Transcript Slide 1
Red Alder; Market Reasons for Optimism!
Larry Mason University of Washington College of Forest Resources Rural Technology Initiative Washington Hardwoods Commission Annual Meeting, June 14, 2006
5/06 price in 2004 $ Red Alder: $699 Douglas-fir: $620 Puget Sound Region. Source: Log Lines (1989-2004, 2006), Forest Product Price Report (1959-1990), Timber Management Plus (current), U. S. Dept of Labor
2004
7.35% 8.40%
Net Present Value (NPV) $1,200 $1,000 $800 $600 $400 $200 $0 Douglas-fir 45 year rotation
2004; 5% rate of return
Red Alder 35 year rotation
Price Indexes for Hardwood Lumber, 1965 - 2002
Average increase/year since 1965 of 4.9% More stable than softwood lumber Western producers produce < 5% of hardwood lumber
Source: U.S. Forest Service
U.S. Hardwood Exports 1986-2002
3000
$ Million
2500 2000 1500 1000 500 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Logs & Chips Value-Added
Source: American Hardwood Export Council
Source: USDA Foreign Agriculture Service
Top Five Hardwood Lumber Species Exported to China in 2004 $35 $30 $25 $20 $15 $10 $5 $0 Alder
Source: USDA Foreign Agriculture Service
Red Oak Yellow Poplar Maple White Oak
Value of Alder Lumber Exports for Total World and Top Markets: 2001-2004 $120 $100 $80 $60 $40 $20 $0 2001
Source: USDA Foreign Agriculture Service
2002 World China EU-25 2003 Canada 2004 2005 $121 Million Total Sales
Alder lumber export statistics for Jan-May of 2004 and 2005.
Alder LBR Exports by Country
China Canada Mexico Italy Germany Spain EU-25 Taiwan Philippines Vietnam Portugal World Total
Jan-May 2004 Vol. (m 3 )
47,397 13,467 11,740 7,990 3,031 5,483 21,398 5,504 1,388 855 1,762 107,159
Jan-May 2005 Vol. (m 3 )
65,349 18,515 12,380 8,774 6,657 4,961 25,725 4,049 2,617 1,907 1,501 135,315
Change 05 vs. 04
+37.9% +37.5% +5.5% +9.9% +119.6% -9.5% +20.2% -26.4% +88.5% +123.0% -14.8% +26.3%
Jan-May 2004 Value (1000 $)
$12,897 $3,751 $4,065 $5,125 $2,506 $3,479 $14,261 $1,548 $617 $313 $952 $40,304
Jan-May 2005 Value (1000 $)
$19,620 $4,283 $4,552 $6,517 $5,433 $3,601 $18,831 $1,209 $1,365 $746 $829 $52,589
Change 05 vs. 04
+52.1% +14.2% +12.0% +27.2% +116.8% +3.5% +32.1% -21.9% +121.2% +138.2% -12.9% +30.5% Source: Hardwood Review (2005) and USDA Foreign Agricultural Service (2005).
How Do Domestic Markets Respond to Alder?
Source: Roos, J., G. Donovan, D. Nicholls.
How does species name affect consumer choice? An analysis and implications for PNW cabinet door marketers.
Forest Products Journal. 55(5). Pp. 21-26.
Cabinet Door Species Preference 30.00% 25.00% 20.00% 15.00% 10.00% 5.00%
Name No Name
0.00%
Alder (Heavy Stain) Alder (Moderate Stain) Alder (Unstained) Cherry Maple Red Oak Hickory 560 respondents in Anchorage 900 respondents in Seattle
Cabinet Door Species Preference 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%
Name No Name All Alder Cherry Maple Red Oak Hickory
Combined alder preferences dominate selections!
Huge opportunity for consumer education!
But can Alder price get too high?
C - $1.40
#1 - $1.00
#2 - $0.60
C - $1.50
#1 - $1.20
#2 - $0.70
C - ?
#1 - $2.20
#2 - $1.70
C - $3.75
#1 - $2.50
#2 - $1.50
Poplar Maple Alder Cherry http://www.innernet.net/galleryofwood/pricelist.htm
Working Properties for Selected Commercial Hardwoods Finishing Gluing Screw ing Nailing Machining POOR Red alder American cherry Hard maple Soft maple GOOD
One reason for alder popularity among manufacturers is its workability Source: American Hardwood Export Council
South West Rustic Furniture ???????????????
4/4 Premium Frame $825/MBF 4/4 Standard and #3 Shop $550/MBF
Source: Bill Redman, North Pacific Lumber
Alder is the only wood approved for grocery pallets by the West coast food industry.
But > $300/MBF?
Source: Hardwood Lumber Review and Bill Redmond
What about the pulp price?
The west produces < 3% of U.S. hardwood chips
Source: USDA Forest Service
Look into the crystal ball
Red Alder is not a tropical hardwood.
Planting Red Alder will diversify commercial forestland investments.
As prices rise more plantations are established.
Red Alder logs are likely to become increasingly scarce because present plantations are few.
Increases in research in intensive management and genetic improvements will likely result in hardier stock, shorter rotations, higher grades, and greater yields.
Shorter rotations mean quicker return-on investment and reduced risk.
Rapid growth does not appear to compromise lumber quality.
Red Alder appears well established in Domestic and Export niche markets.
Products markets can be strengthened and expanded through consumer education.
Engineered Wood Products may help with raw material shortages.
200 MMBF in Alaska more in Canada.
CONCLUSION: Red Alder is uniquely positioned among PNW log species for continued market success.
Available on the web at no charge or on DVD ROM for $10 (
this can only be viewed on a computer with DVD reader
). To order, contact Clara Burnett
(clara75 @cfr.washington.edu),
or call the RTI office at (206) 543-0827.
Available on the web at
http://www.treesearch.fs.fed.us/pubs/22325
Or in hard copy from: Pacific Northwest Research Station P.O. Box 3890 Portland, OR 97208 (503) 808-2592