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An Asian Driven Evolution of Western U.S. Log and Wood Building Products Markets

by: David New, Growing Excellence, Inc.

While the USA remains the world’s largest single wood building products market and producer, the developed and emerging economies of Japan, Korea, China, India, Vietnam and Indonesia are rapidly overtaking the US. Globally, building products market demand is directly related to national or regional overall economic activity. Regretfully the US is projected to have very poor growth in domestic building products demand for the next five years.

Whereas East and South Asia’s collective economy is projected to continue to grow and become increasingly reliant on importing forest products from outside of the region to meet its needs. Until recently Canada has been much more aggressive in pursuing these emerging Asian lumber markets.

While market demand is changing, so too are the critical relative “global trade” factors of transportation costs (liquid fuel and empty container backhaul shipping ), manufacturing costs and currency exchange. Ten years ago shipping a container of lumber to the Eastern US from Idaho was cheaper than shipping to Asia. Today that situation has reversed, making lumber buyers of East Asia some of Western North America’s most profitable markets.

Despite Canadian lumber exports to China, Pacific Northwest log markets have also significantly changed as US log exports to China have risen from 100,000 m3 (about 18MMBF) in 2007 to 2.43 million m3 (about 452 MMBF) in 2010. This additional demand led to significant increases in sawlog stumpages in the Coastal PNW during 2009-2011. The coastal PNW was the only US region to experience such sawlog stumpage price increases.  Combined,  these factors are likely to drive more and more Western US lumber manufacturers into exporting lumber to Asia for the foreseeable future.

As a long time advocate of the importance of export markets to the viability of any industry, Asia’s new wood products markets represent great opportunities for Western US large and small forest owners and wood building products manufacturers.

David New is president of Growing Excellence Inc., a small international forest business management consultant company. He was Chief Forester for Fletcher Challenge, formerly a New Zealand based company with forest products, construction and energy interests globally, and he has served as VP of Timberland Resources for Boise Csacade with lands in 6 states and Brazil.

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