Global lumber continues two-year climb
June 21, 2018 – After softwood lumber consumption in the United States reached a 10-year high in 2017, demand fell early this year. In spite of reduced first-quarter consumption, lumber production on the U.S. west coast increased by nine per cent year over year when compared to the first quarter of 2017 due to strong demand from China.
Shipments to China during the first quarter of this year were up almost 50 per cent compared to the first quarter of 2017.
While lumber production in Canada's eastern provinces increased slightly in early 2018, sawmills in British Columbia reduced their production by an estimated three per cent in the first quarter of this year as compared to the first quarter of 2017. Production levels were down partly because of lower demand for wood in the U.S. during the winter season, but also because of reduced availability of logs due to severe weather conditions. The weather also impacted lumber shipments by rail, resulting in substantial slowing in exports from B.C.
Lumber markets – Northern Europe
In the Nordic countries, the sawmilling industry has seen their markets improve both in regard to demand and to pricing during the past year. Although export volumes declined somewhat in early 2018 as compared the same period in 2017, prices increased, reaching the third highest level seen in the past decade (in local currencies). Sawmills in Finland and Sweden have increased their presence in different markets in 2018, with Swedish sawmills predominantly expanding sales in Europe, and Finnish exports increasing to the Middle East and Japan, reports the Wood Resource Quarterly (WRQ). Both countries reduced sales to China during the typically slow season of January and February when the Chinese New Year is celebrated.
Lumber markets – China
Demand for wood in China slowed in the first quarter of this year, following a record 2017, with import volumes of softwood lumber falling to their lowest levels since the fourth quarter of 2016. Imports from Canada fell the most, with quarterly shipments reaching an eight-year low in the first quarter of this year. The Nordic countries have filled the gap where Canadian suppliers have pulled back. In this year's first quarter, lumber volumes from Finland and Sweden accounted for 12 per cent of total imports, a doubling of their market share as compared to 2015.
Lumber market – Japan
The record high softwood lumber prices in the U.S. have impacted the costs for North American lumber imported to Japan in the past six months. In May 2018, prices for U.S. Douglas fir lumber (45 x 105) and Canadian hemlock lumber (45 x 105) delivered to Japan reached their highest levels for the month of May since 2013. Lumber import volumes to Japan have been sliding for three consecutive quarters and were down to 1.46 million m3 in the first quarter of 2018 as compared to 1.6 million m3 in the second quarter of 2017. The biggest declines in lumber supply over the past year have been in wood coming from Canada and Finland; Sweden, Chile and Russia have all increased their market shares.
Lumber market – Russia
Russian lumber exports reached an all-time-high volume of 28 million m3 in 2017, up 10 per cent from the previous year, a doubling of exports from 10 years ago. Exports to their primary destination, China, fell 19 per cent year over year. Twenty years ago, eight of the 10 major destinations for Russian lumber were in Europe, while in the first quarter of 2018, only three European countries made the top 10 list, according to the WRQ. Average export prices have trended upward in both U.S. dollar terms and rouble terms over the past two years, with the biggest increases occurring in lumber sold to China, Uzbekistan and Egypt.
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