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.
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.
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]