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| China's appetite for lumber keeps B.C. mills, loggers busy |
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http://www.sbdailynews.com
2011-07-19 |
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China's increased appetite for lumber is helping to fire up B.C. mills and keep loggers in the woods as the demand for wood from the United States remains subdued.
For the first time, B.C. companies are making more money from the wood they send to China than from shipments heading south of the border.
May's B.C. softwood lumber shipments to China, including Hong Kong, were valued at $122 million, compared to $119 million in shipments to the U.S.
Jobs, Tourism and Innovation Minister Pat Bell said that while more wood — roughly 1.2 million cubic metres compared to 1.1 million — went to the U.S. in May, the Chinese exports were more expensive.
Bell said this puts to rest the criticism that Chinese buyers are only looking for cheaper wood. "The Chinese are paying for high quality and they're getting high quality," he said. "It's such a wide variety of uses that it's quite unlike the U.S. and makes it far more sustainable on that basis."
From January to May, the province exported 2.8 million cubic metres of lumber to the world's fastest-growing economy, more than double the value and volume exported there during the same period last year.
Bell said most B.C. lumber sent to the U.S. is used in house construction, but in China it is used for apartment buildings, trusses, commercial buildings and furniture .
Lee Doney, vice-chariman of Duncan-based Western Forest Products, said Monday that about 20 per cent of its lumber goes into the Chinese market, compared with "much less" than five per cent three or four years ago.
About 90 per cent of WFP's Ladysmith mill is dedicated to the Chinese market, he said. "Three years ago that mill wouldn't have been running."
"That's the good news. But it is a low-margin market," Doney said. "It is very, very competitive. Pricing is very sensitive. We don't make a lot of profit off this market but it keeps things running."
China's demand is not a panacea for the industry, he said. "It is not a market that is going to cause a turnaround right away."
WFP has about 2,600 workers at mills and in the woods, with 95 per cent on Vancouver Island, Doney said, adding "we are logging significantly right now."
The company's target this year is to cut 5.5 million cubic metres of logs this year, he said.
Markets in Asia and elsewhere in Canada are keeping a line running at WFP's downtown Nanaimo mill, and workers on the job at the planer mill at Duke Point.
Rick Jeffrey, Coast Forest Products Association president, said the demand from China is helping diversify B.C. markets. "That's been a very good thing through the last couple of years as we've grown the market there because the U.S. market is still a long ways from recovery."
"It is strategically and tactically important. Market diversification is good. Not being so dependent on the U.S. market is a good thing." The American market is expected to revive in two or three years, further adding to the demand for B.C. products.
On Vancouver Island, it's meant that mills at Cowichan Bay and Chemainus "have been running to service that Chinese market. It has also allowed a lot of logging to happen that wouldn't necessarily have happened ... So loggers are at work." Along with helping to keep B.C. sawmills running, the Chinese market is also a major purchaser of pulp, added Jeffrey.
Tom Pallan, president of Campbell River's Pallan Group, said his company's business to China surpassed the U.S. about 18 months ago. "With the U.S. market suppressed like it is, if we didn't have the China market, we would be suffering quite badly."
Without the Chinese market, Pallan's company would be doing about 50 per cent less work. "This is an opportunity that we don't want to miss out on."
Pallan's office has 20 staff and subcontractors represent about 300 to 400 workers. "I think the Asian market is here for the foreseeable future," said Pallan. "I've just come back from a two-week trip to China and there's tremendous amount of activity there and building going on."
The Japanese demand for more wood, to rebuild homes destroyed by the March tsunami, will pick up in a major way in six to nine months, Pallan said.
Shipments to all Asian countries in the first five months of 2011 were valued at $776 million compared to $464 million of lumber sent to the U.S.
These Asian exports represent almost half the total value of provincial lumber shipments so far this year, the province try said.
During the first five months of last year, Asian exports accounted for $464 million — a third of all lumber sales — while American exports were over half of all shipments at $851 million. |
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