No overview of the market for US hardwoods would be complete without a summary of the current state of Chinese timber consumption. The effects of China on all global markets, in terms of competing for raw material and selling converted wood products, can not be overestimated, even in the light of its recent economic cooling following power shortages and an overblown economy.

In June 2004 US sawn hardwood exports to China had risen by 45% on a year earlier and the total trade in American hardwood logs, sawn lumber and veneer was worth US$271m (£135m €193m). Even China’s expansion of plywood production (exports up 151% to 4.3 million m3 in 2004) has knock-on effects to hardwood supplies – a result of the huge domestic demand developing, as well as a highly competitive export trade in hardwood products ranging from flooring and furniture to joinery parts and components.

This, and the growing capacity of cheap products from eastern Europe and other lower cost producers in the EU, has also all but wiped out the British mass-produced furniture industry and left those surviving with a real fight on their hands. The UK is the second largest importer of furniture in the EU after Germany with imports up 28% in 2004.

Last year the UK was China’s number two global destination for wooden dining chairs, number five for wooden kitchen furniture and number seven for wooden bed furniture – not bad for a nation of 60 million providing employment for one of 1.2 billion.

It is thus not surprising that the American hardwood industry is increasingly targeting the UK architectural joinery and flooring markets rather than chase a diminishing furniture makers.

EU imports jump 10%

But despite rising Chinese consumption, data just released from the US shows that total exports of US hardwood logs, lumber and veneer to the EU in 2004 amounted to US$757m – an increase of 10% over 2003. White oak lumber value accounted for 29% of all American hardwood – logs lumber and veneer – into the EU 25.

For the UK specifically, the data shows a generally stable market for American hardwoods, where both volume and value of sawn lumber were up about 3% on last year. In terms of species, white oak lumber was not only the most important item in UK, accounting for US$30.3m, but the dollar value in 2004 was up 20% compared to the previous year.

Ash lumber was second at US$8.8m, with cherry, tulipwood and maple lumber each about US$5.4m for the year. Red oak lumber was up 6% to US$4.1m. White oak also led the veneer imports at US$1.9m ahead of cherry at US$1.3m. This trade has partly been helped by the weakness of the US dollar, and also by the continuing fashion for these species.

In Ireland, US hardwood lumber imports were up by 23% in value at more than US$19m (€14.6m) against 15% in volume, reflecting higher grades and higher value species. White oak again led lumber imports there at US$9m – up 43%, and was way ahead of ash, the second most popular species. Imports of hardwood flooring were also up 69% in value – a sign of the continued buoyancy of the economy and the real estate market in Ireland.

European competition

Another key consideration for US hardwood shippers is, of course, the development of competition in recent years from eastern European suppliers.

European oak producers have continued to enjoy a real revival in this traditional species which has much more healthy demand than beech. The UK was the third largest oak importer in Europe in 2004. To some extent the weakness of the US dollar, which makes American oak competitive against euro-priced hardwoods, is helping US exporters compete, although the huge availability of KD lumber and its consistency of grading also contributes.

Business in the former eastern bloc is for specialists and intrepid risk takers. There are many importers across Europe who turned noisily to eastern European producers a few years back who are quieter now about the profitability and reliability of that trade. Nevertheless, the European hardwood resource will continue to yield increasing volumes of hardwood in the future, as raw material for its own greater conversion capacity and as raw material for others. A revival in China’s appetite for beech would go a long way to improving the profitability of Europe’s forest owners.

Competition for American hardwoods from tropical hardwood is becoming less and less significant. Looking at the Eurostat data for 2004, the UK was the sixth largest importer of tropical sawn lumber, which was down 11% on 2003 against an EU average of 5% increase in 2004. But UK imports were 38% down on the volume of four years ago. Despite some restrictions in African countries such as Cameroon, reduced supply coupled with slack demand in Europe has led to a stable market.

With a few exceptions, such as iroko, demand for African and other tropical species in general is undermined by continuing concern by many European specifiers as to forest sustainability. However, the growing import demand from the US has also become an increasingly important factor for some tropical hardwood suppliers, although this may now have reached a price resistance barrier at the moment.

In the UK there have been some highly active hardwood consumption sectors, such as the decking market where competition has intensified between all suppliers (notably in Africa and South America) but US hardwoods do not feature here much. The flooring market has also marched onward and upward across Europe, with its main development being one of increasing choice in species. For flooring in the UK and elsewhere in Europe, oak leads the way but many other species are also in strong demand. In recent months, however, and by no means yet over, there has been growing controversy about the legality of some supplies of merbau (aka kwila in Papua New Guinea) from across South-east Asia. This is the issue, along with that of sustainability, that above all else has increasingly disturbed the stability of the hardwood market and its underlying demand in the past 12 months.

With the imminent birth of the British government’s CPET established by Defra and watched by many European countries and the EU in Brussels not least, we have yet to see what practical and workable outcome this watchdog will have on 2005/6 hardwood consumption and trade. Although largely aimed at central government purchasing policy, it is undoubtedly affecting the attitude of UK specifiers towards wood.

Top approval rating

The CPET has given its top approval rating as proof of “legal and sustainable timber” to the Canadian CSA certification scheme and that of the Forest Stewardship Council. The US SFI scheme and those of the PEFC and Malaysian MTCC have six-months’ grace to achieve the same status before government procurement officers officially start following CPET’s guidance.

In the meantime, US hardwood log supplies have not been good this winter, but the vitally important American domestic furniture sector is also suffering from intense competition from imports, so home demand has also been tempered.

The outlook in UK and European is for a slackening of demand for hardwoods generally, but the international supply side for sawn hardwood is currently not good either and so prices are surprisingly stable as these conditions balance out.