Transcript American Hardwoods in China: Threat or Opportunity?

US Hardwood
Exports:
A Global
Perspective
Michael S Snow
Executive Director
AHEC
AHEC Membership
• AHEC 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
AHEC’s Global Reach
U.S. Hardwood Exports
1986-2007
$ Million
3500
3000
2500
2000
1500
1000
500
1987
1989
1991
1993
1995
1997
Logs & Chips
1999
2001
Value-Added
2003
2005
2007
World’s Leading Hardwood Lumber
Exporters: 2007
$1,500
United States
Malaysia
$1,200
$Million
Canada
Brazil
$900
Hong Kong
EU-15
$600
Romania
China
$300
Thailand
Croatia
$0
1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Global Trade Atlas
Growing Importance of US
Hardwood Exports:
Exports as a % of US Production
14
13
12
11
10
9
8
7
6
1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Hardwood Review,
Red Alder Exports
$Millions FAS value)
Main destinations for Red Alder
Exports- 2007
$,Millions
Red Alder Exports:
Major Markets 2005-2007
(Millions of Dollars)
Source: GTA
Value of Hardwood Lumber
Exports to Japan
1997-2007
($ Thousand F.A.S. Value)
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1997
Source: US Census Bureau
1999
2001
2003
2005
2007
Value of Hardwood Lumber Exports
to Korea
1997-2007
($ Thousands F.A.S. value)
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1997
Source: US Census Bureau
1999
2001
2003
2005
2007
China: Threat AND Opportunity
(Photo by Dr. Dave Cohen, UBC)
Center for International Trade in Forest Products
US Hardwood Lumber Exports
to China
($ Millions FAS value)
Demand Drivers
• Housing
Privatization
• Commercial
Construction
• Rising 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 1999-2007
Pillars of Growth:
• High levels of
investment
spending
• Trade and Opening
to world economy.
Chinese Domestic Market
• 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!
Hardwood
Demand
Driver I:
Furniture
China Furniture Production & Exports
Production
Export
60
50
40
Billion USD
30
20
10
0
Production
Export
1998
1999
2000
2001
2002
2003
2004
2005
2006
10.5
12.6
14.5
16.9
19.88
24.58
34.1
42.5
56
2.1
2.7
3.6
4
5.42
7.33
10.35
13.8
17
•China National Furniture Association
Greater China: Furniture Sector
Chinese Furniture Export by Province 2006
(Million US$)
Others
100
Province
Beijing
100.6
Liaoning
222.1
Tianjin
237.4
Shandong
Guangdong province accounts
For over 50% of China furniture exports.
374.1
Shanghai
543
Jiangsu
566.6
Fujian
574
Zhejiang
726
Guangdong
3650
0
500
1000
1500
2000
2500
3000
3500
4000
Greater China: Furniture Sector
Export Markets for Chinese Furniture in 2004
Hong Kong
11%
Japan
7%
Canada
2%
Australia
2%
EU
11%
.
U.S.
51%
Others
16%
Greater China: Furniture Sector
Export Markets for Chinese Furniture 07
.
Hardwood
Demand
Driver II:
Property
Development
Greater China: 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
Source: ITTO,
AHEC Model Home: Shanghai
厨房：美国红橡木橱柜
Kitchen: American Red Oak Cabinets
Hardwood
Demand
Driver III:
Flooring and
Secondary
Manufactures
China Flooring Production:
2002-2006
200
• China is the largest wood flooring producer &
consumer
• Account for 50% world flooring production.
Laminated
flooring
Solid wood
flooring
150
Engineered
flooring
million m
2
100
50
0
2002
2003
2004
2005
2006
Lam inated flooring
95
120
154
190
200
Solid w ood flooring
65
70
71.6
50
69
Engineered flooring
16
22
33.7
46
46
US Hardwood Flooring Imports:
Major Suppliers 2004-2006
(Millions of Dollars)
Source: GTA
2004-2006 China Door Production & Export
United States is the largest export market for
Chinese door, account for over 40% of the total
export value.
