Red Alder Export from the US
Dr. Ivan Eastin
Director, CINTRAFOR
College of Forest Resources, UW
Presented at the:
Western Hardwood Association Annual Meeting
Whistler, British Columbia
13-14 July, 2008
Weak US Dollar helps exports
1.8
$Canadian per $US
140
¥ per $US
120
1.2
100
1.0
80
0.8
0.6
0.4
0.2
Euro per $US
Since 2002
$US has weakened 24.1% against the ¥
$US has weakened 37.3% against the $C
60
40
20
$US has weakened 43.1% against the €
0.0
0
Jan-99
May-99
Sep-99
Jan-00
May-00
Sep-00
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
$Canadian/Euro per $US .
1.4
Yen per $US .
1.6
160
The weak dollar has significantly improved the competitiveness of US
wood exports, particularly with respect to Europe and Canada products
Center for International Trade in Forest Products
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
US Wood Products Trade Deficit
$5,000,000
Trade Balance ($1,000)
$0
-$5,000,000
-$10,000,000
-$15,000,000
-$20,000,000
-$25,000,000
-$30,000,000
The US trade deficit has declined by 21.8% since 2005
Center for International Trade in Forest Products
US Red Alder Log and Lumber Exports
$140,000,000
$120,000,000
Total
Red Alder Exports ($) .
$100,000,000
Lumber
$80,000,000
$60,000,000
$40,000,000
Log
s
$20,000,000
$0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Center for International Trade in Forest Products
Red Alder Log Export Markets
$7,000,000
+63.9
Red Alder Log Exports ($) .
$6,000,000
$5,000,000
$4,000,000
$3,000,000
Spain
Italy
$2,000,000
Mexico
Germany
China
$1,000,000
$0
2007
2008
Center for International Trade in Forest Products
Red Alder Lumber Markets
$25,000,000
Red Alder Lumber Exports ($) .
$20,000,000
-30.90%
$15,000,000
Spain
Germany
Vietnam
Mexico
Italy
China
$10,000,000
$5,000,000
$0
2007
2008
Center for International Trade in Forest Products
Unit Values of Log and Lumber Exports
$600.00
Lumber
Unit Values ($/m3) .
$500.00
112.3%
111.1%
$400.00
89.8%
91.5%
$300.00
79.4%
Logs
$200.00
82.4%
76%
70.7%
54.5%
44.5%
31.2%
$100.00
$0.00
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Center for International Trade in Forest Products
Vietnam is a Rapidly Emerging Market
$6,000,000,000
China Growth Rate 2001-2006: 252%
Furniture Exports (USD) .
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
Vietnam Growth Rate 2001-2006: 478%
$0
2001
2002
2003
2004
2005
2006
Center for International Trade in Forest Products
Recent Trends of Interest

Russian announcement of log export tariffs aimed to
encourage investment in wood processing industry




Initially 6.5%
20% on July 2007 (but not less than €10/m3)
Currently 25% in April 2008 (but not less than €15/m3)
80% by January 2009 (but not less than €50/m3)
 Japanese and European public procurement policies require
certification of legality for wood used in public projects
(expected that private companies will comply eventually)
Center for International Trade in Forest Products
Russian Softwood Logs Exports
World SW Log Exports
42.3%
70,000,000
Softwood Log Exports (m3) .
45%
42.4%
80,000,000
60,000,000
50%
34.4%
37.3%
44.1%
40%
35%
37.3%
Russian Ratio
30%
50,000,000
25%
40,000,000
30,000,000
20,000,000
20%
Russian SW Log Exports
15%
10%
Russian Exports to China
10,000,000
Russian Exports to Japan
0
Russian Ratio of World Total (%) .
90,000,000
5%
0%
2001
2002
2003
2004
2005
2006
Russia supplies over 80% of China’s SW logs and over 50% of Japan’s SW log
imports. The loss of Russian logs provides opportunities for the US.
Center for International Trade in Forest Products
Russian Hardwood Logs Exports
100,000,000
26.8%
27.6%
30%
Hardwood Log Exports (m3) .
20.8%
20%
60,000,000
World HW Log Exports
15%
40,000,000
10%
10.2%
20,000,000
Russian Ratio
4.1%
4.3%
Russia HW Log Exports
Russian Ratio of World Total (%) .
25%
80,000,000
5%
Russian Exports to China
0
0%
2001
2002
2003
2004
2005
2006
Center for International Trade in Forest Products
Public Procurement Policies Drive
Chinese Demand for Certified Wood
Results of a Survey of Chinese Companies with
Chain of Custody Certification
200 companies with CoC certification as of November 2006
 Surveys were faxed in December 2006 / January 2007 to
all CoC firms
 Completed surveys received from 41 companies
 Response rate of 20.5%

