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Econ Home > Products > Southern Markets > Timber Sector
The potential for substitution between timber and other materials depends upon the level of technology and relative prices of alternative material inputs. For instance, the possibility for substitution away from timber to produce paper and paper related products is low since there are currently no economically viable and widely produced substitutes for wood fiber. However, the potential for substitution among alternative materials in building construction is much higher.
Even during the rapid growth phase described earlier, the use of lumber in the US did not grow at the same rate as housing starts. Increasing prices of timber relative to steel and cement allowed for substitution away from lumber and toward these other products. Very recent large upturns in cement and steel prices may portend a moderating or reversal of this substitution of raw materials. While many factors contribute to price differences among raw materials, energy prices will have a strong influence on the future competitive position of wood products. In general, steel and cement embody higher energy costs in transportation and production than do solid wood products. It is also conceivable that recent upsurges in energy prices could have a positive influence on domestically produced wood products.
Fleishman et al. (1999) report that lumber has recently lost market share in the construction market, with the share in wall framing down from 93 percent to 83 percent between 1995 and 1998. Most of the lost share in the lumber market has been taken over by engineered wood products--Glulam beams, wood I-joists, and laminated veneer lumber (LVL) (Figure 8)—with some share also captured by steel, reinforced concrete, and wood-plastic lumber. LVL especially has captured increasing market share since 1991 with no decline in its rate of growth. Lumber has additionally lost market share in roof and floor applications (Fleishman et al. 1999). The decline can be attributed mainly to improvements in engineered wood product quality, declining quality of lumber, and perceptions that lumber is not as environmentally friendly as some alternative construction materials.
Substitution away from forest products is one but not the only explanation of reduced market share for forest products (Fleishman et al. 1999, Zhang and Buongiorno 1997, 1998). Imports, technological change, and changing consumer preferences are also determining factors. In the paper sector, for example, information technology continues to shift news provision from newspapers and toward electronic media, with important implications for paper demand. In addition, declines in demand for softwood pulpwood products such as unbleached kraft pulp are partially due to recent steep declines in paper bag manufacture and consumption domestically.
Figure 8. Engineered wood products production (Source: The Engineered Wood Association).
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modified: 07-Feb-2017 created by: John M. Pye |
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