4000
3500
Production
million USD
3000
Export
2500
2000
1500
1000
500
0
2004
2005
2006
Production
2213
3000
3671
Export
200
349
401
What’s Next?
• 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?
China’s rank in wood products global
trade:
• Production:
• Plywood
• MDF
• Blockboard
• Furniture
• Hardwood lumber
• Particleboard
• Softwood lumber
• Finished Products
Global Rank
#1
#1
#1
#2
#2
#3
#4 (higher than Sweden)
Soaring
• Imports
#2 (after the USA)
• Exports
#1
Source: Wood Markets Inc
Chinese Wood Product Exports:
200
(Millions of Dollars/ 8 month totals)
150
100
50
0
Source: World Trade Atlas
Hrdwd
Lmbr
2004
Hardwood
Veneer
2005
2006
2007
China is a Low Cost Producer, But…
Global Sawmilling Costs - Average Mill 2006
90
US$/Net m3 - Lumber Basis
80
70
60
Total Mill
Costs + OH
50
40
Avg Sawmill
Costs
30
20
10
st
a
Co
a
hi
n
Source: Wood Markets Inc
B
C
C
SA
U
W
.E
.E
ur
op
ur
op
e
e/
B
al
tic
s
R
us
C
si
an
a
ad
a:
SP
F
C
an
/
Sc
So
.H
em
is
p
he
re
0
Source: Prelim inary
Global Saw nw ood
Benchm arking
Report; Copyrirhgted
by Intn'l WOOD Markets
Group
World’s Leading Hardwood
Log Importers
$1,600
China
$1,400
$Million
EU15
$1,200
Japan
$1,000
Canada
$800
Taiwan
$600
Thailand
South Korea
$400
Hong Kong
$200
Turkey
$0
United States
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Global Trade Atlas
Chinese/Russian Border - Suifenhe
Chinese/Russian Border - Suifenhe
US Hardwood Log Exports to
China: 1997-2007
(Thousands of Cubic Meters)
Source: USDA-FAS
China: Hardwood Log
Imports 2007
60
50
40
%
Market 30
Share
20
10
0
SEA
Africa
Russia
EU
US
China Domestic Timber
Output Under NFCP
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1997 1998 1999 2000 2003 2004 2005 2006
Source: China Timber Import Export Co/IFSA Consulting
Per Capita Wood Consumption
1.4
1.2
1
0.8
0.6
0.4
0.2
0
China
World
OECD
In cubic meters per capita
Source: China Timber Import Export Co/Hardwoodmarkets.com 2005
USA
Other Markets to
Watch
• Southeast Asia/Vietnam
• Middle East
• Latin America
• India
• **The EU**
S.E. Asia: Market Overview
Log
Lumber
Veneer
140
Million US$
120
100
80
60
40
20
0
2001
2002
2003
2004
2005
2006
2997
Log
22.34
29.09
29.28
30
41
31
51
Lumber
47.02
67.5
69
71
83
110
138
Veneer
13.82
16.08
13.56
16
13
15
17
VIETNAM
U.S. Hardwood Log, Lumber & Veneer to VIETNAM
Log
70
Lumber
Veneer
Million US$
60
50
40
30
20
10
0
2001
2002
2003
2004
2005
2006
2007
Log
1.438
4.682
5.916
8
9
13
27
Lumber
3.86
11.101
11.301
21
26
43
65
Veneer
0.691
1.262
1.439
2.5
1.8
2
4
Picture of wood processing factories in
VN
Establishment (company – enterprise)
2
1
Economy area
3
4
6
7
8
5
Total
(%)
1. North – West
11
0.9
2. North – East
52
4.3
3. Red river delta
189
15.8
4. Northern of Danang
170
14.2
5. Coastal of Southern DN
161
13.4
6. Highland
153
12.8
7. South – East area
376
31.3
8. Mekong delta
88
7.3
Source: Ministry of Agriculture & Rural
development
Hardwood Lumber
Exports to Mexico
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
2001
Source: Global Trade Index
2002
2003
2004
2005
2006
2007
Mexico: Hardwood Import
Market Share
80
Market Share (%)
70
60
US
Peru
Canada
Brazil
Bolivia
50
40
30
20
10
0
2000 2001 2002 2003 2004 2005 2006 2007
Source: Global Trade Index
New Markets: Middle East (Dubai 1990)
New Markets: Dubai (2007)
New Markets: Dubai (2010)
Exports of US hardwoods to the Middle East &
North Africa
2002 - 2007 ($,000)
