PENNYSLVANIA HARDWOOD EXPORT TRENDS AND FORECASTS

Transcription

1 Pennsylvania Hardwoods Development Council PENNYSLVANIA HARDWOOD EXPORT TRENDS AND FORECASTS Prepared by: D. Wayne Bender, Hardwoods Development Specialist September 2010 Pennsylvania Hardwoods Development Council Pennsylvania Department of Agriculture 2301 N. Cameron Street, Room 308 Harrisburg, PA

2 PENNYSLVANIA HARDWOOD EXPORT TRENDS AND FORECASTS The forest products industry has seen a major improvement in export of hardwood products during the first six months of 2010 over that of 2009! Hardwood lumber exports from the United States increased 60%, hardwood logs increased 40%, hardwood veneer increased 15%, and hardwood flooring increased 69%. The only market to decline in 2010 was hardwood siding (-82%). Considering all hardwood products, there was a 47% increase in exports through the second quarter of 2010 over that of This compares to a 35% decline in hardwood exports through the second quarter of American hardwood exports by hardwood product are listed below from data provided by the American Hardwood Export Council (AHEC) based on the US Census Bureau. The numbers in bold indicate the highest year for sales for each hardwood product. American Hardwood Exports 1 Hardwood Product (2 Q) Percent Q Lumber $1,618,498,908 $1,421,964,171 $1,130,826,573 $921,151,692 $659,040, % Logs 618,409, ,439, ,658, ,693, ,809, % Veneers 428,244, ,580, ,317, ,926, ,104, % Flooring 99,364,107 92,501,058 82,746,180 63,782,490 44,312, % Plywood 77,646,419 87,895, ,092,344 74,177,228 57,203, % Moulding 24,031,611 29,598,402 27,978,172 22,419,559 12,733,706 +9% Siding 6,559,902 1,656,614 2,627,674 6,284, ,862-82% TOTAL $2,873,055,675 $2,890,635,470 $2,459,246,304 $1,927,434,756 $1,290,079, % In Pennsylvania, forest product export sales in 2010 have also improved 24% over the second quarter of Hardwood lumber and log exports both increased 30.6% over the same period in Furniture exports hit a new high in 2009, and the current exports through the second quarter are just under a 4% decline from that record year. Paper exports also increased in 2010 with 27.8% growth over 2009 (2Q). Pennsylvania Hardwood Exports 2 Product (2Q) % Change (2Q) Lumber 334,297, ,805, ,527, ,515,016 $145,828, % Logs 118,513, ,894,351 96,478,942 58,584,398 41,164, % Furniture/Fixtures 91,939, ,226, ,750, ,777,446 62,093, % Paper 442,040, ,205, ,930, ,353, ,164, % TOTAL $986,790,734 $985,131,882 $1,000,686,912 $898,260,716 $530,250, % 2

