A recent Business Council of British Columbia conference on Asian opportunities revealed that, while exports of B.C. softwood to Asia are soaring, the wood is often seen as low value in the China market.
Hank Ketchum, president and CEO of West Fraser Timber Co. Ltd., told conference delegates that West Fraser shipments of B.C. timber to China were up 100 per cent in the past five years - from near zero - while exports to the U.S. had fallen 40 per cent the same period. Today, he said more than one-third of West Fraser's lumber and plywood production was being shipped to China. In the first five months of this year, total B.C. softwood exports to Asia - $776 million - surpassed those to the United States - $661 million - for the first time. "The emergence of the Chinese market has saved roughly 6,000 British Columbia jobs," Ketchum said. But it could be so much more, he added.
China is building 12 to 14 million homes per year, but only about 20,000 of these are made out of wood, or about the same number of annual housing starts in British Columbia. "The Chinese build out of concrete and steel, not wood" Ketchum said. "Our lumber is currently used for low-value applications, like concrete forming, not home building."
Ketchum said B.C. has had some good luck combined with hard work in increasing Asian lumber exports.
Part of the luck was the hefty 25 per cent export tax that Russia has slapped on its lumber shipments to China, and the fact that B.C. has a huge surplus of softwood due to the collapse of the U.S. housing market. The hard work is seen in B.C. government investments in promoting B.C. lumber to architects and builders in China, led by a 60-person trade office in Beijing. "We have to move up the value chain," Ketchum said.
It costs about the same to ship lumber from B.C. to China as to most U.S. markets, and Ketchum said improved port and rail services in China could open the country's expansive interior to more B.C. softwood by next year. "That is a market we're not reaching yet," he said.
from Western Investor November 2011
