Will China Log And Lumber Exports ‘Jump Start’ U.S. Timber Markets?

January 2012 — ALBANY, Ga., Jan. 20 —- The head of one of the nation’s largest forestry management firms believes a surge in U.S. log and lumber exports to the Far East may provide “a possible jump start to our southern pine economic engine” hard hit by the prolonged housing slump.

Marshall Thomas, president of F&W Forestry Services, Inc., which provides management and sales services to private, industrial, and institutional forestland owners throughout much of the U.S. and South America, said U.S. large-scale wood exports to China and other Far Eastern nations is providing some relief to housing-distressed timber markets.

However, Thomas said most forecasts for a recovery in domestic housing construction, the major market for U.S. lumber and other wood building products, “may be three years away” before reaching a 1.3 million housing start level.

“The U.S. historically has been a net importer of forest products, but the imports have come from Canada, our sister country in North America,” Marshall writes in his firm’s current newsletter, The F&W Forestry Report.  “With housing starts down the Canadians have been hurt as badly as we have.”

China has replaced the U.S. as Canada’s major lumber customer and the U.S. has now joined Canada in large-scale shipments to the Far East from ports in the Pacific Northwest, Thomas notes. The Chinese lumber demand is fueled by that country’s huge housing construction program with a target of 36 million dwelling units by 2015.  India may follow and Japan has barely begun to rebuild from its earthquake and tsunami disasters of last spring.

Thomas believes U.S. East Coast ports, especially those in the Southeast that have immediate access to the southern pine belt, may participate in the China and Far East lumber export boom with the coming enlargement of the Panama Canal. .

“The U.S. South is a long way from China and the Far East and shipping is somewhat limited by the Panama Canal, the size of which currently restricts the use of the largest, most efficient container ships and even larger ones to come,” he writes.  “Fortunately this restriction will be eased around 2014 due to the widening and deepening of the canal.”

“I don’t think the Chinese and other Far Eastern importers will be able to consume enough of our wood to drive prices to the levels of the late nineties,” Thomas said, “but I am hopeful that maybe they can consume enough to get supply more in line with domestic demand when it returns.

“We are still looking at possibly three to five year for a recovery, but maybe when it comes we will be able to thank the Chinese for making it more robust.”

About F&W:

F&W Forestry Services, Inc., of Albany, Ga., is one of the nation’s oldest and largest forest consulting and management firms.  Established in 1962, F&W operates 19 offices in 12 states comprising the Southern pine belt, the Central and Appalachia region, Upstate New York, and Oregon in the Pacific Northwest. It also manages private forestlands in South America with offices in Uruguay and Brazil.