Download - Dan Meyer Northern Editor September 6, 2006
Dan MeyerNorthern Editor
September 6, 2006
Trends in Global Markets for North American Hardwoods
OverviewMacro TrendsEurope
Sleep-Inducing GraphsKey OpportunitiesMarket Summary
AsiaCanada/MexicoOthers to Watch?
U.S. Lumber Exports
$1,059/MBF$1,108
$1,137$1,160
$1,180
U.S. Lumber Exports
EU Mfg. on the Move…Again
U.S. Lumber Exports to European Union
260
270
280
290
300
310
2001 2002 2003 2004 2005 2006 est.
Mill
ion
BF
EU-10EU-15
EU
EU
Biggest Markets in EU
60
65
70
75
80
2001 2002 2003 2004 2005 2006 est
Mill
ion
Boa
rd F
eet
Italy
Spain
SpainMonthly Lumber Exports to Spain
0
2
4
6
8
10
12Ja
n-01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Mill
ion
Boa
rd F
eet
Jul
Jul Jul
May
Oct
MayOct
Oct
Mar
May
Italy
Monthly Lumber Exports to Italy
0
2
4
6
8
10
12Ja
n-01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Mill
ion
Boa
rd F
eet
JulJul
JulJul Jul
Jun
Jun
Jun Jun
Monthly Lumber Exports to UK and Germany
0
1
2
3
4
5
6
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
Mill
ion
Boa
rd F
eet
UK
Germany
UK Germany
Dec Dec Dec Dec Dec
U.S. Lumber Exports to Western Europe
0
10
20
30
40
50
60
70
80
90
ITALY SPAIN UK GERMANY
Mill
ion
BF
2001 2002 2003 2004 2005 2006 est.
Annual Look
Markets to Avoid
Big But Shrinking Markets in EU
4
6
8
10
12
14
16
18
20
22
2001 2002 2003 2004 2005
Mill
ion
Boa
rd F
eet
Belgium-LuxembourgFrance
Netherlands
Medium and Growing in EU
Medium-Sized, Growing Markets in EU
4
6
8
10
12
14
16
18
20
2001 2002 2003 2004 2005 2006 est
Mill
ion
Boa
rd F
eet Portugal
Denmark
Medium and Growing in EU
Medium-Sized, Growing Markets in EU
4
6
8
10
12
14
2001 2002 2003 2004 2005 2006 est
Mill
ion
Boa
rd F
eet Ireland
Greece
Sweden
Small But Growing in EU
Small But Growing Markets in EU
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2001 2002 2003 2004 2005 2006 est
Mill
ion
Boa
rd F
eet
Estonia
Latvia
Lithuania
Austria
Rapid growth since joining EUTariff reductions, free trade stance,
investment in mfg. sectors, wage rates among lowest on continent—make it a low-cost mfg.centerfor Europe.
Key European Opportunities: Poland
Poland
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2001 2002 2003 2004 2005 2006 est
Mill
ion
Boa
rd F
eet
Increased lumber shipments to Germany ending up in Poland.
Sizeable furniture industry and rapidly growing flooring industry—both heavily export oriented.
Polish wood furniture exports up 24% in 2005 to U.S.$1.44 billion.
Key European Opportunities: Poland
Poland’s mfg. competitiveness similar to Spain and Portugal’s positions at initial EU formation.
Poland’s industrial production growing at 10% annually.
N.A. lumber exports will increase significantly.
Key European Opportunities: Poland
EU membership discussions opened in Oct 2005
Key European Opportunities: Turkey
Turkey
0.0
0.5
1.0
1.5
2.0
2.5
2001 2002 2003 2004 2005 2006 est
Mill
ion
Boa
rd F
eet
Market potential similar to Poland’s; but won’t be realized as quickly.
Wood household furniture exports surged 54% in 2004 to $136 mil.
EU admission likely; maybe as soon as 2007.
Key European Opportunities: Turkey
Turkey’s geographic location at the crossroads of European, Asian and African trade routes.
Attractive location from which to source lumber and mfr. products for export to all three continents.
