5 6.3% 4,123.3 125.7 3.0% 6,417.3 271.2 4.2%
2001 2,292.3 141.6 6.2% 4,144.1 125.0 3.0% 6,436.4 266.6 4.1%
2002 2,295.8 139.3 6.1% 4,187.7 126.2 3.0% 6,483.5 265.5 4.1%
2003 2,287.3 137.0 6.0% 4,224.7 127.4 3.0% 6,512.0 264.4 4.1%
2004 2,302.3 141.1 6.1% 4,291.1 130.2 3.0% 6,593.4 271.2 4.1%
2005 2,292.4 145.2 6.3% 4,351.5 132.9 3.1% 6,643.9 278.1 4.2%
2006 2,293.3 147.8 6.4% 4,415.1 125.0 2.8% 6,708.4 272.8 4.1%
2007 2,310.9 150.0 6.5% 4,478.0 120.1 2.7% 6,788.9 270.2 4.0%
2008 2,313.1 149.9 6.5% 0.1 0.0% 4,709.9 92.0 2.0% 7,023.1 242.0 3.4%
2009 2,316.0 143.1 6.2% 0.3 0.0% 4,765.1 77.1 1.6% 7,081.1 220.4 3.1%
2010 2,318.2 152.7 6.6% 0.6 0.0% 4,831.4 80.7 1.7% 7,149.7 234.0 3.3%
2011 2,341.3 147.5 6.3% 1.8 0.1% 4,916.1 84.7 1.7% 7,257.4 233.9 3.2%
2012 2,354.0 149.6 6.4% 2.9 0.1% 4,995.0 87.5 1.8% 7,349.1 239.9 3.3%
2013 2,377.5 149.7 6.3% 4.6 0.2% 5,095.6 91.1 1.8% 7,473.1 245.4 3.3%
2014 2,398.4 151.3 6.3% 6.0 0.3% 5,218.4 92.9 1.8% 7,616.7 250.2 3.3%
Average 2,319.1 146.1 6.3% 2.3 0.1% 4,583.1 107.9 2.4% 6,902.3 255.1 3.7%
Trendline Growth Rate 0.3% 0.5% 0.2% 91.1% 87.2% 1.8% -3.6% -5.4% 1.3% -1.1% -2.4%

9. Study Area Market Dynamics – Pine
$0
$5
$10
$15
$20
$25
$30
5
25
45
65
85
105
125
145
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pulpwood/ResidualPrice($/ton)
PulpwoodRemovals/ResidualSupply
(milliontons)
Pellet Removals Non-Pellet Removals Residual Supply Deficit
Residual Supply Pulpwood Stumpage Price Residual FOB Sawmill Price
$0
$5
$10
$15
$20
$25
$30
5
25
45
65
85
105
125
145
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pulpwood/ResidualPrice($/ton)
PulpwoodRemovals/ResidualSupply
(milliontons)
Pellet Removals Non-Pellet Removals Residual Supply Deficit
Residual Supply Pulpwood Stumpage Price Residual FOB Sawmill Price

10. Study Area Market Dynamics – Hardwood
$0
$5
$10
$15
$20
$25
$30
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pulpwood/ResidualPrice($/ton)
PulpwoodRemovals/ResidualSupply
(milliontons)
Pellet Removals Non-Pellet Removals Residual Supply Deficit
Residual Supply Pulpwood Stumpage Price Residual FOB Sawmill Price
$0
$5
$10
$15
$20
$25
$30
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pulpwood/ResidualPrice($/ton)
PulpwoodRemovals/ResidualSupply
(milliontons)
Pellet Removals Non-Pellet Removals Residual Supply Deficit
Residual Supply Pulpwood Stumpage Price Residual FOB Sawmill Price

