lnternational outlook for western softwood lumber

tTl"u NUMBERS: The international I marketplace for U.S.-produced softwood lumber is one of the few lumber markets that have continued to grow and provide added market demand over the past few years. In 2005 during the peak of the U.S. housing boom, international markets dropped to $449 million and 76,424900 bd. ft. By 2008, the market had climbed to $584 million ($372 million from western species) and 86.8 million bd. ft. Exports for 2010 finished 5l7o ahead of 2009 at more than $843 million and 1.3 billion ft.

And then there was 20 I I . The numbers for the first l0 months indicate that this will be a $ I billion export year, with more than 1.5 billion bd. ft. shipped overseas. China entered the market in a big way, pushing to the number one spot with an estimated $225 million and 375 million bd. ft. Japan continued to improve, with approximately $140 million and 165 million bd. ft. imported in 201 l. Two other $100 million markets were Mexico and Canada. which include re- exports overseas.

In 2011, regional markets for U.S. softwoods included the Caribbean ($128 million), Southeast Asia ($38 million), and the European Union ($30 million). Southern Asia, including India and Pakistan, and the South Pacific, including Australia and the French Pacific Islands. combined for another $36 million in exports. Central and South America combined for over $5 million in shipments in 201 l.

Western species have done well. Douglas fir has climbed from $58 million in 2005 to $256 million (29Vo of all softwood exports) in 20 I l, and hemlock has risen from $l I million to $145 million during the same period. Ponderosa pine has maintained a steady market, at about $26 million for the past two years. Southern prne shipments are at approximately $150 million in 201l.

Markets

In the global lumber market, U.S. softwood producers are still relatively small suppliers. Europe, Canada,

Chile, New Zealand, and Russia are the major exporting regions or countries for softwood lumber products.

International market requirements and product uses vary widely by species, size, grade, and material end use. Traditional U.S. structural species, such as Douglas fir and hemlock, are found in many non-structural products. Lower grades of all species, which are of limited value in structural applications, find a home in crating, pallets, and packaging. Additionally, they are used in many remanufacturing and gluing facilities in parts of the world with much lower labor rates for furniture and millwork components.

Wood frame residential construction is mostly limited to North America, Japan, and parts of Oceania. Even in those markets, North American framing systems using 38mm x 89mm (2x4) structural members is limited. The U.S., Canada, and a small segment in Japan are the only countries that utilize 2x4 construction. Japan is the second largest wood frame building market in the world, but of the almost 500,000 wood frame units in Japan this year, only 98,000 were 2x4 based. The vast majority were traditional Japanese metric post and beam timber construction using metric sizes. Structural framing sizes in Australia and New Zealand use 35mm and 45mm by 90mm and l00mm sizes. U.S. softwood producers successful in these markets are providing metric-sized lumber to compete with other imported products, mainly from Europe and Canada.

International Wood Uses

Most of the U.S. softwood exported is for non-structural uses. Interior applications, such as doors, windows, frames, mouldings, flooring, paneling, and other millwork, are prime destina- tions for both pine and fir species. Furniture parts and glued panels are also an end use for softwood lumber. In Europe, western species such as Douglas fir and hemlock in the clear and other upper grades are prized for wooden window and door parts and frames. Ponderosa and other western pines are used in rustic pine furniture and for upholstery frames in Mexico, China, and Vietnam. U.S. producers are selling both metric and imperial sizes into these markets because much of the stock is ripped and resawn to provide "finished" metric sizes for the local markets.

A large portion of exported lower softwood grades are used in concrete forming for forming, wailers, and support posts. Much of the structural construction around the world is based on the use of concrete, so there are a large demand for formwork materials at all levels. Some world markets require structurally graded materials; some cultures use the material repeatedly, while others see wood as a single use material and aim for a cost competitive disposable supply with the remains for fuel or local d-i-y projects.

Western Species Markets

Western softwood species have found distinct foreign markets based on species and size. For strength, long lengths, and large sections of solid lumber. or for tight close grain materials, the U.S. West is the place to go.

The Pacific Rim is the leading market for western species and China is the leading destination. China has grown by a factor of 10. In 2005, exports to China were $23 million (33,072,000 bd. ft.), which rose ro $225 million (375,000,000 bd. ft.) in 2011. When Russia raised its export taxes in 2009, China looked to the West for increased supply for raw materials and low cost remanufacturing stock. Hemlock was the leading U.S. species imported into China in 2011 at $24.3 million, which was 36Va of all hemlock exported worldwide. Douglas fir had a value of $6.67 million, and other major western species, including cedar, hem-fir, and ponderosa pine, were over $2 million each.

Japan is the second largest export market for U.S.-produced Douglas fir. In 2011, Japan imported over $102 million, which was 567o of all Douglas fir exported that year. The vast majority of the product is in metric sizes and lengths for post and beam construction. Western hemlock and hem-fir were second at $2.7 million. Other notable species include redwood, western red and yellow cedar, and ponderosa pine. For all of 2}ll, exports were expected to increase by more than 67o over 2010 levels.

Mexico is the second largest market for all western species. Its imports have followed the U.S. economy downward from $102 million in 2006 to $83 million in 2009. Last year brought a turnaround running at 21Va over 2009. 20ll should top out with a market value of $120 million. Mexico is a low-grade pine market with ponderosa pine the leading known species imported, behind "other softwoods."

Uses include furniture components, concrete forming, pallets, crating, and millwork. Douglas fir is also imported for some structural applications along the border. The major competition is radiata pine from Chile.

Canada is a perennial top destination for U.S. softwood species, but there is limited data as to how much is transshipped to the Pacific Rim via Vancouver and to Europe via the St. Lawrence, although anecdotal data points to a large percentage. Western species such as Douglas fir are used in housing construction and remanufacturing and components throughout Canada.