Key European Opportunities: Turkey
European Winners
Big Growth Markets in Europe ytd 2006
0.0 1.0 2.0 3.0 4.0 5.0
Ash to Portugal
Walnut to Italy
Ash to Spain
Red Oak to Switzerland
White Oak to Germany
White Oak to Ireland
Yellow Poplar to Germany
Yellow Poplar to Spain
Ash to Italy
Yellow Poplar to Italy
Change in Export Volume (Million Board Feet)
European Losers
Biggest Losers in Europe ytd 2006
-6.0 -5.0 -4.0 -3.0 -2.0 -1.0 0.0
White Oak to Spain
Maple to Italy
Yellow Poplar to Slovenia
Alder to Germany
Cherry to Italy
White Oak to Italy
Ash to Uk
Alder to Belg-Lux
Cherry to Uk
White Oak to Belg-Lux
Change in Export Volume (Million Board Feet)
N.A. lumber demand slid south; now shifting east.
We’ll see more lumber shipped to Poland via Germany.
Turkey shows Poland-like promise.
European Summary
Exports to France, Belgium will decline further.
Short-term outlook for many other EU-15 countries is good, but long-term pressures will limit sustained market strength.
European Summary
ASIA
China
U.S. Lumber Exports to China
0
50
100
150
200
250
300
350
2001 2002 2003 2004 2005 2006 est.
Mill
ion
BF
China
Trend in U.S. Monthly Exports to China
1
2
3
4
5
6
7
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Mill
ion
Boa
rd F
eet
Alder
Poplar
China
Trend in U.S. Monthly OAK Exports to China
0.0
1.0
2.0
3.0
4.0
5.0
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Mill
ion
Boa
rd F
eet
Red Oak
White Oak
China
U.S. Lumber Exports to China
0
5
10
15
20
25
MAPLE CHERRY ASH WALNUT
Mill
ion
BF
2001 2002 2003 2004 2005 2006 est.
U.S. Lumber Exports to Asia
0
10
20
30
40
50
JAPAN TAIWAN THAILAND VIETNAM
Mill
ion
BF
2001 2002 2003 2004 2005 2006 est.
Other Asian Markets
U.S. Monthly Exports to Vietnam
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
Mill
ion
Boa
rd F
eet
Key Asian Opportunities: Vietnam
Monthly U.S. Exports to Vietnam
0
400
800
1,200
1,600
2,000
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Thou
sand
Boa
rd F
eet
White Oak
Yellow Poplar
Key Asian Opportunities: Vietnam
Key Asian Opportunities: Vietnam
Asian Winners
Asian Growth Markets,First Half 2006 vs. First Half 2005
0 +5 +10 +15 +20
Alder to Taiwan
Walnut to Thailand
White Oak to Indonesia
Ash to Korea
White Oak to Malaysia
Maple to Japan
White Oak to China
Yellow Poplar to Vietnam
Red Oak to China
Yellow Poplar to China
Change in Export Volume (Million Board Feet)
Asian Winners (excluding China)
Asian Growth Markets (minus China),First Half 2006 vs. First Half 2005
0 +1 +2 +3 +4 +5
White Oak to Taiwan
Ash to Japan
Cherry to Taiwan
Alder to Taiwan
Walnut to Thailand
White Oak to Indonesia
Ash to Korea
White Oak to Malaysia
Maple to Japan
Yellow Poplar to Vietnam
Change in Export Volume (Million Board Feet)
Asian Losers
Slow Asian Markets,First Half 2006 vs. First Half 2005
-10 -8 -6 -4 -2 0
Alder to China
Cherry to China
White Oak to Japan
Maple to Korea
Walnut to China
Alder to Philippines
Maple to China
Maple to Indonesia
White Oak to Thailand
Cherry to Vietnam
Change in Export Volume (Million Board Feet)
Asian Summary
China 8x larger than next largest Asian market.Price will remain buyers’ main concernFickleSome say too difficult to deal with
Asian Summary
Japan will show steady economic improvement, and increased consumer spending and business investment.Direct lumber shipments won’t improve
Asian Summary
Taiwan is fadingModest growth in Hickory, Alder
Thailand is stagnant Walnut up in 2006
Korea is flatSome promise for increased Ash
Asian Summary
Vietnam is market to watchYellow PoplarCherryAshWhite Oak
North America
Canada
Decline in U.S. Imports of Canadian Products
0%
20%
40%
60%
80%
100%
120%
Moulding Flooring
Perc
ent o
f 200
4 Vo
lum
e
2004 20042005 2005
-19.1% -50.1%
2006 2006
Canada
U.S. Monthly Lumber Exports to Canada
5
7
9
11
13
15
17
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Mill
ion
Boa
rd F
eet Red Oak
Maple
Canada
U.S. Lumber Exports to Canada
0
10
20
30
40
50
60
WHITE OAK CHERRY ASH ALDER
Mill
ion
BF
2001 2002 2003 2004 2005 2006 est.
