By: The Daily News
Fewer logs are leaving West Coast docks this year, as Asian demand shifts toward other regions because of the stronger U.S. dollar. That could mean fewer hours for longshoremen and logging contractors as timberland owners clamp down on harvests as a result.
“The export market really has been declining for some time. It wasn’t too big of a problem when domestic markets were really strong, but those markets have weakened as well, so we are kind of cutting our harvest a bit,” said Bill Marre, a Vancouver-based general manager for Hancock Forest Management, which has locations scattered throughout the Northwest, the South and New Zealand.
There were 29.43 million board feet of logs exported from the Port of Longview in the first quarter of 2015, down 45 percent from the same period last year. That continues a trend that started last year, when log exports at the Port dropped 20 percent from the previous year.
It’s not just Longview that’s hurting. The volume of log and lumber exports from Washington, Oregon, Northern California and Alaska plunged 13 percent in 2014 compared to 2013, according to U.S. Forest Service.
The vast majority of West Coast logs are exported to China, which has started turning to U.S. competitors such as Russia or New Zealand in part because of the stronger U.S. dollar makes American logs comparatively expensive. (Although the Russian Ruble has strengthened recently, one U.S. dollar will still buy about 53 Russian rubles and about $1.46 New Zealand dollars.)
An unusually warm winter also pushed up supplies because loggers were able to harvest more than expected. A deteriorating Chinese housing market, which only recently started to show signs of life again, may have also contributed to the drop in West Coast log exports.
“The (Chinese) government has not been as willing to give loans to investors who want to build housing in China, so that has meant that there has been huge inventories of logs waiting to be turned into lumber. … So the price of logs has had to come to down,” said Hakan Ekstrom, president of the Seattle-based consulting firm Wood Resources International.
Ekstrom said that timber companies could continue to look toward domestic markets to make up the difference, especially if the U.S. housing recovery continues. That would spur demand for finished wood products from sawmills.
“If housing prices will continue to go up in the U.S. … the sawmills will be running a little bit higher. … More logs will stay and go to local sawmills rather than be shipped to China,” Ekstrom said Tuesday.
Marre said that dip in log exports hasn’t forced the Hancock Forest Management to make any layoffs, but has meant fewer hours for logging contractors. Weyerhaeuser Co., which also relies on contractors to cut timber, also has not made any layoffs.
Net sales in the timberlands division of Weyerhaeuser were down $24 million in first quarter of this year compared to the fourth quarter of last year, according to the company’s latest financial report.
About one third of Weyerhaeuser’s West Coast logs end up in Asia — but Japan, rather than China or Korea, is the main destination, according to company. Spokesman Anthony Chavez said Weyerhaeuser has a long-term relationship with one of the biggest sawmills in Japan, Chugoku Mokuzai, which could help to insulate it from short-term market changes.
“Western domestic log prices and volumes have continued to decrease through the first part of (the second quarter), but we anticipate they will stabilize as housing activity begins to improve and mill inventories come back into balance,” said Patty Bedient, Chief Financial Officer for Weyerhaeuser in a May 1 conference call to investors.
But Marre isn’t holding his breath for a dramatic rebound in Northwest log sales this year.
“We’re optimistic that we’ll see a small increase later in the year, but it wouldn’t be anything earth shattering,” he said.
By: The Daily News