7 Reasons Why Lumber Exports Are Booming in 2021
Lumber is one of the most important commodities in the global economy, and its trade has been growing steadily in recent years. In 2021, lumber exports reached new heights, driven by several factors such as strong demand, high prices, supply constraints, and environmental policies. In this article, we will explore seven reasons why lumber exports are booming in 2021 and what this means for the future of the industry.
1. Strong demand for wood products in Europe and North America
One of the main drivers of lumber exports in 2021 was the strong demand for wood products in Europe and North America, especially for construction and renovation purposes. The COVID-19 pandemic boosted the demand for housing and home improvement projects, as people spent more time at home and sought more space and comfort. According to Wood Resources International, lumber trade increased by about three percent year-over-year during the first nine months of 2021, with most shipments originating in Europe.
2. High prices for lumber in the US market
Another factor that stimulated lumber exports in 2021 was the high prices for lumber in the US market, which reached record levels in the spring of 2021. The US is the largest importer of lumber in the world, and its domestic supply was unable to meet the surging demand. As a result, many overseas suppliers shifted their sales to the US market, mainly from Europe and Canada. Germany was the dominant overseas lumber supplier to the US, with a market share of about 35%, followed by Sweden and Brazil.
3. Supply constraints in Canada
Canada is the largest exporter of lumber in the world, and its production was affected by several supply constraints in 2021. These include wildfires, insect infestations, labor shortages, transportation disruptions, and reduced harvest levels due to environmental regulations. Consequently, Canada’s lumber exports fell by about 13% year-over-year in the third quarter of 2021, with the largest decline in shipments to China, which fell by over 50%. Canada’s export prices to the US also followed the US domestic prices, which plunged in the third quarter of 2021.
4. Reduced import demand in China
China is the second-largest importer of lumber in the world, and its import demand was weaker in 2021 compared to the previous year. This was due to several factors such as a slowdown in its construction sector, trade tensions with some of its major suppliers, and increased domestic production of wood products. China’s softwood lumber imports rose by only three percent year-over-year in the third quarter of 2021, but were still substantially lower than in the same quarter last year. China’s import prices also reached their highest levels in at least 15 years, driven by higher lumber values in the European and North American markets.
5. Increased production and exports from Europe
Europe is the largest producer and exporter of softwood lumber in the world, and its output and shipments increased significantly in 2021. This was mainly due to favorable weather conditions, increased availability of raw materials, improved efficiency and capacity utilization, and strong demand from both domestic and overseas markets. Sweden was the largest exporter in Europe, shipping an all-time high volume of 14 million cubic meters in 2020. During the first eight months of 2021, Sweden’s exports fell by six percent year-over-year, but its exports to the key markets in Europe were higher than last year.
6. Diversification of export markets
Another reason why lumber exports were booming in 2021 was the diversification of export markets for many suppliers. As some traditional markets such as China and the US became less attractive or more competitive, many exporters sought new opportunities in other regions such as Asia-Pacific, Middle East and North Africa (MENA), Latin America, and Africa. For example, Finland increased its exports to Japan by 28% year-over-year in the first half of 2021, while Germany increased its exports to Egypt by 25%.
7. Environmental policies and sustainability initiatives
The last reason why lumber exports were booming in 2021 was the increasing awareness and adoption of environmental policies and sustainability initiatives by both producers and consumers of wood products. Lumber is a renewable and biodegradable material that can help reduce greenhouse gas emissions and mitigate climate change impacts. Many countries have implemented policies to promote forest management, certification, carbon sequestration, bioenergy production, and green building standards. These policies have created more demand for certified and low-carbon wood products, which have boosted lumber exports from countries that have adopted such practices.
Lumber exports are booming in 2021 due to a combination of factors such as strong demand, high prices, supply constraints, reduced import demand, increased production and exports from Europe, diversification of export markets, and environmental policies and sustainability initiatives. These factors have created opportunities and challenges for the global lumber industry, which will continue to evolve and adapt to the changing market conditions and consumer preferences.
Lumber Exports: Trends and Prospects
Lumber is one of the most important forest products traded globally, with a total value of over $50 billion in 2020. Lumber exports are influenced by various factors, such as supply and demand conditions, exchange rates, trade policies, environmental regulations, and consumer preferences. In this article, we will examine some of the recent trends and prospects for lumber exports from different regions and countries.