3 When comparing the corresponding data from Pennsylvania with the total for the United States, Pennsylvania is slightly below the national average of increase in lumber, but slightly ahead in the increase in forest products (logs). However, note that the national figures include statistics for both hardwood and softwood, while Pennsylvania s sales represent primarily (over 95%) hardwood sales. It is not possible using the WISER data base to separate the hardwood from the soft wood. The Hardwoods Development Council uses the WISER data to compare the eastern hardwood states statistically. United States Wood Exports 2 Product (2Q) %) Wood Products 5,180,661,076 5,260,103,359 5,310,908,832 4,193,112,578 2,658,772, % Forest Products 1,781,128,776 1,994,268,316 1,975,395,782 1,702,106,343 1,063,961, % Furniture 3,506,305,137 3,963,750,457 4,521,853,990 4,000,767,172 2,169,424, % Paper 18,580,621,481 20,343,045,942 22,313,303,997 19,699,854,986 11,376,326, % TOTAL 29,048,716,470 31,561,168,074 34,121,462,601 29,595,841,079 17,268,484, % LUMBER MARKETS: Regarding the top twenty markets for hardwood lumber from Pennsylvania, Mexico continues to be the largest increase. In 2009 (2Q), Mexico was Pennsylvania s fifth largest market and had an increase of 58% over In 2010 (2Q) they are now the third largest market for Pennsylvania, and their imports from Pennsylvania have increased 218% over It should also be noted that Mexico s import of Pennsylvania logs also decreased 94%. Nationally, Mexican imports of American lumber have increased only 17%, indicating that Mexico manufacturers are looking for higher quality lumber from Pennsylvania (with added shipping costs) over southern states. Primary species of interest to Mexico are: Red Oak ($7.5 million, up 4%), Maple ($7 million, up 30%), Poplar ($6.0 million, up 18%), Alder $2.9 million, up 16%), Hickory ($1.9 million, up 148%) Ash ($1.8 million, up 32%), and White Oak ($1.1 million, up 74%). However, the following species have declined: Birch ($3 million, down 7%), Walnut ($414,500, down 55%), Beech ($295,500, down 24%) and Cherry ($133,700, down 38%. The 2010 report for the Top Twenty Pennsylvania Lumber Markets indicates that only one market declined during the first six months United Kingdom. 2 #1 Canada 15% growth with sales of $22.9 million #2 China 160% growth with sales of $14.9 million #3 Mexico 219% growth with sales of $12 million #4 Germany 29% growth with sales of $6.2 million #5 Spain 38% growth with sales of $5.1 million 3

4 #6 Italy 14% growth with sales of $4.3 million #7 United Kingdom 8% decline with sales of $3.2 million #8 Sweden 87% growth with sales of $3.0 million #9 Taiwan 57% growth with sales of $2.6 million #10 Japan 25% growth with sales of $2.6 million #11 France 10% growth with sales of $2.2 million #12 Egypt 24% growth with sales of $1.5 million #13 Australia 42% growth with sales of $1.42 million #14 Vietnam 13% growth with sales of $1.3 million #15 Hong Kong 93% growth with sales of $1.3 million #16 Belgium 58% growth with sales of $1.3 million #17 Saudi Arabia 158% growth with sales of $1.2 million #18 Malaysia 28% growth with sales of $1.1 million #19 South Korea 64% growth with sales of $1.0 million #20 Indonesia 13% growth with sales of $1.0 million Other major increasing markets (with sales over $400,000) are: Ireland 39%, Greece 13%, Iceland 2412%, Mauritius 683%, UAE 73%, and Turkey 70%. Decreasing markets were found in #23 Portugal (-22%), #24 Finland (-7%), #26 India (-38%) and #29 Thailand (-52%). Nationally, the largest markets for American lumber are: #1 China $209 million in 2009, and 2Q up 141% #2 Canada $199 million in 2009, and 2Q up 43% #3 Italy $69 million in 2009, and 2Q up 54% #4 Mexico $68 million in 2009, and 2Q up 17% #5 Vietnam $51 million in 2009, and 2Q up 129% #6 United Kingdom $40 million in 2009, and no growth #7 Japan $26 million in 2009, and 2Q up 36% #8 Spain $26 million in 2009, and 2Q down 21% #9 Germany $24 million in 2009, and 2Q up 50% #10 Portugal $15 million in 2009, and 2Q up 13%. The 11 th largest market is the only decline Thailand, with 9% decline in purchase of American lumber. This probably reflects the recent economic and political upheaval in the country, and may only be temporary. Through the second quarter of 2010 the US Census Bureau reports the following current year highlights for exports of American hardwood lumber: BRAZIL In 2009, Brazil was one of few growing markets, and ended purchasing $1.4 million from Pennsylvania. However, in 2010, the market has declined by 56%. A recent trade mission to Brazil, led by the PA Hardwoods Development Council, did show strong interest in American lumber and obstacles to trade with Brazil are lessening. This continues to be an emerging market for American lumber. Primary species of interest are walnut, red oak, and white oak. 4

