On January 21, the Softwood Export Council and Pontifical Catholic University of Valparaíso (PUCV) will co-host a a webinar to share information with Chilean engineers, architects, and government officials about the use of Douglas fir in structural applications.  The webinar will include presentations about historic use of Douglas fir, which includes buildings that date to the 19th century, and an introduction to the physical properties of Douglas fir and modern applications. Speakers will include SEC's consultant in Chile and Dr. Arijit Sinh from Oregon State University, which is an SEC member. 

The webinar will also officially mark the formal announcement of a the Chile-US Wood Technology Transfer Council,  to promote the use of wooden construction and infrastructure projects  in Chile.  Led by the engineering department at PUCV, the voluntary committee is made up of representativesfrom academia, government, and industry, including SEC's Chile consultant. 

To see the agenda and register for the event (presentations will be held in English and Spanish) visit: 
​https://www.pucv.cl/pucv/webinar-conversatorio-madera

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By Rose Braden
​This article appeared in Softwood Buyer and the Wood Products Import/Export News

Countries that are open to international trade grow faster, are more productive, and provide higher income and greater opportunities for their citizens.  Being part of the global economy through two-way trade has been proven to drive economic growth and reduce poverty – locally and globally.  Likewise, companies who export know that having international and domestic customers can help them survive market downturns. In the U.S., these downturns are not uncommon, particularly in the building products industry.  Over the past several decades the U.S. has experienced a recession nearly every eight years while housing starts have plunged every six and a half years.

When the 2007 global recession hit, bringing with it a collapse in the U.S. housing market, U.S. forest products exports reached $5.2 billion - $698 million of which was softwood lumber.  U.S. softwood lumber exports continued to increase in subsequent years while domestic lumber consumption declined 33%.

While exports account for a small share of U.S. lumber production, for the hundreds of small, often family-owned lumber mills and wholesalers across the country, exports meant they could continue to operate in the black, retain employees, and outlast the downturn.  

Exports are also important for large corporate lumber producers. As corporate forest products companies expand to the U.S. South to capitalize on Southern Yellow Pine resources, these companies must look beyond the U.S. to maintain their massive new mills. This means creating new international markets – both geographically, and in terms of developing new innovative ways to expand consumption. For example, the U.S. industry is teaching builders overseas how to incorporate less frequently used U.S. species in certain framing applications to improve performance and lower costs.  The U.S. industry is also training builders in areas prone to high winds how to build safe and durable wood structures in lieu of concrete and steel.
Skyrocketing structural lumber prices have made it much more challenging to compete in the export market, however opportunities do exist. Specifically, in higher grade clears, which have not seen price increases to the degree that structural grades have. From North Africa to the U.K., demand is buoyant for clear Douglas fir and cedar, thanks to demand from high-end builders and an increase in detached home offices.

Exports to Canada, while down slightly this year, reached $127 million and continue to be stable as Canada’s housing market has defied COVID. Canada is a great market for U.S. suppliers as shipping is relatively inexpensive and Canadian buyers are accustomed to standard U.S. lumber dimensions and grades. However, analysts predict a possible bubble as immigration – the top driver of growth, has stalled and the short-term rental market has vanished.   

U.S. softwood lumber exports to Mexico declined 18% this year, yet the U.S. remains Mexico’s leading softwood lumber supplier accounting for 38% of its total imports. Mexico buys massive volumes of low-grade lumber, which is in tight supply this year. However, Mexico is well positioned to consume large volumes of U.S. lumber when prices return to normal levels. Tariffs on goods from China have contributed to more nearshoring to Mexico and U.S. demand has boosted imports of goods and agriculture products. In August, U.S. imports of goods from Mexico returned to March 2020 levels after a precipitous drop in April and May. U.S. phytosanitary requirements, which require that all incoming pallets be heat treated, helps support demand for U.S. species, particularly by pallet producers and customers in northern Mexico, who report that they value the quality of U.S. softwood lumber.    
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The 2020 housing market has been incredibly strong and, thanks to low mortgage rates, an increase in repair and remodeling work, and housing shortages, lumber demand is projected to remain strong through the coming year.  However, if COVID tells us anything it is that interrupting events can come out of nowhere. Companies who are well diversified are best equipped to survive market uncertainties.
 
