Prices, Production Rise

(Continued from page 20) to l57o of their production. Although lumber exports were down about 30Vo in2012 compared to 2011, the year's shipments to Asia were still expected to reach the second highest level in 15 years.

The log market in western U.S. has seen quite a shift in the log flow during2012, with logs going to the local sawmills rather than to the export docks. Log export volumes to Asia, with China being the major destina- tion, fell about 22Vo in 2012. The reduced log demand from China has been good news for lumber producers in both Washington and Oregon, since it has taken off some upward price pressure that otherwise would likely have occurred had the log export market continued to stay at the l5-year record highs that were experienced in 201t.

The log consumption at the local sawmills was up by almost 107o this year, and this higher demand for logs has been met by a combination of higher timber harvests, increased log imports from Canada and a diversion of logs from Asian to domestic consumers.

The net exports of logs have fallen from 8.7 million cubic meters in 201I to an estimated 6.4 million cubic meters in 20 12. (The approximate average conversion factor for West Coast logs is I O00 bd. ft. for every 6 cubic meters.) Log imports from coastal British Columbia to sawmills in western Washington this year are predicted to reach their highest levels in four years.

Timber harvests have also gone up in the Northwest and 2012 is likely to be the third straight year when harvest volumes have increased year-overyear, reaching the highest level seen since 2007.

Sawlog prices have not yet gone up as a result of the improved lumber market. Prices in the U.S. Northwest, have been surprisingly flat for more than a year, with Douglas fir prices averaging close to $90 per cubic meter and hemlock log prices hovering around the mid-$80s, according to the North American Wood Fiber Review.

However, in early November, there was increased upward pressure on sawlog prices in the West from Chinese log buyers that were more active in the market than earlier in the year.

Although sawlog prices are currently at their highest levels in over five years, they are still way below the record highs during the 1990s. The Douglas fir log prices in November were just below the 15year average of $93 per cubic meter, while hemlock prices are well above the l5-year average of $68 per cubic meter.

With the expected continued improvement in the U.S. lumber market and Chinese log buyers continuing their presence in the Northwest, it is likely that sawlog prices in the region will move upward in 2013 and that hemlock log prices may reach their highest levels in at least 15 years.

- Hakan Ekstrom is president of Wood Resources International LLC. Bothell. Wa., and editor of the Wood Resource Quarterly. WRI publishes two quarterly market reports tracking market developments, as well as sawlog, pulpwood, lumber and pellet prices in most key regions oJ the world. Reach him at info@wrihd.com.