11. Significant Findings
Residual supply 2007-2014:
•21% less than the supply between 2000 and 2006
•Pine/hardwood residual prices increased 12.5% and 10.7%
Pine pulpwood consumption and price 2008-2014:
•Non-pellet demand increased by 5.8 mm tons (from 111.8 to 117.7 mm tons)
•Pellet demand increased by 3.7 mm tons (from 0 to 3.7 mm tons)
•Sawtimber inventory increased significantly more than pulpwood
•US South average pulpwood prices increased 4.5% annually
•Similar price trends in areas with and without export pellet influence
Hardwood pulpwood consumption and price 2010-2014:
•Non-pellet demand decreased by 2.5 mm tons (from 36.1 to 33.6 mm tons)
•Pellet mill demand has increased by 2.4 mm tons (from 0 to 2.4 mm tons)
•Sawtimber inventory increased and pulpwood inventory declined
•US South average pulpwood prices increased 7.4% annually
•Similar price trends in areas with and without export pellet influence

12. EU Export Pellet Outlook
• 2014 – 3.6 mm metric tons (40% market share)
• Near-term growth – 7.4 mm metric tons (from
existing installed capacity)
• Additional demand – 3.4 mm metric tons (40%
market share)
• Total capacity – 10-11 mm metric tons (7 new mills)
• Total Removals – .6% of pulpwood inventory

13. Case Study – Coastal Georgia

14. Coastal Georgia – Removals and Prices
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
PulpwoodRemovalsas%ofInventory
StumpagePrice($/ton)
Annual Precipitation (Indexed) Pulpwood Removals as % of Inventory
Pine Pulpwood Stumpage Avg Precipitation
Trendline (9.6% Annual Growth rate)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
PulpwoodRemovalsas%ofInventory
StumpagePrice($/ton)
Annual Precipitation (Indexed) Pulpwood Removals as % of Inventory
Pine Pulpwood Stumpage Avg Precipitation
Trendline (9.6% Annual Growth rate)

15. Coastal Georgia – Micromarkets Comparison (2010-15)
10%
11%11%
9%
6%
3%
4%
2%
10%
5%
8%
-3%
1%
0%
-3%
-11%
-8%
1%
9%
11%
8%
-9%
-4%
-2%
-6%
9%
4%
-3%
4%
-1%
-7%
1%
5%
-15%
-10%
-5%
0%
5%
10%
15%
CaseStudy3
Area#2
Area#3
Area#4
Area#5
Area#6
Area#7
Area#8
Area#9
Area#10
Area#11
Area#12
Area#13
Area#14
Area#15
Area#16
Area#17
Area#18
Area#19
Area#20
Area#22
Area#23
Area#24
Area#25
Area#26
Area#27
Area#28
Area#29
Area#30
Area#31
Area#35
Area#36
Area#37
TrendlineAnnualGrowthRate
Case Study 3 Non-Pellet Area
Pellet Influenced Area (All Years) Pellet Influenced Area (Partial Years)
10%
11%11%
9%
6%
3%
4%
2%
10%
5%
8%
-3%
1%
0%
-3%
-11%
-8%
1%
9%
11%
8%
-9%
-4%
-2%
-6%
9%
4%
-3%
4%
-1%
-7%
1%
5%
-15%
-10%
-5%
0%
5%
10%
15%
CaseStudy3
Area#2
Area#3
Area#4
Area#5
Area#6
Area#7
Area#8
Area#9
Area#10
Area#11
Area#12
Area#13
Area#14
Area#15
Area#16
Area#17
Area#18
Area#19
Area#20
Area#22
Area#23
Area#24
Area#25
Area#26
Area#27
Area#28
Area#29
Area#30
Area#31
Area#35
Area#36
Area#37
TrendlineAnnualGrowthRate
Case Study 3 Non-Pellet Area
Pellet Influenced Area (All Years) Pellet Influenced Area (Partial Years)

16. Key Takeaways
• Southern forests are sustainable
• The marketplace is experiencing a post-recession
inventory and residual supply correction
• Several factors (e.g. inventory and residual correction,
increased post-recession demand, pellets, weather)
have affected pulpwood removals and prices
• Price trends are similar in areas with and without pellets
• Pellets will have a relatively minor impact on overall
wood supply and prices but may have more significant
localized impacts