5 INDIA lumber purchases in India still are declining, while log sales increased 11%. Recent visitors at IWF continue to claim they can buy American sawlogs and dry the lumber adequately for their furniture industry. PAKISTAN currently shows a significant decrease in sales through the 2Q of Recent floods in Pakistan have also limited options for Furniture Pakistan to buy lumber quickly due to a warehouse being destroyed. However, Pennsylvania lumber suppliers are well positioned to lead the nation in expanding the Pakistan market. For the first time in recent history, New York leads Pennsylvania in export of American lumber. While Pennsylvania had a 40.6% increase in exports totaling $145.8 million, New York experienced 112% increase through the second quarter with sales totaling $153 million. Other top hardwood exporting states are: 2 #3 North Carolina +62 $117.9million in sales through 2Q, 2010 #4 Virginia +33% $98.1 million #5 Ohio +22% $93.9 million #6 Wisconsin +41% $92.8 million #7 Indiana +11% $88.3 million #8 Georgia +32% $81.8 million #9 Michigan +33% $72.8 million #10 Tennessee +49% $55.0 million #11 Kentucky -15% $52.0 million #12 Mississippi +42% $47.7 million #13 West Virginia +55% $42.2 million #14 Minnesota +41% $37.0 million #15 Maine +2% $35.4 million Of the top thirteen hardwood exporting states, only Wisconsin is not part of the Hardwood States Export Group. Only three states nationwide saw a decline in the sale of lumber to overseas markets. They were: Kentucky, Colorado, and Kansas. LOG MARKETS: While log exports from Pennsylvania in the 2Q of 2009 were 50% below where they were at this time in 2008, log markets in 2010 have improved 30% over After years of continual double digit growth in the export log market, Pennsylvania logs exports reached a high of $130.9 million in 2007 and dwindled to $58.6 million in Through the second quarter of 2010, Pennsylvania has exported $41.2 million in log values. Nationally hardwood log markets in 2010 are 40% higher over the second quarter of

6 The US Census Bureau reports the following major markets increased for their purchase of American hardwood logs through the second quarter of 2010: 2 #1 China 92% $113.million through 2Q #2 Canada 10% $55.5 million #3 Hong Kong 82% $24.6 million #4 Italy 21% $23.0 million #5 Vietnam 29% $20.0 million #6 United Kingdom 45% $21.7 million #7 Germany 24% $20.6 million #8 Japan 8% $9.7 million #9 Spain 85% $9.7 million #10 Portugal 12% $9.2 million In 2010, Pennsylvania hardwood logs exports have increased 30.57% over the second quarter of indicates if the % increase is above or below the national average. #1 China 99% $12.7.million through 2Q #2 Hong Kong 153% $6.1 million #3 Germany 17% $3.3 million #4 Italy 37% $2.9 million #5 Vietnam 68% $2.2 million #6 Canada -34% $2.2 million #7 Turkey 25% $1.5 million #8 Taiwan -19% $1.2 million #9 Portugal 88% $1.0 million #10 Japan -17% $1.0 million In 2010, Pennsylvania currently ranks 7 th among eastern states for hardwood log exports. In 2009, through the second quarter, Pennsylvania was fourth. 2 #1 Maine -18% $70.5 million #2 North Carolina +67% $70.4 million #3 New York +29% $50.8 million #4 New Jersey +23% $47.0 million #5 Tennessee +46% $46.7 million #6 Virginia +69% $43.4 million #7 Pennsylvania +31% $41.2 million #8 Ohio +45% $31.3 million #9 Illinois +37% $22.5 million #10 Missouri +178% $21.3 million 6

