Download - US Hardwood Exports: A Global Perspective Michael S Snow Executive Director AHEC

US Hardwood Exports:A GlobalPerspective

Michael S SnowExecutive DirectorAHEC

AHEC MembershipAHEC member companies supply the growing worldwide demand for U.S. hardwoods, exporting the full range of hardwood products including lumber, flooring, veneer, molding, and dimension materials.AHEC Members include:111 direct company members;12 export association members;8 associate members;4 sponsor members;Represents 90% of the U.S. hardwood industry

AHECs Global Reach

U.S. Hardwood Exports1986-2007$ Million

Source: Global Trade AtlasWorlds Leading Hardwood Lumber Exporters: 2007

Source: Global Trade Atlas

Growing Importance of US Hardwood Exports: Exports as a % of US Production Source: Hardwood Review,

Red Alder Exports

$Millions FAS value)

Chart1

Sheet1

FoodGasMotel

Jan121710

Feb171121

Mar222914

Apr141017

May121710

Jun191520

Chart1

138

130

121

108

78

Sheet1

20032004200520062007

13813012110878

Main destinations for Red Alder Exports- 2007$,Millions

Chart1

3.1

4

7

9

10

30

Sheet1

GermanySpainCanadaItalyMexicoChina

34791030

Source: GTARed Alder Exports: Major Markets 2005-2007

(Millions of Dollars)

Chart1

453629

151610

12119

9107

1173

2005

2006

2007

Sheet1

200520062007

China453629

Mexico151610

Italy12119

Canada9107

Germany1173

Value of Hardwood Lumber Exports to Japan1997-2007($ Thousand F.A.S. Value)Source: US Census Bureau

Value of Hardwood Lumber Exports to Korea1997-2007($ Thousands F.A.S. value)Source: US Census Bureau

Center for International Trade in Forest Products(Photo by Dr. Dave Cohen, UBC)China: Threat AND Opportunity

US Hardwood Lumber Exports to China

($ Millions FAS value)

Chart1

Sheet1

FoodGasMotel

Jan121710

Feb171121

Mar222914

Apr141017

May121710

Jun191520

Chart1

30

54

61

84

104

140

199

274

233

Sheet1

199920002001200220032004200520062007

$30$5461$84104$140199$274233

Demand DriversHousing PrivatizationCommercial ConstructionRising consumer wealth and sophistication; Domestic and export oriented manufacturing in furniture and interior fittings sectors;

Hospitality industry 2008 Beijing Olympics/2010 Asian Games in Guangzhou

Chinese GDP Growth 1999-2007Pillars of Growth:

High levels of investment spending

Trade and Opening to world economy.

Chart1

7.93.82.4

7.94.42.6

7.51.11.5

8.11.31.1

81.41.3

8.921.5

922

9.12.22.4

China

USA

EU

Sheet1

19992000200120022003200420052006

China7.97.97.58.188.999.1

USA3.84.41.11.31.4222.2

EU2.42.61.51.11.31.522.4

China Accounted for 20% of Global Economic Growth 2000-2005

Automobile Market Exceeds Germany

Largest Mobile Phone Market in the World

Estimated 10% of Population with Middle Class Purchasing Power. Represents 130 million consumers and growing! Chinese Domestic Market

Hardwood Demand Driver I:Furniture

China Furniture Production & ExportsBillion USD China National Furniture Association

Greater China: Furniture SectorChinese Furniture Export by Province 2006 (Million US$)ProvinceGuangdong province accountsFor over 50% of China furniture exports.

Export Markets for Chinese Furniture in 2004Greater China: Furniture Sector.

Export Markets for Chinese Furniture 07

Greater China: Furniture Sector.

Chart1

0.4

0.21

0.1

0.07589

0.024

0.03

0.16

Sheet1

U.S.EUHong KongJapanCanadaAustraliaOthers

40.00%21.00%10.00%7.59%2.40%3.00%16.00%

Hardwood Demand Driver II:Property Development

Approximately 700 million square meters of finished construction each year

Flooring demand to hit 2.5 billion square meters in 2008

Door and window market to hit 500 million units in 2008 Greater China: Property DevelopmentSource: ITTO,

AHEC Model Home: Shanghai

Kitchen: American Red Oak Cabinets

Hardwood Demand Driver III:Flooring and Secondary Manufactures

million m2China Flooring Production: 2002-2006 China is the largest wood flooring producer & consumer Account for 50% world flooring production.

