Wood Exports To China Continue To Grow In BC
Prince George- Demand for logs and lumber by China from North America fell by 17% in 2012 according to Wood Resources International.
Despite this decrease, the Wood resource quarterly says the industry in both Canada and the USA has benefited from the increased wood consumption by China over the last five years.
The exporting of raw logs decreased to China from the USA , lumber products showed less declines.
The biggest changes in wood imports to China was the sharp decline of Russian logs crossing the border into China .
Sawmills in British Columbia have become the largest suppliers of lumber to China in recent years surpassing Russia in 2010.The value of lumber exports was about $1.1 billion dollars in both 2011 and 2012 and the value is expected to be higher in 2013 .
Five years ago less than $1 million dollars worth of lumber was shipped to China . Wood Resources says the new market in China has become increasingly important for saw mills in western Canada.
Five years ago 10% of the export volumes went to China , that share has now risen to 32%
Industry analysts like Hakan Hekstrom says the question is how saw mills in western Canada will choose to allocate their production in the coming years when lumber demand is expected to increase in the USA.
Comments
This is not a good news story. Raw log exports should be nill
They’ll allocate their production where they can get the best price. If the price rises too high, cheaper substitute products will take market share away from lumber .
That’s been happening for over 100 years, according to a study done by Weyerhaeuser in the USA a number of years ago. One that showed the per capita consumption of wood products made from sawn lumber peaked around 1900, and has been in steady decline since.
We’ll sell more wood because there’s more people, but what will be sold in wood becomes more limited to what can be manufactured competitively. And that’s NOT any product that’s ‘labour’ intensive. Something those who dream about ‘value added’ manufacturing being the great ‘job’ creator they’re convinced it’s going to be should start to think about.
Additionally, it behooves anyone to ‘value add’ anything whose ‘raw material’is already valuable through any process of ‘separation’ ~ which is what sawing and planing lumber actually is. All that’s usually added is more cost, and all too often it can’t be recovered fully in price.
Posted by: LunarcomPG on March 15 2013 7:19 AM
This is not a good news story. Raw log exports should be nill
—————————
Why should they be nil? If we just left them standing a lot of people would be out of work and that’s not good.
Or are you suggesting that we mill them ourselves? Then what would we do? No one’s going to buy the end product and we’d end up with yards full of milled and unsold 2 by 4s. Then we’d have to stop logging which would result in a lot of people out of work and that’s not good.
I have heard that China is using out lumber to build concrete forms, not wood frame houses. My source is not very reliable. Any info on this.
Kolberg. What you heard is right. The majority of lumber shipped to China is low grade, and it is used for concrete forms,. Chinese for the most part live in high rise concrete apartments, not houses like we do in North America. If it wasn’t for the beetle kill, and the collapse of the US housing market, there would have been a lot less lumber sent to China.
Now that the US market is turning around and the price is rising, most of our production is once again targeted to the more lucrative US market.
Just sell them more raw logs and unrefined oil…we don’t need any jobs here.
“Additionally, it behooves anyone to ‘value add’ anything whose ‘raw material’is already valuable through any process of ‘separation’ ~ which is what sawing and planing lumber actually is. All that’s usually added is more cost, and all too often it can’t be recovered fully in price”
I disagree. On its own the log isn’t valuable. I suppose one exception would be if trees were only used to build log homes, but that isn’t realistic. In the vast majority of cases, the log has to be converted to some other form in order to be useful or to add value to another product or process.
That’s what “value added” is all about. It’s trying to obtain the maximum amount of value from a particular resource. It could be a fundamental change in how that resources is primarily used, or it could be something as simple as creating a product out of the waste materials associated with the primary production process. Either way, it makes sense to convert that raw resource into the highest number of useful and profitable products as possible.
I know there is the argument of “it’s more valuable in the ground”, but that’s only a half truth. It still needs to be processed in order to make it valuable. Proponents of that approach are just hedging that the future value of the resource will increase because of market forces and that they’ll make more money by processing it at a future date. That argument has some merit (especially if there is low demand or ample volumes already being processed), but it shouldn’t be confused with a “value added” approach to converting resources into useful products.
NMG, “value added” could be properly defined as “any further process beyond any product’s initial stage of manufacture that can recover its costs plus an additional profit.”
If it can’t recover its “costs plus an additional profit” then NO ‘value’ has been ‘added’.
This little FACT is apparently lost on many people, particularly people in politics, who see value added as being synonomous with the number of jobs it creates.
Cutting lumber and working it up into various patterns of siding, paneling, flooring, etc. is a process of separation. In this it is akin to the diamond industry, which is also initially a process of separation.
Where a raw gemstone is cut and faceted to make a finished jewel. By the reasoning of some politicians who see value adding equating to work and wages, a large raw diamond, say like the Hope diamond, would have more value-added if it were cleaved into four smaller gemstones because the work and wages of the diamond cutters would be multiplied by four in finishing those four smaller stones rather than the one big one. But would the four finished smaller stones ever add up to the value of the one big one?
There have been some limited successes in value adding wood products like, say, where a piece of low grade lumber has its defects trimmed out and the resultant short good pieces are finger jointed into a higher grade piece. But if you study the processes like that that were successful, any of them that involve anything that’s labor intensive, you’ll find almost invariably every such product involved having raw material that was virtually worthless to begin with.
You’ll find that as soon as raw material costs increase, those kind of products are no longer viable. And they’ll disappear. As a great many uses wood was once to put to have disappeared. Replacement products gain market share, as witnessed by the use of vinyl siding, for instance, or MDF extruded moldings, etc., rather than the sawn and planed wood products previously preferred.
“NMG, “value added” could be properly defined as “any further process beyond any product’s initial stage of manufacture that can recover its costs plus an additional profit.” If it can’t recover its “costs plus an additional profit” then NO ‘value’ has been ‘added’.”
I agree 100%. As an aside, are there businesses out there actively looking to lose money on the creation of secondary products just so they can say they do “value added” work, OR would most of these businesses employ accountants to make sure that anything that is done as part of that secondary processing is actually profitable to them?
Many so-called ‘value-added’ businesses have discovered there’s more value to be extracted by their owners through ‘hype’ than there ever will be making any of the products most people envision when they think of value-added.
This is because the people we elect to form governments have elevated the creation of ‘jobs’ to be their main reason for existence. And they trip all over themselves trying to assist any smooth-talking huckster who has discovered how to tap into all the ‘stimulus’ money the public purse can offer on the premise that his new wonder-product will add to the employment numbers.
Which is actually quite a lot of money, from a lot of various agencies of governments, if all the sources of public funding for this purpose are explored.
The process followed is already becoming predictably familiar. And while it certainly is not fraud, since intent would be extremely difficult to ever prove, it definitely borders on it. WAC Bennett used to call such enterprises ‘hot house industries’ ~ because they can only ‘grow’ in an artificial financial environment. And he wisely refused to fund them. His government would provide the needed infrastructure ~ some properly zoned land, the road, the hydro connection, the rail spur, etc. But that was it.
His son, and every Premier we’ve had in BC since, of any Party, have been blinded by the promise of ‘jobs’ galore “…if only my value added venture could get some government seed money to help us get going.” Failing completely to realise that if the venture can’t access capital on normal terms and conditions then the chances for profitablity are definitely in question. And all a government that funds such things is really doing is giving the unemployed the opportunity to dig holes and then fill them back in again.
Comments for this article are closed.