7 FURNITURE MARKET: It is interesting to note that while much of the hardwood furniture production left the United States during the past 10 years, the remaining furniture production has seen an increase in the demand for American produced furniture. Starting in 2003/4, there has been an annual increase in the value of exported furniture from the United States. This growth continued through the end of the decade for Pennsylvania suppliers, but the first six months of 2010 has shown a decline of 3.8% in exports. United States Furniture Exports 2 Year US Total Pennsylvania Total ,024,477,247 90,666, ,588,021,976-14% 84,599,604-7% ,323,373,781-10% 69,030,708-25% ,546,043, % 63,455,946-8% ,868,399, % 68,584,404 +8% ,156,901, % 75,020,730 +9% ,506,305, % 91,939, % ,963,750, % 118,226, % ,521,853, % 125,750,003 +6% ,993,487,998-12% 129,777, % Q 2.169, ,093, % In 2002, the top ten markets for Pennsylvania furniture with sales over $1 million were: Canada ($41 million or 60% of all exports), Mexico ($2.7 million), Guatemala, Japan, El Salvador, United Kingdom, Germany, Belgium, Saudi Arabia and Italy. In 2009, the top fourteen markets for Pennsylvania furniture with sales over $1 million were: Canada ($77.4 million or 60% of all PA exports), Saudi Arabia (10.1 million) United Kingdom ($6.6), Mexico ($4.8), Germany ($2.2), Qatar ($2.1 million), Australia ($1.7), Italy ($1.7), Bermuda ($1.7), Brazil ($1.4), China ($1.1), United Arab Emirates ($1.1), New Zealand ($1.0), and France ($1.0)., Growing markets in 2010 with projected sales over $1 million are: Qatar (48%), Italy (110%), United Arab Emirates (195%), Japan (220%), South Korea (271%), China (84%), Hong Kong (280%), Netherlands (51%), and New Zealand (37%), Declining markets in 2010 appear to be: Canada (-5%), United Kingdom (-11%), Saudi Arabia (-75%), Mexico (-16%), Germany (-8%), Australia (-15%), and Brazil (-43%). Denmark is currently experiencing significant growth in the purchase of Pennsylvania furniture, having increased over 9459% in 2010 over They have bought $446,142 in furniture in 2010 compared to only $4,667 in

8 PAPER MARKET: Pennsylvania paper exporters had seen annual growth in exports through 2008, but 2009 saw a 1.2% decrease. This was relatively good news for a struggling economy. Pennsylvania exports for paper dropped from $493 million to $486 million in However, paper exports have improved through the second quarter of 2010 by 27.8% At one time it could be assumed most paper production in Pennsylvania was made from hardwood pulp since Pennsylvania s forests are 90-95% hardwood. While there are some major suppliers for high quality paper using hardwood pulp still in production in Pennsylvania, such as Glatfelter in York and Domtar in Johnsonburg, many other paper manufacturers are using imported pulp from other states and nations. Production of cardboard does not use significant quantities of hardwood pulp. That being said, paper exports from Pennsylvania continue at near record growth. Like furniture, nearly 60% of the paper products produced in Pennsylvania are exported to Canada. In 2009, Pennsylvania exported $493 million in paper products, and Canada imported $272.7 million, a decrease of 8.4%. Exports for 2010 to Canada are up 14% through the second quarter for a total of $145.3 million. Other major markets for Pennsylvania paper products include: 2 #2 China 15.5 million in sales through the 2Q + 46% #3 Columbia 15.1 million in sales through the 2Q + 4% #4 Mexico 11.1 million + 8% #5 United Kingdom 11.0 million + 87% #6 Turkey 9.4 million +500% #7 Germany 9.2 million - 19% #8 South Africa 6.0 million +719% #9 Dominican Republic 4.8 million +247% #10 Malaysia 4.3 million +675% #11 France 3.4 million - 24% #12 Netherlands 3.2 million +122% #13 Hong Kong 2.4 million + 65% #14 Brazil 2.4 million +333% #15 Ireland 2.3 million + 87% #16 United Arab Emirates 2.0 million + 37% #17 Chile 2.0 million +181% #18 Argentina 1.8 million + 8% #19 Belgium 1.7 million - 64% #20 New Zealand 1.6 million +598% The following markets are 100% or higher in their growth for Pennsylvania paper imports: Turkey, South Africa, Dominican Republic, Malaysia, Netherlands, Brazil, Chile, New Zealand, Japan, Venezuela, Philippines, Latvia, Peru Trinidad and Tobago, 8