Source: GTAUS Hardwood Flooring Imports: Major Suppliers 2004-2006

(Millions of Dollars)

Chart1

2994132

372716

185293

111315

2004

2005

2006

Sheet1

2004200520062007

China2994132128

Canada37271615

Brazil185293102

EU11131519

million USD2004-2006 China Door Production & ExportUnited States is the largest export market for Chinese door, account for over 40% of the total export value.

Will China become a major player in the lumber/veneer export markets?

How much growth left in the furniture industry?

Can Chinese plantations make them more self-sufficient in wood fibre?

Whats Next?

Source: Wood Markets Inc Chinas rank in wood products global trade: Production:Global Rank Plywood#1 MDF #1 Blockboard#1 Furniture #2 Hardwood lumber #2 Particleboard #3 Softwood lumber #4 (higher than Sweden) Finished Products Soaring

Imports#2 (after the USA)

Exports#1

Source: World Trade AtlasChinese Wood Product Exports: (Millions of Dollars/ 8 month totals)

China is a Low Cost Producer, ButSource: Wood Markets Inc

Source: Global Trade AtlasWorlds Leading Hardwood Log Importers


Chinese/Russian Border - Suifenhe

US Hardwood Log Exports to China: 1997-2007(Thousands of Cubic Meters)

Source: USDA-FAS

Chart1

28

58

99

114

142

212

285

345

Sheet1

20002001200220032004200520062007

285899114142212285345

China: Hardwood LogImports 2007 %MarketShareSource: World Trade Atlas:

China Domestic Timber Output Under NFCP

Source: China Timber Import Export Co/IFSA Consulting

Per Capita Wood Consumption

In cubic meters per capitaSource: China Timber Import Export Co/Hardwoodmarkets.com 2005

Other Markets to WatchSoutheast Asia/VietnamMiddle EastLatin AmericaIndia**The EU**

S.E. Asia: Market OverviewMillion US$

VIETNAMU.S. Hardwood Log, Lumber & Veneer to VIETNAMMillion US$

Source: Ministry of Agriculture & Rural development Picture of wood processing factories in VNEstablishment (company enterprise)

Economy areaTotal (%)1. North West 110.92. North East524.33. Red river delta 18915.84. Northern of Danang17014.25. Coastal of Southern DN16113.46. Highland 15312.87. South East area37631.38. Mekong delta 887.3

Hardwood Lumber Exports to MexicoSource: Global Trade Index

Mexico: Hardwood Import Market ShareSource: Global Trade Index

New Markets: Middle East (Dubai 1990)

New Markets: Dubai (2007)

New Markets: Dubai (2010)

Exports of US hardwoods to the Middle East & North Africa2002 - 2007 ($,000)Source: US Bureau of Census

Exports of US Hardwood Lumber to the Middle East & North Africa2002 - 2007 ($,000)Source: US Bureau of Census

Turkey AHEC/AF&PA Korea Office September 2002Furniture Industries 65,000 Manufacturers Exports exceeded $1.2 billion in 2007 Heavily dependent on Russian logs

OpportunityExport-oriented furniture: Middle East and Europe

South America AHEC/AF&PA Korea Office September 2002Emerging Furniture Industries13,000 Brazilian manufacturersU.S. exports of promoted products doubled Brazil12th largest market for veneer

OpportunityHigh end furniture

Brazilian Furniture Exports($million US)


CaribbeanShortfall in the mahogany supplySupplies come from Brazil and GuyanaInterior design (hotels, restaurants)Small scale furniture market

Source: World Trade AtlasIndian Hardwood Imports: (Millions of Dollars)

Indian Imports of Hardwood Lumber:2001-2007 (Millions))

Indian Imports of Sawn Hardwood Lumber by Supplier(m3)

Source: Broadleaf Consulting/Various

The Importance of Europe

Worlds Leading Hardwood Lumber Importers: 2007

Hardwood Lumber Exports by Volume - 2007 (m3) Source: US Census Bureau

US Hardwood Lumber Exports by Value 2007 Source: US Census Bureau($1,000)

