George Staphos: Congratulations on the good end to the year. My two questions are around timber. There was a lot of discussion as we go into the year on I think you mentioned high-margin opportunities in China, some opportunities in Japan as well, yet there also seem to be some headwinds in terms of the market activity and ultimately, what will be realizations. Could you give us a bit more color, Devin and Davie, in terms of what we should take away in terms of the realization outlook, and why in timber in the export markets on the west? And I ask, particularly given that, at least from the day that we see and certainly there’s a lag on it, exports to China on softwood are down quite a bit? My second question is can you talk a bit about the prospects for Climate Solutions to tension the timber markets, where would you expect to see the most impact and when and from which of your Climate Solutions business is in terms of ultimately helping support timber pricing in the future?
Thank you, guys. And good luck in the quarter.
Devin Stockfish: Sure. Thanks, George. Well, with respect to your first question and that’s primarily, I think, a question about the Pacific Northwest. The dynamic is really being driven right now by lumber prices. So, as you say, I do think we’re going to see a pickup in export activity out of the Pacific Northwest, both to Japan and China, particularly coming out of the Lunar New Year period, we’re expecting our exports to China to really ramp back up. And so, that’s going to be a nice healthy offtake and we’re going to see more volume going to the export market out of the Northwest. And so, ordinarily, you would see that tension things up and support pricing. But the reality is in the domestic market, log prices are going to have to be within a range where the manufacturers can still generate a profit.
And frankly, until you see those log prices come down a little bit given where lumber prices have been, that’s been a real challenge. And so, I think ultimately, what’s going to be the governor on pricing in the Northwest is really what happens with lumber prices. Now, if you were to see lumber prices start coming back up as we enter the spring building season and some of the weather issues in California resolve, so you see more takeaway out of that important market, to the extent lumber prices come up, then I think you’ll see log prices follow. It continues to be a very tension wood basket. Regardless of lumber prices, there’s just a shortage of log supply in the Pacific Northwest, and that will ultimately be reflected in log prices, particularly as we see exports pick up.
But again, you’re just not going to see that to the extent that lumber prices stay at a lower level. So, that’s the answer on the log side. Just in terms of the Natural Climate Solutions business and tensioning log markets, I think, candidly, we’re still a ways away from that. The primary tool for doing that is going to be on the forest carbon side. I do think over time that is going to be a big opportunity, not just for us but for other landowners. But we’re still in the early innings, I think, of that market developing. You can read the commentary on it. I think as a whole, the market is still figuring out exactly how these carbon markets are going to work. So, that’s still probably got a little bit of time before that has any real material impact.
And frankly, I do think just remember, there’s lots of forest land in the United States. So I think that’s probably still a ways out before that becomes a real issue.
Operator: Our next question comes from the line of Anthony Pettinari with Citi.