 
 

Charles Trevor - AMSO Europe Representative

2019 saw global export markets for American softwood species decline from $949 million in 2018 to $770 million in 2019. By far the largest reduction came from China where US softwood exports fell from $150 million in 2018 to $74 million in 2019, owing to the imposition of an import tariff on imports from the U.S. Other factors affecting U.S. softwood exports include lower priced timber being available from Europe, where winter storms brought large volumes of timber onto the global market, a strong U.S. dollar and sustained heavy timber demand in the domestic market. China’s newly introduced Tariff Exclusion Process, which allows Chinese importers to apply for the removal of tariffs on specific products, is already having a positive impact. Some U.S. timber suppliers have reported large orders for logs and timber from China. U.S. exports to Japan remain steady at $97 million owing to the Japanese preference for building with Douglas fir.
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Exports to the European Union including the U.K. were $24 million in 2019, with Italy the leading importer with $5.9 million, followed by the UK with $5.1 million and Germany with $3.9 million. Sales are predominantly higher grades of both rough and planed Southern Yellow Pine. An interesting trend has been an increase in sales of lodgepole pine from $0.5 million in 2015 to $5.3 million in 2019. In terms of other substantial markets, India has been a considerable success story and hit a record $25.3 million in 2019.

In common with most countries in the world, the U.S. expects to see a significant decline in GDP in the second quarter of 2020. Unemployment claims in the U.S. amount to 22 million. However, it is hoped that the recently announced gradual return to work will mitigate the decline in GDP and the rise in unemployment to some extent. Housing starts are forecast to decline from 1.3 million in 2019 to 1.21 million in 2020, rebounding to 1.52 million in 2021. A gradual improvement in the third quarter followed by more rapid growth in the fourth quarter will accelerate into 2021. Prior to the Covid 19 pandemic, the fundamentals underlying US softwood’s main end use markets remained strong. There is pent-up demand for new housing and U.S. housing stock is relatively old which should encourage RMI activity. So demand for softwood timber will fall in April and May 2020 before beginning to recover in June and into the third and fourth quarters. Consumption will surge by 8.3% in 2021. Demand for domestically produced timber will reduce by 5% in 2020 and grow by 13% in 2021.

In terms of exports, sharp declines have already been seen and exports are expected to reduce by 30% in 2020, before rebounding sharply in 2021 as global trade gradually returns to normal.

Cross Laminated Timber (or ‘Mass Timber’ as it’s called in the U.S.) has enjoyed considerable growth thanks to recent changes in building codes throughout the country, especially for its use in medium to high rise buildings. Between 2016 and 2019, CLT use quadrupled in terms of square metres produced. Eight companies entered the market, construction started on three new plants and plans for a further three plants were announced in 2019. 78 CLT buildings were constructed in the US in 2019, representing 372,000 square metres of space.

Promotional activity by American Softwoods globally in 2019 included seminars on wood use in central America, south America and Egypt, as well as a market assessment visit to Morocco, participation at numerous trade shows and inward missions to the US for importers from key international markets.  These missions introduce importers and manufacturers to U.S. lumber species, grades, applications, and quality control measures through tours of lumber mills, lumber grading workshops, and discussions with lumber grading associations.
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While travel is on hold for the time being American Softwoods are also working to open new markets for U.S softwoods through our work to provide information to international government and building code officials. Work in Chile is progressing to support the use of U.S. Douglas fir in heavy timber bridges. Work in China and Thailand is ongoing to educate architects about the correct use of U.S. softwoods in hybrid and wood frame structures. Work in Thailand to conduct in-country testing of preservative treated U.S. softwood species will result in new opportunities once business resumes.
In summary, although the short term outlook for the American softwood industry is difficult, the fundamentals both of the industry and of the U.S. economy remain robust and positive, pointing to a strong rebound in demand both for domestic consumption and for exports in 2021.
 
[The author would like to acknowledge the assistance provided by Forest Economic Advisors in preparing this article] 
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SEC quickly shifted to virtual webinars and supplier-buyer exchanges. While face to face interactions are preferred, virtual events have been an effective way to increase contact with international buyers. When travel resumes SEC plans to continue virtual discussions and webinars to supplement trade shows and in-person seminars.
 