9 and El Salvador. The above list includes countries that have purchased more than half a million in paper imports in In the United States, Pennsylvania is currently 18 th in paper exports. Paper exports in the United States are 26% above the export levels of 2009, while 2009 saw a 12% decline over Pennsylvania was slightly ahead of the US growth rate at 27.8%. Nationwide, only five states saw a decrease in the export of their paper products: #32 Vermont, #45 Oklahoma, #46 New Mexico, #49 Montana, and #50 Hawaii. &, and Pennsylvania is 9.8% below sales in In 2009 (2Q), of those states with sales over $1 million, only two states saw increases in exports. In 2010, all 26 states have seen increases. The Future: While the exports for the first six months has been extremely positive in comparison to sales in 2009 or late 2008, optimism for the future is cautious. The increased lumber sales in the first half of the year may have been the result of importers restocking inventory in low warehouses and may not reflect ongoing export sales. Local saw millers have reported decreased orders in July and August in comparison to past summer months. While orders are typically lowest in the third quarter for both lumber and logs, companies fear the sales of the first six months may not be sustained through the remainder of The Middle East continues to be developing into a major market. Lumber markets #12 Egypt up 24%, #17 Saudi Arabia up 158%, #28 United Arab Emirates up 73%, #30 Turkey up 70%, #46 Israel up 79%, and #47 Jordan up 32%, continue to show signs of growth. Only #36 Lebanon was down 71%. Growing log markets in the Middle East include: #7 Turkey up25%, #11 United Arab Emirates up 699%, #18 Egypt down 13%, #26 Lebanon down 24%, while #32 Israel and #33 Jordan remained stable with no growth. AHEC and the Hardwood States Export Group had their first trade show in Turkey in 2009 and will return in The HSEG is also sponsoring a mission to Egypt and Turkey this September. Reports from Dubai WoodShow indicated it was stronger in 2009 than expected and that the show will be larger in USDA also recently hosted a delegation from Egypt that visited some mills in Pennsylvania, and Penn State University is hosting a delegation from Egypt this fall. While Egypt is a market that primarily works through agents and distributors, attempts are being made to assist American lumber suppliers to help end users buy direct. India continues to be a mystery. While all predictions are for India to become a major hardwood market, the first half of 2010 saw a decline of 38% in their purchase of Pennsylvania lumber. Log exports from Pennsylvania to India increased 11% during the same time. India has a large veneer and panels industry demanding veneer. They do not have adequate kiln facilities for drying temperate hardwood. They like to cut and dry 9

10 temperate hardwood similarly to the processes used for tropical hardwoods. This results in lower quality lumber with significant downgrade occurring from the drying process. The HDC attempts to discourage the Indian market from buying sawlogs due to low quality lumber that results in making Indian manufacturers timid to try American lumber a second time. Reports from the IndiaWood trade show this past spring continue to be optimistic about the Indian market but participants projected that it will take 2-5 more years to develop. There was a strong showing of Indian companies at the Pennsylvania HDC booth at the IWF trade show in Atlanta. There were more international visitors from India than any other nation to the Pennsylvania booth. Of the seven Indian visitors, five wanted veneer and saw logs. Only one was seeking suppliers for lumber. The HDC will have a booth at DelhiWood 2011 staffed by Pennsylvania s Authorized Trade Representatives in India. Sushama Kanetkar and Supriya Kanetkar will seek to promote Pennsylvania suppliers to this market in northern India. The HDC also had planned for a mission of Pennsylvania companies to the trade show and to Pakistan but the mission was cancelled due to budget cuts through the Center for Trade Development, Office of International Business Development, Department of Community and Economic Development. Pennsylvania companies are invited to share the booth at DelhiWood at no cost. China continues to be a major market with room for expansion. In a recent presentation by Michael Snow, Executive Director of AHEC, he posed the question regarding what new emerging market would replace China. The answer was China referring to the expanding domestic market for Chinese wood products and increased furniture and wood production being done by central and western China. Annual salary increases of nearly 10% in China over the past decade have allowed a middle class to emerge. While wealthier Chinese tend to like more exotic species, the middle class seem to appreciate American lumber for their flooring and furniture. It is also reported that while eastern cities of China have experienced major urbanization growth due to migration of poorer interior Chinese workers seeking jobs in Beijing, Shanghai, Guangzhou and other major eastern cities. To help alleviate these migration issues, the government is now providing incentives for wood product manufacturers to invest in industry within Central and Western China. It is suggested that this will be the new market for the future. China purchased a high of $16.1 million in lumber from Pennsylvania in 2006, and in 2010 (2Q) they have already purchase $14.9 million, surpassing the total purchased in 2009 of $14.8 million. This compares to China buying $274.4 million of American lumber in 2006 (the peak), and in 2010 they have already purchased $187.5 million. Similarly, log exports from Pennsylvania to China have increased 99% in 2010 over 2009, but even if the rate were to continue, the sales would be below the high of $28.7 million sold to China in Through the second quarter of 2010, Pennsylvania has shipped $12.7 million in logs to China. American log exports to China peaked in 2007 with $189.7 million. American logs exports are 92% above 2009 (2Q), and total $

