The global timber trade is a large and complex network of competing countries, policies and forests from around the world, of which the Pacific Northwest is an integral part.
It was a mixed third quarter for West Coast timber exports, with log exports going up 9 percent and lumber exports going down 8 percent. Each uptick or downtick in the market is often because of something that happened thousands of miles away.
Lumber exports are down, for instance, because China has been taking more lumber from British Columbia instead of the U.S. Meanwhile, log exports are up because China is increasing its take there, according to the Portland Business Journal.
China continues to be the largest consumer of West Coast timber, accounting for 62 percent of exported products.
“China increased its importation of West coast logs to over 257 million board feet, an increase of 30 percent from the second quarter of this year,” said Xiaoping Zhou a research economist with the U.S. Forest Services’ Pacific Northwest Research Station.
China is the center of the universe right now in the global timber market (for better or worse). U.S. domestic log prices have gone up because of the demand from China for timber, and the market is expected to improve next year. But the demand is not always explosive. Looking at the larger market, not just the West Coast, the total value of U.S. wood product shipments to Asia actually fell by 30 percent in 2012, from $2 billion to $1.4 billion, largely due to reduced demand from China, according to Hakan Ekstrom, president of the consulting firm Wood Resources International.
As Ekstrom points out, it’s not just China that West Coast timber companies need to be watching. Russia is still positioned as a major competitor in sating the Chinese demand for timber. This is why the owner of a Washington timber company on the Olympic Peninsula may be paying close attention to the comments of Russian President Vladimir Putin on the other side of the world.
Russia’s decision in 2007 to impose tariffs of 25 percent on outgoing shipments of logs made the Chinese wary of dealing with their northern neighbor, but Russia — and even a country far to the south — are still worth watching.
Due to the tremendous volume of timber in Siberia, Russia is a formidable force in the global wood products market, said Paul Owen, president of the Vanport International exporting firm.
The frigid temperatures in the region are an impediment to efficiency, however — in winter, for example, logs must be thawed indoors before processing, he said. “The climate is a huge issue.”
Even with a major investment in logging roads and related infrastructure, Russia would only be able to bring about 40 percent of its available timber to market, Owen said.
Due to Siberia’s wealth of natural resources, including oil, gas and precious metals, logging roads aren’t likely to be a major priority anytime soon, he said. “I don’t think it even registers in Moscow.”
However, given the proximity between Russia and China — as well as China’s demand for wood and its available capital — there’s an incentive for the Chinese to make investments, said John Perez-Garcia, a professor at the University of Washington’s Center for International Trade in Forest Products.
“They’re investing in infrastructure and mills in Russia,” he said.
China is only able to supply about half of its demand for wood products, but the Northwest faces stiff competition from New Zealand as well, Perez-Garcia said.