US-based Plum Creek Timber Company has reported solid gains in its manufacturing division due to improved demand from industrial wood panel customers.

The division, which produces lumber, MDF and plywood, posted operating profits of US$10m for the second quarter, significantly above the breakeven position a year ago.

Improved demand drove price and volume gains for both the plywood and MDF product lines, but lumber sales volumes were significantly lower as a result of the permanent closure of two lumber mills in 2009.

Plum Creek’s overall operating profits, including real estate and logging operations, totalled US$35m (2009: US$32m) on sales of US$258m (2009: US$272m).

Average sawlog prices improved more than US$15 per ton (30%) from the lows of the second quarter of 2009. Total harvest for the quarter was 30% higher than a year ago at 484,000 tons as lumber customers increased demand in response to attractive lumber prices.

Looking forward, Plum Creek said the pace of recovery was slow and demand for sawlogs remained relatively weak as the repair and remodeling and residential construction markets stayed near historic lows.