11 million. The increase purchase of American logs no doubt relates to the on again/off again tax tariffs on Russian logs exported to China, and a growing demand for logs secured through verifiable legal means. Pennsylvania s Authorized trade representative did exhibit at the Furniture Manufacturing and Supply China Show in early September 2010, and will participate in the Interzum Guangzhou show in March Leads from these trade shows will be distributed through the Hardwood States Export Group and the HDC to Pennsylvania companies.. Mr. Steven Zou is also planning an in-bound mission with a furniture manufacturing association from Chengdu, in central China. These opportunities will allow Pennsylvania companies to continue to be on leading edge in reaching the wood products industry in China. Vietnam continues to be a major growing market for Pennsylvania hardwood. Pennsylvania lumber exports to Vietnam totaled $2.1 million in 2009, down 30% from Through the second quarter 2010, Pennsylvania has shipped $1.3 million, representing an increase of 13% over 2009, and is Pennsylvania 14 th largest lumber destination. While this increase is not as high as other European nations and countries such as China and Mexico, it is stable growth. Logs exports are on track to equal the values shipped in Pennsylvania logs exports in 2010 are $2.2 million, an increase of 68% over 2009, and only $50,000 shy of the total exported to Vietnam in Vietnam is currently Pennsylvania 4 th largest market for logs, and in 2007 they were 7 th. Vietnam continues to take advantage of low wage employees to compete on the international scene for selling furniture and other secondary wood products. Their products are exported to Europe and North America, and consequently are pressured to use sustainable wood supplies. Increasing international pressure to reduce illegal logging supplies will also contribute to leveling the playing field for Pennsylvania lumber and wood products to Vietnam. There are no current plans from the HDC or the Hardwood State Export Group to do a major trade show or mission to Vietnam. The HSEG does plan to participate in Vietnam Wood Show in Ho Chi Minh City, in September South America continues to show signs as a potential market for American hardwood but it will take time. In 2009, South America was one of few markets to expand in the purchase of American lumber, buying $3.4 million, up from $2.6 million in American sales to South American are currently below the levels of 2009, dropping 54%. Brazilian furniture manufacturers were extremely interested in pricing and using American hardwoods for their high end domestic production. It was reported that the upper class of Brazil does not want to use rainforest species, and prefers to use sustainable lumber resources. This market is expected to grow as barriers to trade for wood products to Brazil and South America improves. Chile, Argentina, Columbia are other markets to watch. 11

12 1. US Hardwood Export Statistics - American Hardwood Export Council, based on data from the Unites States Department of Agriculture, Foreign Agricultural Service Report and 2010 January July Report. 2. WISERTrade data based on US Census Bureau data. 12