Subject

American Softwoods has announced the recent completion of the award-winning Shiobara Foot Spa project located in Nasu Shiobara City of Tochigi Prefecture in Japan. The hot springs spa used approximately $36,000 worth of US-sourced Douglas fir lamstock lumber. The structural material was manufactured by Warm Springs Forest Products Industries of Warm Springs, Oregon. The mill is owned by the Confederated Tribes of the Warm Springs Indian Reservation and is certified by the Forest Stewardship Council and the Western Woods Products Association. The Douglas fir lamstock was supplied to Japanese fabricator Chuto for manufacture into glued laminated beams. A Portland, Oregon-based company - Walsh Industries, consolidated and exported the US lumber product to Japan.

This activity was the direct result of several FAS-sponsored activities including seminars, related trade missions to the United States and Japanese press coverage of similar nonresidential projects utilizing US engineered wood. Mr. Hirofumi Sugimoto, the architect and Dr. Katsuo Nakata have acted as a speakers in past American Softwood seminars and are themselves past American Wood Design Award winners. They specified Douglas fir wood products for this design because of the products superior strength and appearance. This contract and related non residential construction promects represent a major step in ongoing US industry efforts to gain a share of the commerical construction sector in Japan.

Europe Market Report

by Eddie Pearce

The last 2 months have shown that the financial problems being experienced in the U.S.A. at the present time are having an effect on most of the major EU markets and as a consequence they are slowing down by varying degrees. This is resulting in a significant downturn in the building and construction activity across Europe.

It is interesting to note that reports from Scandinavia are stating that a number of sawmills owned by some of the larger timbers producers in this region, are planning to close or have closed a number of their mills. Reasons cited are - log shortage and downturn in demand Despite this downturn the exports of US Softwoods has maintained their upward trend.

IMPORTS OF U S SOFTWOOD LUMBER BY COUNTRY - m3: OCTOBER
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COUNTRY	2002	2003	2004	2005	2006	2006 YTD	2007 YTD

AUSTRIA	243	0	2	225	0	0	0
BELGIUM/LUX	9,346	6,210	4,053	7,177	8,075	7,527	3,512
DENMARK	502	1,689	1,485	1,139	1,231	1,075	1,608
FRANCE	6,701	5,308	6,824	6,365	9,941	8,973	5,541
GERMANY	12,261	5,753	6,417	5,590	9,538	7,788	7,990
GREECE	4,768	1,883	3,610	2,649	3,025	2,744	2,600
IRELAND	3,719	1,366	2,006	3,111	6,044	5,463	2,280
ITALY	31,950	15,476	22,096	21,660	21,111	18,256	15,697
NETHERLANDS	8,696	20,255	6,281	5,952	3,918	3,511	6,806
PORTUGAL	2,623	2,107	3,197	4,457	6,894	5,848	3,041
SPAIN	78,660	50,435	55,025	72,678	79,496	67,838	40,121
SWEDEN	8	131	789	1,227	667	445	1,447
U K	13,598	11,478	17,180	18,077	26,288	21,525	86,919

TOTAL EXPORTS	173,117	122,233	129,195	154,302	176,424	151,189	177,675

United Kingdom:

Housing in the UK has slowed. New house orders are down by 11.0% and new completions are down by 12% compared with the same period in 2006 which resulted in a fall in the demand for timber. However, this is viewed by a number of forecasters as a short term condition forecasting that by 2009 an increase in demand for timber and housing will increase again.

Germany:

As is the case in the UK, new house construction in Germany, in the second half of 2007 showed a dramatic downturn, particularly in the volume of pre-panelised houses sold, to a level being 44.18% lower compared with the same period in 2006. This has led to a reduction in demand for sawn timber. This in turn has resulted in a number of sawmills being shutdown earlier than expected.

The slowing down of the German economy is supported by reports from the German Timber Trade Federation (GD Holz), who have stated that the timber merchant's sector has seen a significant fall in trading levels since September 2007.

France:

The French economy appears to be moving in the opposite direction to that of the rest of Europe, as shown by the fact that the demand for timber in France has slightly increased, indicating a positive activity in the building and construction sectors. However, information based on reports published in various trade journals, commentators are indicating a slowdown during the first quarter of 2008.

