China lumber sales set new record

VANCOUVER — China's appetite for British Columbia lumber grew at a record pace in 2009 in volume and value, providing sawmillers here with a needed new market to counter stumbling American demand.

Lumber exports to China hit 1.63 million board feet in 2009, more than twice the volume shipped in 2008. Those exports generated $327 million in revenues, a 70-per-cent increase over 2008.

The U.S. market is still this province's primary customer, Americans bought 7.48 billion board feet of lumber valued at $1.54 billion in 2009.

But China's rise has caught the attention of industry leaders who see the potential for that kind of growth to continue as China's appetite for wood continues to outstrip its ability to supply it. Chief executive officers at most major forest companies are heading to China later this week to meet with new customers and for the signing of a new memorandum of understanding with Chinese housing authorities. It will be their second trip within the last four months.

"China is emerging as a critical strategic market for coastal producers," said Rick Jeffery, president of the Coast Forest Products Association, who plans to attend the event in China. "We get weekly inquiries here from folks interested in buying both lumber and logs," he said.

Jeffery also said Chinese companies are starting to invest in the province's forest sector, noting that Zhejien Fulida announced an equity investment in B.C. pulp company Neucel last January.

Jefffery said the Chinese are buying the Coast's low-valued lumber, which is a perfect fit strategically with the Coast's Japanese market, which buys high-quality wood.

Coastal mills are able to generate more revenue from a single log as a result, he said.

"We are selling them lower-grade products that are the fall-down from Japanese production but moving into the future, as we work with them to show them the value of using wood, we can get them to begin using higher grades of wood, which brings higher revenues," he said. "That will allow us to maybe consider bringing new capacity online."

Chinese sawmill workers re-saw the low-grade boards then glue and laminate them together again to make a higher-grade products.

At Interior lumber giant Canfor, spokesman Dave Lefebvre said much of the increased demand is coming at the expense of Russian lumber.

Chinese customers have indicated they prefer B.C. wood to Russian wood because it is planed, the quality is consistent and it is easy to work with.

He said Canfor is starting to sell higher grades of lumber in China now, some for use as roof trusses or for interior wall construction. Chinese buyers have also switched to higher grades because the price differential between utility grades and higher grades was negligible.

Lefebvre said Canfor's China team has noted it's not just the price differential that's driving sales in higher grades of lumber.

"The availability of lower grade lumber is scare. It's actually creating a situation where they are going to higher grades because they need more lumber."

Forests minister Pat Bell said in a news release that he expects shipments to China to reach four billion board feet by the end of 2011.