Source: EUROSTATEU Hardwood Lumber Imports(Billions of Euros)

Architectural Projects

Public sector procurement policies: EU and JapanEU governments developing procurement policies designed to eradicate illegal wood from supply chain.These policies actively promoted by certified wood suppliers.Increasingly sustainability equated with independent certification and traceability.Public sector procurement policies in UK , Netherlands, France, Germany, Spain, and Belgium favour certification. UK policy is the most stringent and insists on Chain of Custody and traceability.AHEC statements on sustainability not accepted by UK public authorities.UK government promoting harmonisation in Europe based on their model.

Legislative Options: EUEffectively 2 options:1) Burden of proof on the prosecution Similar to US Lacey Act Encourages risk assessment and due diligenceProportionate to the scale of the problem2) Burden of proof on the importer/supplierEvery shipment would have to be verified legalTakes no account of the risk of illegal activityCould lead to imposition of unnecessary bureaucratic controlsNot proportionate to the scale of the problem

AHEC ActionsAHEC-commissioned study to assess the risk of American hardwoods being derived from illegal sources or controversial sources as defined by FSC Controlled wood standard

Lobby national governments to accept detailed risk assessment as evidence of sustainability when dealing with small family-owned forests in countries demonstrating good forest governance

Encourage timber importing associations to ensure risk assessment forms an integral component of private sector timber procurement policies

Continue to explore with FSC and PEFC potential for regional certification of American hardwood forests accommodating large numbers of family owners at minimal cost

For additional information contact:

AHEC Headquarters1111 19th Street, NW, Suite 800Washington, DC 20036Phone: 202/463-2720Fax: 202/463-2787www.ahec.org

****US exports of hardwood products total about $2.5 billion. AHEC was formed in the late 1980s and has a positive impact in promoting US hardwoods.**In 2005, Europe continued to maintain its importance as the United States main destination for hardwood lumber and most valuable export market.

Canada has always been a significant importer of US hardwood lumber and much of what it imports is destined for re-export back to overseas markets. This raises an interesting point, as although Canada does have some hardwood forests of its own notably maple the majority of hardwood lumber offered by Canadian exporters is actually grown in the United States.

China is also a large and growing market for US hardwood lumber much of which is destined for the furniture and flooring sectors for both the domestic and export markets.There is a widespread perception that wood demand in China drives the illegal timber trade. *Turning to the market, these are the major factors that affect the demand for hardwood products.*******

****Turning to the market, these are the major factors that affect the demand for hardwood products.*Hardwood lumber accounts for the largest portion of US hardwood exports to the Middle East & North Africa

However, during the past 2 to 3 years, increases have been seen in shipments of US hardwood logs and veneer, while lumber has lost some of its market share

Exports of hardwood flooring from the United States have also begun to increase in recent years, although this may not be the case this year.

The forecast, based on annualised data for January to November 2007 and market information, is for total exports of US hardwood products to reach around $63 million in 2007, marking a 34% increase on last year. *This slide shows direct exports of US hardwood lumber to the Middle East & North Africa from 2002 to 2007, with the figure for this year being annualised from the 11 month data.

Following the peak of 2004, exports to the region have fallen somewhat, but this has been primarily accounted for by a decline in demand in Saudi Arabia alone.

However, it looks as though 2007 will be mark the start of an further upturn in exports to the region.

The relative importance of the UAE, Egypt and other markets has grown in the past two to three years and exports to these markets are now increasing.

The forecast for US hardwood lumber exports to the MENA region in 2007 is a 24.0% increase to just over $34 million, as compared to last year. ****

As the Japanese government and other governments around the world move forward with policies to reassure their citizens that all is being done to ensure the responsible utilization of the worlds forest resources, two main options are available:

Finally, to show that the US industry is in fact putting its money where its mouth is, AHEC has recently commissioned Seneca Creek (authors of the AF&PA study on Illegal Logging that has been so widely praised) to conduct a risk assessment of the US hardwood industry.

*

Download - US Hardwood Exports: A Global Perspective Michael S Snow Executive Director AHEC

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