Global Lumber Trade Increases by 25% in the Last 2 Years

By:
on May 29, 2012
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Wood Resources International has released a report, which shows that the international softwood lumber trade is on the rise. After two years of decline, the market is picking up again, with estimates showing a 25% increase in softwood lumber trade. Though still some way from pre-financial crises levels at 90 million m3, imports to developing economies give cause for optimism. The increase is mainly a result of higher imports to China, Japan, and South Korea. This has compensated markets which are still on a downward trend such as the UK, the US, France, Italy and troubled regions such as Egypt and North Africa where imports have fallen.

!m[](/uploads/story/176/thumbs/pic1_inline.png)One major factor for the increase over the past two years has been large construction projects in the Middle East and Far East. Huge construction and infrastructure projects in areas such as the Emirates and North Africa resulted in an overall increased demand for lumber leading up to last year. In 2010 the import of lumber to the region was 36% higher than in 2007. However, last year’s tension in the region caused a slight deviation of that course, creating uncertainty. The Egyptian revolution and the crises in Libya and Algeria have proven to have had a negative effect on lumber shipments to the region, causing a 10% decrease in lumber imports, compared to the previous year.

The European sawmill industry was in decline in 2011, as many sawmills across the continent were forced to reduce their operating rates due to reduced demand for lumber, declining product prices and high prices of the raw wood materials. Numerous lumber companies announced financial losses in 2011.
Nordic companies have also suffered as lumber prices reached their lowest since 2009. But there are signs that the market in Europe may have hit the bottom and the recovering process may have already started. Several indications show that the market is improving in some European countries and also in key parts of North America and the Middle East. In the meantime log costs are decreasing, which is also good for sawmills and lumber companies. These two factors combined could bring the industry back to its feet.

With that said, there is still a lot to be done for the industry to meet the high standards set before the financial crisis. The market is unstable and fragile and predictions are very difficult to make. A positive scenario would be reduced current supply in Europe and North America meaning an increase in demand would result in higher prices. However in this particularly volatile market, optimism in the market could have the result of supply being ramped up again and vulnerable to any subsequent repeat of a downturn in the market.

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