North America: Declining Exports Due to COVID-19 and Domestic Demand
North America is the largest exporter of lumber in the world, accounting for about 28% of the global market share in 2020. The United States and Canada are the main producers and exporters of lumber in this region, with a combined value of $14.2 billion in 2020. However, both countries experienced a decline in their lumber exports in 2020, mainly due to the COVID-19 pandemic and the surge in domestic demand for home construction and renovation.
According to the United States International Trade Commission (USITC), the value of U.S. domestic exports of lumber declined by $277 million (9.4%) to $2.7 billion in 2020, even with the gain in lumber prices which are discussed below. It was the fourth straight year of decline. The largest decrease was in exports to Canada, which fell $67 million (11.6%) to $505 million .
Similarly, according to Statistics Canada, the value of Canadian lumber exports decreased by $1.2 billion (8.4%) to $13.1 billion in 2020, with the largest drop in exports to China, which fell $518 million (23.5%) to $1.7 billion . The decline in Canadian exports was partly offset by the increase in exports to the United States, which rose $407 million (4.3%) to $9.9 billion, as the U.S. housing market remained strong despite the pandemic.
One of the main drivers of the domestic demand for lumber in North America was the record high lumber prices that resulted from supply constraints in Canada combined with strong demand in the United States for home improvements. According to Random Lengths, a trade publication that tracks lumber prices, the composite price of framing lumber reached an all-time high of $955 per thousand board feet (MBF) in September 2020, more than three times higher than the average price of $321 per MBF in 2019 .
Europe: Stable Exports Despite Brexit and Environmental Challenges
Europe is the second largest exporter of lumber in the world, accounting for about 26% of the global market share in 2020. The European Union (EU) is the main producer and exporter of lumber in this region, with a total value of $12.8 billion in 2020. The EU’s main export markets are China, Japan, Egypt, Algeria, and Morocco.
According to Eurostat, the value of EU lumber exports increased slightly by $32 million (0.3%) to $12.8 billion in 2020, despite the uncertainties caused by Brexit and the environmental challenges posed by bark beetles and wildfires . The largest increase was in exports to China, which rose $284 million (16.5%) to $2 billion, followed by Japan, which rose $83 million (10%) to $913 million. The largest decrease was in exports to Egypt, which fell $136 million (15.6%) to $735 million.
The EU’s lumber production and trade are also affected by its environmental policies and commitments, such as the EU Green Deal and the EU Forest Strategy. These policies aim to promote sustainable forest management, biodiversity conservation, climate change mitigation and adaptation, circular economy, and bioeconomy . The EU also implements various regulations and agreements to ensure the legality and traceability of its timber imports and exports, such as the EU Timber Regulation and the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan .
Asia: Rising Exports Driven by China’s Economic Recovery and Demand
Asia is the third largest exporter of lumber in the world, accounting for about 17% of the global market share in 2020. China is the main producer and exporter of lumber in this region, with a total value of $7 billion in 2020. China’s main export markets are Japan, South Korea, Vietnam, India, and Thailand.
According to China Customs Statistics, the value of China’s lumber exports increased by $1 billion (16.7%) to $7 billion in 2020, reversing the downward trend since 2017 . The increase was mainly driven by China’s economic recovery from the COVID-19 pandemic and its strong demand for wood products for furniture, construction, and packaging. The largest increase was in exports to Japan, which rose $318 million (19.9%) to $1.9 billion, followed by Vietnam, which rose $217 million (32.4%) to $886 million. The largest decrease was in exports to the United States, which fell $62 million (8.7%) to $651 million.
China is also the largest importer of lumber in the world, importing $22.4 billion worth of lumber in 2020, up by 16.4% from 2019 . China’s main sources of lumber imports are Russia, Canada, New Zealand, the United States, and Brazil. China’s lumber imports are expected to continue to grow in the coming years, as its domestic supply is limited by its forest resources and policies. China has implemented various measures to protect and restore its forests, such as the Natural Forest Protection Program, the Conversion of Cropland to Forest Program, and the National Forest City Program .
References:
http://ageconsearch.umn.edu/record/124400/files/Belcher%202005.pdf
http://www.rmportal.net/framelib/belcherschreckenberg.pdf
https://ir.library.oregonstate.edu/dspace/bitstream/1957/1569/1/FPL_1463ocr.pdf
https://www.randomlengths.com/In-Depth/Framing-Lumber-Prices/
https://ec.europa.eu/eurostat/statistics-explained/index.php/Timber_statistics
https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en
http://english.customs.gov.cn/
http://www.forestry.gov.cn/
https://cfs.nrcan.gc.ca/selective-cuttings/93
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