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of President Xi on the state-owned sector over the private has also put the brakes on the economy. Rising wages have made China less competitive too, leading to international businesses relocating to lower labour rate countries, from Vietnam to Mexico. The consequence is that China, from accounting for 57% of US hardwood exports in 2017, last year took 37%. That’s a decline of 1.3 million m3
and US$671m.
“That equates to US hardwood lumber and log exports to Mexico, Japan, Vietnam and western Europe combined,” said Mr Snow. China saw an upturn in GDP growth in Q1 2023 and the government has set a 5% target for the year. But, Mr Snow cautioned, longer term the country faces a “demographic timebomb” due to its aging population, which could further curb economic development, with the government’s focus on “geopolitics over economics” adding another drag. After its two biggest export customers, China and Canada, the US hardwood sector’s leading foreign markets in 2022 were Vietnam, Mexico, the UK, Japan, Germany, Italy, Spain, Thailand, Indonesia and South Korea.
Demand for US hardwoods in the rest of South-east Asia rose in 2022, with notable growth in Indonesia, up 9%, Thailand 54%, Malaysia 54%, Philippines 39%, Singapore, 163%, and Cambodia, 176%. Interestingly, Mr Snow pointed out, recent years have also seen India becoming a more active buyer, with Q1 2023 producing a further jump in its US
imports, up 68% in volume over Q1 2022 and 36% in value to reach US$2.14m.
EUROPEAN RED OAK IMPORTS UP 63% Despite this, however, recent growth in demand from Europe, led by the UK, has kept it ahead of South-east Asia as a US hardwood destination. And Mr Snow highlighted that lately European demand for red oak, the most prolific of US hardwoods and target of high profile AHEC promotion, has increased significantly. This was attributed by panelists to the price differential with white oak, but also to red oak developing its own markets, with specifiers and end users choosing it on its own merits. Red oak exports to Italy jumped from around 8,352m3 15,911m3
in 2021 to increased to 6,526m3 .
last year, while shipments to the UK . Total red oak exports
to Europe last year were up 63% on 2021 at 68,964m3
AHEC trade analyst Rupert Oliver highlighted that while exports to the UK declined slightly in 2022, it remained Europe’s leading US hardwood buyer, with total purchases of 140,000m3
.
The country’s economic slowdown and the end of the pandemic home improvement boom in the second half of 2022 into 2023 saw more significant contraction. In fact UK US hardwood imports were down 48% in Q1 2023 against Q1 2022. Mr Oliver said that UK hardwood importers, and those across the rest of Europe, had bought heavily in the first half of 2022, but as prices fell and demand
weakened, they were left with overpriced stock which they’d been “slowly offloading to maintain cash flow, but often at a loss”. He added that the trend was timber sector-wide, with the UK Builders Merchants Building Index showing Q1 2023 sales of all timber and joinery products down 15.3%. However, Mr Oliver also pointed out that, while UK GDP is forecast by the IMF to rise just 0.4% this year, it will recover to 1% growth in 2024. Consumer and construction sector confidence indexes are also now on the rise.
US hardwood lumber sales to its next biggest European market, Germany, contracted marginally in 2022 to around 60,000m3 60,000m3 50,000m3
, while those to Italy rose 22% to and to Spain by 38% to around . In Q1 2023, however, US exports
to Germany and Italy, fell by over 40%, with those to Spain down 9%. The contraction is attributed to economic slowdown due to energy price inflation, triggered by war in Ukraine, and high interest rates.
PRICES TO REMAIN STEADY The latest picture on hardwood supply was given by Dan Meyer of the Hardwood Market Review. He said the US industry expects domestic and global lumber demand to remain lower than last year, but with prices steady due to mills’ increasing willingness to restrict cutting to prevent them falling. Demand from the expanding stave industry is also high, underpinning price. ►
Above: European imports of red oak are growing
www.ttjonline.com | July/August 2023 | TTJ
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