On April 21, over 55 importers and pallet manufacturers in Mexico and U.S. lumber suppliers participated in an SEC webinar to learn more about pallet design software, the State of Idaho Mexico pallet market study, and the state of the U.S. softwood market in light of COVID-19.  Building on the success of the February SEC softwood lumber grading and pallet design seminar in Guadalajara, the webinar helped SEC reach more importers and manufacturers.  It also helped advance the relationship with Centro Abre, a pallet and packaging design institute at the University of Monterrey.  SEC and the State of Idaho’s Mexico office have been exploring ways to collaborate with Centro Abre to educate importers and manufactures about the benefits of using U.S. softwood species in pallet manufacturing.  The meeting was recorded and shared with SEC members.
 
On July 1, SEC’s U.S. and China offices hosted a virtual meeting for U.S. suppliers and Chinese importers. The meeting included presentations from speakers in China and the U.S. about the impact of COVID-19 on China’s lumber imports and manufacturing and the impact of tariffs and the tariff exclusion act on U.S. softwood lumber imports. SEC also provided an update on the U.S, softwood lumber market.  

SEC is planning a webinar in August with importers in Pakistan, FAS-Islamabad, and two Pakistani lumber trade associations.  A group of ten importers from Pakistan had planned to visit Maine, Wisconsin, and Georgia in June 2020.  The webinar will help prepare the visiting group for a 2021 visit by providing information about U.S. grades, end uses, and U.S. suppliers.  U.S. participants will also improve their understanding about the Pakistan market and develop business contacts and prepare for the March 2021 DubaiWood show, which attracts buyers from Pakistan.
 
To help maintain progress made during the November 2019 SEC Emerging Markets Program (EMP) research trip to Morocco, SEC is also organizing a webinar and match-making sessions in August for U.S. Douglas fir suppliers and importers in Morocco. SEC met several importers in Casablanca who were interested in meeting U.S. suppliers to discuss purchasing clear Douglas fir lumber.  SEC had planned to hold an in-person lumber grading seminar and business to business meetings in October 2020. The virtual meeting is expected to help establish business connections now that can lead to in person meetings at DubaiWood in March 2021 and a lumber grading workshop in later in 2021.
 

SEC is reaching international buyers and end users through its new YouTube channel at: https://www.youtube.com/channel/UCaA_XXfjf4PfZvW--6w8rrg.  The channel features SEC and member videos including lumber grading tutorials and other educational and promotional videos. 

U.S. softwood species were showcased in an article about the new Oregon Zoo Education Center in the May issue of Wood in Architecture magazine.  Designed by Opsis Architects of Portland, Oregon, the center features Douglas fir posts, beams, and decking and pine exterior sheathing. The article also discussed the motivation for the products selected and highlighted the sustainability of U.S. wood products.

The project profiles supplement SEC’s ad series in Wood in Architecture and they help provide more information than ad can on its own.  The magazine has a circulation of 7,000 readers in Malaysia, Indonesia, Thailand, Vietnam, Philippines and Singapore.  The full article can be seen here. 

Fifteen softwood lumber exporters and researchers from OSU and Virginia Tech participated in the SEC booth at the Taiwan Construction and Building Show in December.  The display, which was constructed of US softwoods, received over 420 booth visitors.
 
While importers who are familiar with softwood lumber report positive attitudes about US species, architects, designers and developers continue to express concern about the performance of wood frame and hybrid construction in Taiwan’s hot, humid, and earthquake prone environment.  To address this need for ongoing education, SEC, APA-The Engineered Wood Association and FAS-Taipei held a one-day seminar that provided information about US softwood lumber properties and engineering considerations for wood frame and hybrid construction. 

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The Softwood Export Council exhibited at the biennial Edifica trade show in Santiago, Chile. In addition to the standard display of US softwood samples, project videos, and photos of US softwood applications, the display included a sample preservative treated Douglas fir footbridge to promote the use of treated softwoods.
 
The booth was staffed by SEC Mexico and Chile staff and eleven association representatives and wholesalers from SEC and the Southern Forest Products Association. Traffic at the booth was relatively steady. The group collected 37 inquiries and fielded questions about US softwoods and the sample bridge.
 
Edifica is Chile’s largest construction and building materials show, covering 75,000 square meters and attended by over 40,000 construction professionals. The exhibit includes a range of products from heavy machinery to a variety building materials used in residential and commercial projects.
 
During the show, the group met with a buyer from Sodimac, a home center chain with 40 locations in Argentina, Brazil, United States, Chile, Peru, Columbia, Canada, Uruguay and Mexico. While Sodimac is working to grow the residential decking market, the buyer reported that due to the downturn in Chile’s economy since second quarter 2018, the company can meet its demand with domestic supply. He noted that Sodimac would consider imported species when demand increased. 
 
