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Econ Home > Products > Southern Markets > Timber Sector
The US is both the world’s largest importer and producer and the second largest exporter of wood products. Imports and exports of both raw and value-added wood products can directly impact the domestic, regional demand curve for timber. Increasing net imports reduce the in-country demand for timber, thus helping to depress stumpage prices both in the short and long run. In this section we examine exports and imports for both raw materials and for finished wood products.
Trade in wood products needs to be viewed in the context of international economic conditions. While there are many reasons for changes in trade flows, the increase in imports and expanding overall trade deficit in the US is attributed in part to the rising relative value of the US dollar to foreign currencies during the 1990’s (Figure 21). Since 2002, however, the value of the dollar relative to other currencies has begun to decline suggesting that the comparative position of US manufacturers may be improving. However, changes in dollar values take time to play out in terms of trade flows, and some evidence suggests that exchange rate shifts make little difference in the long run in forest products trade, as other costs of production and supply and demand factors adjust to accommodate them (Uusivuori and Buongiorno 1991). It is too early to say definitively how these changes will affect forest products trade.
Figure 21. US broad dollar index (Source: US Federal Reserve).
Wood Pulp—The value of wood pulp imports and exports has demonstrated a cyclical pattern with no strong trends since 1989 (Figure 22). The US balance of trade in wood pulp has been roughly even in recent years (i.e., imports have equaled exports). However, US southern ports exported approximately 7 times what was imported. Canada is the largest source of imported wood pulp into the US and Brazil is the only other significant source (Figure 23). For producers in the US South, the level of Brazilian imports—primarily hardwood pulp--factors mostly into local markets, and to meet specific furnish demands. Imports into southern ports show that Brazilian imports have risen sharply since the early 1990’s. Still, overall imports into southern states in 2004 only accounted for between 2 and 3 percent of total southern wood pulp consumption.
Figure 22. US trade in wood pulp and the balance of trade (BOT) (Source: US International Trade Commission).
Figure 23. Wood pulp imports into the US (Source: US International Trade Commission).
Figure 24. Wood pulp imports into southern customs districts (Source: US International Trade Commission).
Figure 25. Wood pulp imports into southern customs districts (Source: US International Trade Commission).
Wood Chips—In contrast to wood pulp trade, patterns of trade in wood chips have changed substantially since the late 1980’s. Until 2003, Canada was the leading source of imported wood chips in the US, providing chips for northern US producers. However, after peaking in 1997, Canadian wood chip sales to the US have declined to less than one third of their peak level (Figure 26). Producers from the southern hemisphere have also been a source of imported wood chips for the US at various times. In the mid-1990’s Chile provided as much as one third of the total wood chip imports. In 2004, imports from Brazil increased dramatically, making Brazil the largest importer of wood chips into the US. Imports from Brazil are delivered mainly to southern US ports (Figure 27). Southern chip imports currently represent only about 0.9 percent of total southern pulpwood consumption, and about 3 percent of total southern hardwood pulpwood consumption. Most of these imports are concentrated in a few ports, especially in Mobile, Alabama and Florida, so localized impacts on hardwood markets could be substantial.
The surge in Brazilian chip imports is the expected response to price increases due to local scarcity of hardwoods. In addition, Eucalyptus chips, a highly preferred fiber source for some paper grades, may be preferred over native hardwoods. The extent to which hardwood chip imports might increase from South America is unknown. However, it is likely that chip imports from South America now define a ceiling for domestic hardwood stumpage prices in certain areas of the South.
Figure 26. Wood chips imports into the US (Source: US International Trade Commission).
Figure 27. Wood chips imports into southern customs districts in dollars (Source: US International Trade Commission).
Figure 28. Wood chips imports into southern customs districts in tons (Source: US International Trade Commission)
Figure 29. Wood chips imports into the US and the balance of trade (BOT) (Source: US International Trade Commission).
Since the beginning of our time series on wood chips, 1989, the US has had a large trade surplus (Figure 29)—i.e., exports of wood chips have far exceeded imports. Since 1999, however, the trade surplus in wood chips has fallen steadily, from around $515 million in the mid 1990’s to $126 million in 2004.
