National Hardwood Magazine - October 2020

AHEC Reveals Some

AHEC Reveals Some Potential ‘Silver Linings’ In the Global Market By Sue Putnam US Exports Down Through Most Markets Michael Snow American Hardwood Export Council Executive Director Michael Snow recently delivered a mid-year market report webinar outlining how 2020’s Coronavirus COVID-19 pandemic has dramatically impacted global lumber markets. No country, no continent’s economy or lumber market has escaped adverse impacts by the global reach of this virus. Snow acknowledged it is difficult to draw major conclusions from what we as an industry have seen during the first six months of this year. He added, “For the reason that, obviously, we are going through something that was completely unpredictable and we’re not really sure where it is going to go - not only here in the U.S. but overseas - and obviously it is going to have impact moving forward beyond our ability to really influence.” Snow drew comparisons between exports this year, last year and even into 2018. Yet the big question is: where do exports stand now – months into COVID – and what “silver linings” are emerging in the industry. There are a few. First, though, Snow provided context. He noted, “The United States again remains comfortably the largest exporter. China not surprisingly is again, by far the largest single importer of Hardwood lumber than any- where in the world. If you take the EU together, they are next, if you are looking at individual countries, Vietnam follows, and actually the U.S. is the fourth largest importer in the world of Hardwood lumber. “But specifically if we look at our exports, the U.S. exports to the world as does China, Canada, Mexico and Vietnam, followed by the European Union. The export volume kind of trails off from there-Japan, and some Southeast Asian countries. When considering the six months through June of 2020 and beginning in 2015 running through this summer, East Asia, which is not only China but also Hong Kong, Taiwan, Japan, and South Korea, there was a fairly large drop in export markets. Almost all of it a reflection of decline to the Chinese market. North America, Canada, and Mexico markets in the first six months dropped as well. Southeast Asia is a smaller drop. In the EU, surprisingly there was a mixed bag during some of the early COVID lock downs, but we are starting to see signs of movement.” At the time of the webinar, Snow noted that while he would focus mostly on lumber, he acknowledged the market was beginning to see quite a bit of movement of logs. While that activity is significantly down from year-over-year activity the past five years, the uptick in sales bears watching, he said. 30 OCTOBER 2020 n NATIONAL HARDWOOD MAGAZINE

Changes in China, 2019 vs 2017 1Regarding lumber, Snow began with a review of China. He explained that prior to COVID, when the initial tariffs were put in place by the Chinese, “We saw a precipitous drop and a little bit of recovery and then, as we saw about a year ago, the full tariffs were implemented as high as 25 percent on a lot of U.S. species. As a result we saw a pretty big drop in exports to China. It is starting to come back a little bit. The beginning of the year was very flat as China was shut down earlier than most due to COVID. In February of course, the tariffs came off and we have stayed in a bit of recovery and we are seeing some signs of life in China for the Hardwood export industry.” Walnut Lumber Only Species to Show Growth in China During Trade War Due to the 25 percent tariff, however, the North American Oaks saw the largest drops in demand followed 2 by Ash and Cherry and Yellow Poplar. Snow added, “Interestingly, even though the latter is in the 5 percent tariff rate we saw a rather sizable drop in demand, but a lot of that is related to the trade war because Yellow Poplar is used by a lot of Chinese furniture manufacturers. We think that was primarily related to a decline in re-exports of furniture back Please turn the page OCTOBER 2020 n NATIONAL HARDWOOD MAGAZINE 31