The Edifica organizer held a daily seminar on a range of topics. Representatives from WWPI and Western Wood Structures who were part of SEC’s Chile ATP work, were included in the seminar and spoke about preservative treating chemicals, bridge design, and the efficacy of preservative treated wood in bridge applications. 
 
While the seminars were somewhat disorganized and frequently late, they attracted large audiences and the SEC booth received several visitors as a result of our participation. In future, SEC will secure speaking slots well in advance of the show and work with our local contractor and the FAS-Santiago office to recruit attendees and increase awareness about the SEC booth. 

Fifteen representatives from private industry, lumber associations, state trade promotion offices, and academia joined the annual SEC-JLIA exchange in December. Now in its thirty first year, the meeting included one of the largest and most diverse groups to attend in several years. Experts on softwood lumber grading, engineered wood products, and softwood pellets fielded questions from JLIA members and provided in-depth information that contributed to the discussions.  

The JLIA meeting has been instrumental in helping US exporters establish and maintain relationships with large Japanese importers and pre-cutters. The meeting and reception also provides a platform for SEC and JLIA members to discuss market trends and issues of concern. 

Unspoken JLIA issues included declining European softwood log and lumber prices and declining Canadian lumber supply. According to the Japan Lumber Report, JLIA members had an uncharacteristically direct conversation with a delegation of Canadian lumber suppliers a month earlier about high prices and limited supply from Canada.

The US delegation also met with FAS-Tokyo staff to discuss issues affecting US softwood lumber sales to Japan and to communicate the importance of Japan toSEC and its members. During the briefing the US delegation asked FAS and the US Trade Representative’s office to speak on behalf of the US softwood wood products industry during the spring 2020 US-Japan Trade Agreement negotiations.

Under the agreement, tariffs on US forest products include a 4.8% Japan tariff on SYP and Ponderosa Pine lumber and a 3.9% tariff on glued-laminated materials, laminated veneer lumber, and cross laminated timber. FAS staff said that they would help where they could but that they also recommend that SEC inform USTR directly through the ITAC.  

Day two of the program included a tour of two Ken Depot stores and a meeting with Yuichi Shinohara of Shinohara Corp., owner of one of the Ken Depot stores. Ken Depot is a nationwide chain of 70 member-only building materials stores for construction professionals. 
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Shinohara is a large pre-cutter and importer of US Douglas fir. The company purchased a store to develop lumber supplier relationships with other franchise owners. 

The Softwood Export Council (SEC), the Southern Pine Council, and the American Hardwood Export Council (AHEC), exhibited for the first time at the Thai Architect Expo, held annually by the Association of Siamese Architects under Royal Patronage. The event gathers the country’s leading architects and construction professionals, with attendance reportedly reaching 500,000 – although attendance seemed significantly lower. The event was themed “Living Green”, tying-in well with the “wood is good” message delivered by the U.S. association speakers at a seminar during the event.

During the event, the group cooperated with the US Foreign Agricultural Service to conduct a seminar about the use of US lumber. The seminar attracted construction professionals and building material traders who attended to hear about wood products centering on the “Green Living” theme of the trade show. Speakers were:

• Criswell Davis – Designing and building with American hardwoods
• Rose Braden – Introduction to softwood species from the Western and Eastern United States
• Jerry Hingle – Introduction to Southern Pine lumber and preservative-treated lumber
• Xu Fang – Building with wood

 
The event was very well attended, gathering a “standing room only” audience of 84 attendees. Interest was high judging from the numerous questions that the presenters fielded, some of which were:

Bluestain – Echoing earlier discussions, attendees asked about addressing bluestain often found in imported softwoods.

Pricing – Attendees requested pricing of U.S. softwoods, a question that is often asked in new emerging markets. Speakers responded that there’s no easy answer as it depends on the species, grade, size, transport costs, etc. Nevertheless, research shows that U.S. softwoods are priced competitively in the market, particularly in light of rising prices of domestic rubberwood.

Termites – The audience appeared keenly interested in thwarting termite damage in wood, asking numerous questions on subterranean termites vs. Formosans (Formosans are a variety of subterraneans), types of wood preservatives, etc.

Follow up work to facilitate interactions between US softwood lumber suppliers and importers and manufacturers will be held in October 2020.  Please see the SEC Events page for more information.