Roughly 80 percent of wood chip exports from the US have been shipped to Japan; the remainder flows to Canada (Figure 30). While exports to Canada have increased somewhat in recent years, exports to Japan have fallen off dramatically. Nearly all of the wood chip exports from southern US ports were shipped to Japan (Figures 31 and 32). Wood chip exports from southern ports essentially disappeared by 2003.
This decline in southern chip exports--primarily hardwood chips--to Japan was equivalent to 5 percent of total southern pulpwood production in 2003 and nearly 16 percent of southern hardwood pulpwood production. Most of the imports/exports of wood chips into and out of southern ports have been through the port of Mobile, Alabama. We would therefore expect the economic impacts of demand shifts to be felt most strongly in this region of the South. However, any price effects could have a ripple effect on stumpage markets throughout the region.
Figure 30. US wood chips exports (Source: US International Trade Commission).
Figure 31. US wood chips exports from southern customs districts in dollars (Source: US International Trade Commission).
Figure 32. US wood chips exports from southern customs districts in tons (Source: US International Trade Commission).
Lumber—The US is a large net importer of softwood lumber and the vast majority of lumber imports are from Canada (Figure 33). Lumber imports from South America, although relatively small currently, are steadily rising. The US does export some lumber, but the balance of trade is strongly negative and growing (Figure 33).
Figure 33. Sawnwood imports and the balance of trade (BOT) (Source: US International Trade Commission).
The importation of lumber from Canada has an important influence on domestic timber markets, but the effects on southern markets are likely to be indirect. Lumber from western Canada more directly substitutes for species that are produced in the western regions of the US (Nagubadi et al. 2004). Current lumber imports do not provide much in the way of direct substitutes for southern lumber products.
A larger share of hardwood lumber is exported from the US. The US is the world’s largest producer (60 percent) and its largest consumer (52 percent) of temperate hardwood lumber. About eight percent of domestic production is exported to a variety of countries. Hardwood lumber is a very heterogeneous commodity class when compared with softwood lumber, so that production and trade serves a wide variety of end uses, from flooring to furniture to shipping pallets. Aggregate data provide only a very general description of trends in this sector. What’s more we cannot split out trade data for the southeastern US, so we use data for the US as a whole. Note that about 10 percent of hardwood exports are from the Pacific Northwest (especially red alder) and about 90 percent are from the eastern US
Exports of hardwood lumber increased from about 2 million cubic meters in 1989 to nearly 3 million cubic meters in 2004 (Figure 34). Of the four major regions for hardwood lumber exports, North America is the destination for the greatest share of hardwood lumber, followed by East Asia, and the European Union 25. All other countries together receive about 10 percent of hardwood exports from the US. The distribution of exports among these destinations has changed somewhat since 1989, with shipments to Europe declining and shipments to other countries in North America increasing substantially (Figure 34). Shipments to East Asia have been essentially constant in aggregate, with a changing mix of destinations. Specifically, shipments to China have increased by a large portion since the 1990’s while shipments to other countries in Asia have declined by a comparable amount (FAS).
Figure 34. Exports of US hardwood lumber to various regions (1989-2004). Source: FAS Website.
Southern exports of softwood lumber have been relatively small and declining over the last decade (Figure 35). Lumber exports in 2004 were only about one third the amount exported in 1992. Southern exports only account for between 1 and 2 percent of total southern lumber production.
Figure 35. US lumber exports from southern customs districts (Source: US International Trade Commission).
Panels—Trade in panel products is weighted toward imports. For example, the US imported about 15 percent of plywood consumption and 38 percent of OSB consumption in 1999 (Spelter 2001). A large majority of panel imports came from Canada. Particleboard, waferboard, and OSB imports from Canada grew strongly in recent years, increasing from $1.53 billion in 1999 to $3.16 billion in 2004. US exports in this category are negligible (Figure 36).
OSB markets are in a period of rapid expansion with new mills planned in both Canada and in the US (Spelter 2001). North America will continue to dominate world production in this commodity class, but the trade balance within North America—i.e., between Canada and the US—could change as the sector expands. Decline in pulpwood demand in the South may give the US additional comparative advantage for the sighting of new North American mills.
Figure 36. Particleboard, OSB and waferboard imports and the balance of trade (BOT) (Source: US International Trade Commission).
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modified: 07-Feb-2017 created by: John M. Pye |
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