FOREST PRODUCTIONS - China is key to future US hardwood exports

By: | at 08:00 PM | Channel(s): International Trade  

Appetite for red oak benefits producersBy Peter A. Buxbaum, AJOTThe current focus of American hardwood exporters can be boiled down to a single word: China. That country’s economic expansion, and particularly its housing and construction boom, has led to explosive demand in hardwoods for furniture production and domestic consumption.
Several conditions have converged to make China a particularly fruitful export market for US hardwoods. Besides the construction boom, China has also developed strong demand for American red oak, a species found in great abundance on this continent yet not favored in other international markets. Environmental considerations, such as illegal logging and the move toward sustainable forests, means US hardwoods will be favored over competing Russian and West African products.
“Everybody’s eyes are now on China,” said Michael Snow, executive director of the American Hardwood Export Council, a Washington-based trade group. “China used to be thought of as a screwdriver market, meaning we would send them wood and it would come back to the United States as furniture. But in the last few years it has been domestic furniture consumption and the domestic construction boom that has fueled hardwood exports to China.”
In a turnabout from former trends, Chinese furniture production is now overwhelmingly consumed by the domestic market. The Chinese produced $45 billion in furniture last year, according to Snow, while furniture exports amounted to $12 billion. Hardwoods are not generally used for structural purposes, but demand for many hardwood products, such as cabinets, molding, paneling, and furniture is closely linked to housing and construction. Other major uses for hardwood lumber and plywood produced in China include shipping pallets, architectural woodworking, and railroad crossties.
In the last ten years, US hardwood exports to China have increased forty fold. “In 1996, we were looking at a five million dollar market,” Snow said. “In 2005, it was just over two-hundred million.” And that accounts only for US hardwood lumber exports. Throw veneer and other related products into the mix and that adds another fifty to sixty million in exports to China, according to Snow.
The property market boom in China benefits US exporters also because of the demand there for red oak, a hardwood species that is less expensive than other varieties such as white oak, walnut, maple, and cherry, which is indigenous primarily to the United States, and which represents its most abundant hardwood species. “Oaks represent 40% of the USA’s massive hardwood resource, and red oak is by far the most available of these,” according to a paper published by the AHEC.
The US hardwood industry has been actively promoting red oak in international markets by touting its advantages. Among these, according to the AHEC paper, is that it is easy to dry, it is less expensive than the alternatives, it takes finish easily, its lumber exhibits fewer defects and its color is more consistent than other oaks, and its prices are stable. According to Snow, Mexico is also a major export growth market for US hardwoods in recent years, thanks to its demand for red oak.
Other international trade conditions also benefit US hardwood exports to China, according to a June 2006 report from the US International Trade Commission. China has been importing large quantities of hardwoods from Russia and West Africa, but much of these are suspected to be from illegal sources, the report said.
“There have been widespread reports that illegally harvested logs are being imported into China,” noted the report. “A relatively large portion of China’s log imports may be from questionable sources. It has been estimated that 50% of China’s hardwood log imports from Russia and West Africa are from suspicious or illegal origins and that seven out of ten large suppliers of logs to China have generally poor governance of natural resources.”
Reducing the level of illegal logging would benefit US exporters to Chin

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.