U.S. Lumber Exports to North America
0
100
200
300
400
500
CANADA MEXICO
Mill
ion
BF
2001 2002 2003 2004 2005 2006 est.
-2.7%
+21.0%
Mexico
Mexico
U.S. Lumber Exports to Mexico
0
5
10
15
20
25
30
35
40
45
RED OAK MAPLE ALDER YELLOWPOPLAR
Mill
ion
BF
2001 2002 2003 2004 2005 2006 est.
North American Winners
Growth Opportunities in N. America ytd 2006
0 2 4 6 8 10
Beech to Mexico
Yellow Poplar to Canada
Walnut to Canada
Ash to Mexico
Birch to Canada
Maple to Canada
White Oak to Mexico
Alder to Mexico
White Oak to Canada
Maple to Mexico
Change in Export Volume (Million Board Feet)
Key North American Losers
Biggest Losers in North America ytd 2006
-10 -8 -6 -4 -2 0
Red Oak to Mexico
Red Oak to Canada
Cherry to Canada
Alder to Canada
Ash to Canada
Yellow Poplar to Mexico
Cherry to Mexico
Birch to Mexico
Walnut to Mexico
Beech to Canada
Change in Export Volume (Million Board Feet)
CANADA MEXICOALDER 1.8 3.8
ASH 1.5 0.5
BEECH 0.2 0.2
BIRCH 0.8 0.4
CHERRY 3.3 0.5
HICKORY
MAPLE 0.8 8.0
RED OAK 5.2 8.2
WHITE OAK 5.8 1.8
POPLAR 0.3 1.3
WALNUT 0.4 0.3Change in Million Board Feet
First half 2006 vs. first half 2005
North AmericanSummary
Growth Potential for 2006
Difficult business climate will continue to plague Canada.
We expect additional CDN furniture and flooring plants to exit market.
Total lumber export volumes to Canada will fall.
North American Summary
Much of the manufacturing business that Mexico lost to China circa 2001 has been regained.
Mexico’s comparative proximity advantage working well with U.S.’s JIT demands.
Mexican domestic demand rising
North American Summary
Sales to Mexican distributors and flooring mfrs. will grow, as will the diversity of species.
North American Summary
United Arab Emirates – Now India – Later
Other Markets to Watch?
United Arab Emirates
6 Months Ago
United Arab Emirates
Today
United Arab Emirates
6 Months Ago
United Arab Emirates
Today
United Arab Emirates
It’s a great time to get into export markets
Demand exceeding supply for#1 and #2 Com White Oak#1 and #2 Com Poplar#1 and #2 Com Red Oak
Export markets are more volatile, lots of shifting
Parting Thoughts
U.S. exporters competing around the world with world suppliersScandavian flooring mfrs. replacing
N.A. Cherry with S.A. JatobaSurging Russian Oak use in ChinaEastern European Oak edging into
Western European markets, hasn’t yet capped N.A. White Oak prices
Not just a Rubberwood world anymore
Parting Thoughts
“Hardwoods from all regions of the world are now available everywhere, making it less likely that one species will go crazy in demand or price before another one knocks it down.”
We may never again see runs like we’ve seen with Alder and White Oak
Parting Thoughts
Parting Thoughts
U.S. hardwood lumber exports will increase 5% in volume in 2006.
Shipments will be more heavily concentrated among larger exporters.
Export markets are increasingly important to domestic manufacturers.
Data Resourceswww.fas.usda.gov/ustrade/
In the “Export” section, click “FAS”