65,000
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2002
Other hardwood products
Source: US Bureau of Census
2003
2004
Hardwood flooring
2005
Hardwood logs
2006
2007 (forecast)
Hardwood veneer
Hardwood lumber
Exports of US Hardwood Lumber to the Middle East
& North Africa
2002 - 2007 ($,000)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2002
2003
Egypt
Source: US Bureau of Census
2004
Saudi Arabia
2005
UAE
2006
Others
2007 (forecast)
Turkey
•Furniture Industries
– 65,000 Manufacturers
– Exports exceeded $1.2 billion in 2007
– Heavily dependent on Russian logs
•Opportunity
–Export-oriented furniture: Middle East and
Europe
AHEC/AF&PA Korea Office
September 2002
South America
•Emerging Furniture Industries
–13,000 Brazilian manufacturers
–U.S. exports of promoted products doubled
–Brazil—12th largest market for veneer
•Opportunity
–High end furniture
AHEC/AF&PA Korea Office
September 2002
Brazilian Furniture Exports
($million US)
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
2001
Source: Global Trade Atlas
2001
2003
2004
2005
2006
Caribbean
• Shortfall in the mahogany supply
• Supplies come from Brazil and
Guyana
• Interior design (hotels, restaurants)
• Small scale furniture market
INDIA
Indian Hardwood Imports:
800
700
600
500
400
300
200
100
0
(Millions of Dollars)
2003
Source: World Trade Atlas
2004
Logs
2005
Lumber
2006
Indian Imports of Hardwood
Lumber:2001-2007
(Millions))
$25
$20
$15
$10
$5
$0
2001 2002 2003 2004 2005 2006 2007
Indian Imports of Sawn Hardwood
Lumber by Supplier
(m3)
10,000
9,813
8,000
6,000
5,000
4,000
2,000
873
442
0
Africa, Far East, Latin
America & Eastern
Europe
Source: Broadleaf Consulting/Various
Malaysia
USA
EU
The
Importance
of Europe
World’s Leading Hardwood
Lumber Importers: 2007
$3,000
EU15
$2,500
China
United States
$Million
$2,000
Japan
Canada
$1,500
Hong Kong
$1,000
Thailand
South Korea
$500
Mexico
Taiwan
$0
1998 1999 2000 2001 2002 2003 2004 2005 2006
Hardwood Lumber Exports by Volume - 2007 (m3)
EU
Greater China
Mexico
Southeast asia
Japan
Middle East
Korea
Non EU Europe
Oceania
Caribbean
S/C America
India
0
Source: US Census Bureau
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
US Hardwood Lumber Exports by Value
2007
EU
Greater China
Mexico
Southeast Asia
Japan
Middle East
Korea
South Africa
Non EU Europe
Oceania
Caribbean
S/C America
0
50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000
($1,000)
Source: US Census Bureau
EU Hardwood Lumber Imports
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Source: EUROSTAT
(Billions of Euros)
2001 2002 2003 2004 2005 2006 2007
Temperate
Tropical
Architectural Projects
Public sector procurement
policies: EU and Japan
• EU 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: EU
• Effectively 2 options:
1) Burden of proof on the prosecution
– Similar to US Lacey Act
– Encourages risk assessment and due diligence
– Proportionate to the scale of the problem
2) Burden of proof on the importer/supplier
– Every shipment would have to be verified legal
– Takes no account of the risk of illegal activity
– Could lead to imposition of unnecessary bureaucratic
controls
– Not proportionate to the scale of the problem
AHEC Actions
• AHEC-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 Headquarters
1111 19th Street, NW,
Suite 800
Washington, DC 20036
Phone: 202/463-2720
Fax: 202/463-2787
www.ahec.org