Belgium-Luxemburg:

The timber industries of Belgium and Luxemburg rely heavily on exporting their products to Germany and as a consequence of the downturn in Germany these two countries have seen a slowdown in activity resulting in a lower demand for timber.

The Netherlands:

The Netherlands is one of the countries that appears to be going against the trend. Building and construction activity has been very positive, resulting in good demand for timber and timber products, as is reflected in the export figures of US softwoods to the Netherlands. However, commentators from various trade publications indicate that the Dutch economy will not remain isolated from the financial effects that have occurred else where in the world.

Ireland:

The Irish economy remains slow. The building and construction sectors continues to be sluggish despite of the fact the Irish government has indicated that Ireland needs more houses, particularly for the lower cost end of the market. Reports suggest that there is not going to be any significant change in the situation until at least early 2009.

Sweden:

Sweden continues to increase its imports of American softwoods. The main specie being imported is Southern Pine. From the grades being imported it appears to be used for non structural applications.

A visit to Sweden is planned to determine exactly what uses Southern Pine is being used for.

Japan Dimension Requirements

Recent discussions in Japan with a few major importers of North American dimension lumber remind us of why the Japanese are still relying on Canadian rather and US sawmills for their 2x4 needs even with problems like blue stain.

The Japanese know that even if J-Grade does not have an official grading, it is reliable and controlled in terms of quality as wane-free. For the Japanese wood industry, US Home Center grade or High line grade seem lower grade then J-grade regarding wanes.

The Japanese say that stable supply is more important than the price. Canadian mills try to make efforts to supply consistently to take care of the offers from Japan. In the past the US mills seem to concentrate on the U.S. domestic markets. They had an impression that US mills had no interest in supplying the products consistently. With the dollars on par US mills would need to rebuild the suppler trust factor and stay with part of the market even in 2010.

For the US sawmills to return in any large way to Japan, the Japanese industry has a few suggestions. They would like to get to know which mills are doing is doing what softwood products. Much of this factual information is already on the grading agency websites, or in their buyer's manuals which are available through the SEC, but that face to face meeting is always important in Japan.

Many remember the recent past when US mills were only interested in servicing the strong US market. They are afraid that in the future it will happen again. The Japanese prefer to take time to grow the relationship with the overseas mills. Once they start business with overseas mills, they try to keep a long-term relationship.

The Japanese love branding names and images. They suggested that the U.S. should create a unified brand name and image for dimension lumber. Since there are more than 200 mills in the western US, a brand name would be tough, but a "brand" grade might be doable. Some Japanese importers are not even sure that US mills can make wane-free products to meet Japanese requirements. At least we don't have a lot of blue stain to worry about.

Maderalia 2007

By Ignacio Martinez

American Softwoods participated at the Maderalia 2007 trade show. The event, held every other year in Valencia, is Spain's largest show for the timber and woodworking industries, attracting more than 40,000 visitorsover the course of four days. The trade show is the largest opportunity to gain visibility among the timber industry in Spain, with renewed interest for the US wood products this year. This show constitutes an important element to outline the quality aspects of the American products in competition with the European production, with special remarks on the environmental aspects. This is an excellent argument to revamp the interest on our products, lately under the consideration of reduced quality.

During the visits conducted before the start of the show, contradictory opinions were expressed about the actual demand for US wood products . According to on importer his company is 20% above last year's figures on american species, and does not feel like the demand is weakening. Just the opposite was the opinion of onother timber importer, This company was a traditional large importer that has reduced drastically american imports due to big changes in its associated door manufacturer company. Changes in market preference for other wood finishing (white oak for example), has driven the demand to a historically low level.

For a Maelsa timber importer, the question is not what species but what type of product is being demanded today. For him, the demand goes for composites, therefore he is positioning this company to react accordingly. In practical terms, there is a progressive drive to more semi processed products with a parallel diminution of the solid wood segment. For him the demand will require more panels and composites, and less solid wood products for reasons of price, homogeneity and easiness of installation.

These contacts have certainly served to