Center for International Trade in Forest Products
Number of Chinese Firms with CoC Certification
400
376
350
Number of CoC Firms .
300
250
200
200
150
127
100
78
52
50
0
1
7
12
1998
1999
2000
25
32
2001
2002
2003
2004
2005
2006
2007
As of yesterday, there were 408 companies certified in China
Center for International Trade in Forest Products
Location of Chinese Firms with CoC Certification
Most CoC companies are located along the coast
Center for International Trade in Forest Products
Product Mix of Chinese Firms with CoC Certification
60
52
50
42
41
Frequency
40
32
30
25
20
20
18
14
10
0
Number
Indoor
Craft
Outdoor
furniture & products & furniture &
Accessories Stationeries Accessories
52
42
41
9
9
Wood
material
Garden &
BBQ tools
Flooring
Doors &
Windows
Logs
Pulp & Paper
Others
32
25
20
18
14
9
9
Product Mix (Population)
Furniture manufacturers represent the largest segment of
certified companies
Center for International Trade in Forest Products
China CoC Survey Results
Average Cost of Gaining CoC Certification
for a manufacturer or Trading Company
RMB
USD
Evaluation fee
¥66,980
$8,404
Audit fee (per year)
¥33,721
$4,231
Acquiring CoC certification is costly and may be a problem
for the smaller companies.
Center for International Trade in Forest Products
China CoC Survey Results
End markets
Frequency
Percentage
Proportion of sales for each end market
Europe
35
38.4%
54.6%
United States
30
33.0%
29.8%
Canada
11
12.1%
8.4%
Australia
5
5.5%
1.6%
Japan
4
4.4%
0.6%
China
3
3.3%
2.8%
Other
3
3.3%
2.2%
Total
91
100%
100%
Over 90% of total sales for CoC companies go to North
America and Europe
Center for International Trade in Forest Products
China CoC Survey Results
8%
Price Premium .
7%
6%
6.3%
5.1%
5%
4%
2.8%
3%
1.5%
2%
1%
0%
Europe
United States
Canada
China
Price premiums for certified wood products vary by market
but can be substantial in the US and EU
Center for International Trade in Forest Products
Observations
• Weak US dollar has improved the competitiveness of
US wood products in foreign markets, especially in
relation to European and Canadian suppliers
• Slowing US housing market should encourage exports
• Domestic US recession has reduced demand for
wood furniture, flooring and cabinets which has
translated into reduced demand for US hardwood
species in foreign production markets
• Harmonized codes for red alder lumber changed in
2007 from dry and green to a single product
dry+green
• Trade data appears skewed since change in
harmonized codes
Center for International Trade in Forest Products
Observations (2)
• Reduced logging in PNW resulting from steep drop
in softwood lumber production has reduced volume
of red alder logs available
• Main log markets are China and Germany
• Main lumber markets are China, Italy, Mexico and
Vietnam
• Unit value of logs has always been below lumber but in
2007 the trend reverses
• Emergence of Vietnam and loss of Russian logs
presents strong export growth opportunity for US
hardwood industry
Center for International Trade in Forest Products
Questions?
Center for International Trade in Forest Products