Decreasing Exports to Asia Push U.S. Western Log Prices Down

 

There has been a constant upward pressure on domestic sawlog prices in the U.S. Northwest for the past five years as a result of an increase in the exportation of sawlogs and softwood lumber to Asia. In just over four years, log export volumes to China, Japan, and South Korea have almost doubled to reach close to an all-time high of 2.5 million cubic meters in the 2Q/14. As a consequence of the higher demand for logs from the export market, average prices for sawlogs at local sawmills have more than doubled from early 2009 to the 2Q/14, according to Wood Resource Quarterly (WRQ), Seattle, Wash., USA. 

 

In the 3Q/14, U.S. export volumes to Asia were down by almost 25% from the 2Q/14, with Chinese shipments down by more than 32% to their lowest quarterly volumes since the 1Q/13. The total volume shipped to Asia in the 3Q was at its lowest level in more than two years. The two major factors influencing the decline in log shipments from the U.S. to China are decreased demand for wood from the housing sector and high log inventories within China itself, WRQ notes.

 

The weaker demand for logs in the export market has resulted in lower log export prices during the summer and fall. The average export value reached an all-time high in the first quarter this year and has since fallen more than 6%. The slowdown in log export shipments has been welcome news for sawmills on the U.S. west coast.

 

Prices for Douglas-fir sawlogs in the 3Q/14 were down 9% from their eight-year high in the 1Q/14. Despite the recent decline, current price levels in the Northwest are still 13% - 25% higher than the 10-year price averages, depending on species and sub-region. Interestingly, the price decline that was experienced in 2014 may be short-lived. There are reports that both domestic and export log prices stopped falling during the 4Q, mainly as a result of higher production levels at the region’s sawmills, according to WRQ.

 

More information is available online.