Global softwood lumber trade reached an all-time high in 2015 when, according to estimates by the WRI, 118 million m3 was traded internationally. This year has started out with even higher volumes being traded around the world; the 1Q/16 shipments were approximately 20% higher than in the first quarter of 2015. All countries on the “top-10 import list” increased their lumber importation during the first few months this year with the biggest changes in import volumes being in the US, China and Egypt.
There was mostly upbeat news about the US lumber market in the first few months of 2016; housing starts in March were the highest for that month since 2007, lumber consumption in early 2016 was 14% higher than the same period in 2015, lumber imports in January-April were up 42% as compared to early 2015, and lumber prices in May reached their highest levels in over a year. Despite increased domestic wood demand, lumber production on the US West coast actually fell about four percent during the first four months this year.
Canadian production was sharply higher during the first three months of 2016 as compared to the same period in 2015, with an increase of 19% in the Eastern provinces and eight percent in British Columbia.
The Nordic countries increased lumber export volumes in both 2014 and 2015 and the trend continued in early 2016 with shipments during the first two months being up nine percent for Sweden and 14% for Finland.
With the continued weak demand for lumber in Europe, Asian and African markets have received larger volumes of Nordic lumber so far this year as compared to early 2015. Although the US has increased total importation of lumber by as much as 44% during the first quarter this year, Sweden has only shipped six percent more than in the 1Q/15 and Finnish sawmills have not sent any lumber at all.
Importation of lumber to China from the two largest supplying countries, Russia and Canada, were 33% and 4% higher respectively, during the first four months of 2016 as compared to the same period in 2015. Shipments of predominantly pine from Russia have gone up substantially the past year with deliveries in April this year 1.1 million m3 as compared to 820,000 m3 in April 2015. Despite the significant depreciation of the Rouble during 2015 and 2016, Canadian lumber prices have actually fallen faster than Russian lumber prices in US dollar terms.
Housing starts of 2x4 houses in Japan were up 3% in the 1Q/16 as compared to the same quarter in 2015. Increased lumber demand has been met both by higher production at the country’s sawmills and by increased importation. In the 1Q/16, import volumes increased by 12% year-over-year with particularly Finland, Sweden and Austria shipping more lumber this year.
Lumber exports from Russia have fallen for two consecutive quarters, with the 1Q/16 shipments being almost 10% lower than in the 3Q/15, but six percent higher than in the 1Q/15. Most of the recent decline has been in shipments to the CIS countries, including Uzbekistan, Azerbaijan and Tajikistan, but trade with Egypt and some European countries were also down. Export prices have fallen quite substantially in dollar terms the past two years at the same time as values in Rouble terms were close to record high levels in the 1Q/16.