The Korean real GDP expanded 1.4 percent in the third quarter compared with a 1.8 percent gain in the second quarter owing to the strong growth in consumer spending, which offset a slowdown in exports and falling corporate investment. On a year-on-year basis, the GDP grew 5.2 percent, outpacing a 5 percent annual growth in the second quarter. The unemployment rate in October dropped to 3.1 percent , the lowest since December 2002. A pickup in consumption driven by consumer confidence caused by a spike in job growth helped stoke Korea’s fastest annual economic growth in almost two years in the third quarter. Local household expenditures increased at a higher rate than their income during the third quarter. Household income rose by an average of 7.4 percent from the same quarter last year while living and tax expenditures rose respectively 8 and 14 percent during the same period. Korean exports climbed to a record in October as higher shipments to China and Europe helped cushion the $887 billion economy from a slowdown in U.S. demand.The Korean won climbed beyond 900 versus the U.S. dollar for the first time since August 1997. Despite these promising results, the Korean economy in the fourth quarter of 2007 and next year are being threatened by the following reasons:

• Global financial uncertainties
  
• Ongoing U.S. credit crunch concerns
  
• Decrease of exports due to slowing U.S economy 
  
• Record high oil
  

(Source from BOK statement and preliminary data)
(Household income: Source from the National Statistical Office’s quarterly report on household accounts)

The housing market in Korea is experiencing a surge of activity this past year. Building permits and building starts for the first nine months of 2007 increased to 21.2% and 24% respectively to 165,612 buildings and 131,324 buildings.  The residential building permits and housing starts increased to 38.5% and 43.3% respectively to 53,516 buildings and 45,428 buildings compared with the same period of 2006.  Increased activity is due to the continuous increase in Gross National Income.
Both building permits and starts for wood frame construction during the January-September period dramatically rose to 85.4% and 86% respectively to 6,491 buildings and 5,044 buildings compared with the same period of 2006.

(Source: Ministry of Construction and Transportation)

Korean Wood Market Update:

Korean imports of logs for the first nine months of 2007 compared with the same period of 2006 increased 27.2% to US$ 684,181,000. Of this total, Canadian log imports rose to 33.3% to US$ 52,035,000 accounting for a 7.6% share in the total Korean log import market. As a result of the unstable supply of Canadian logs caused by the prolonged industry strike and price weakness of Canadian logs caused by a rise in the Canadian loonie, Canadian log imports in September 2007 sharply decreased to 37% compared with the same month of 2006. This indicates a slow increase in cumulative Canadian log imports for the first nine months of 2007.

Korean lumber imports for the first nine months of 2007 compared with the same period of 2006 rose 23.2% to US$ 225,237,000. Canadian lumber imports increased 31.7% to US$ 36,382,000 accounting for 16.2% of total lumber imports.

(Source: Korea Customs Service)

Current Situation of 2X4 Housing Market

Figure 1: Wood Building Permit and Start

Figure 2: Wood Building Permit and Start (2006 and 2007 YTD September 30)

Figure 3: Artist rendering of SK ApelBaum ($1.3 Million dollar and up WF House). SK is one of top 10 construction companies in Korea, developing a community of 123 detached wood frame houses.

Figure 4: Kingswood sample house, Sam Jung Construction is developing a luxury retirement community of 125 detached wood frame houses.

After years of slow or flat growth, the wood construction market took off in 2006. Building permits and starts for wood buildings more than doubled in 2006 compared to those of 2005 (Fig 1), and the growth continues in 2007.

Canada Wood Korea has successfully conducted two pilot fire tests for 2x4 wood framed wall assemblies at the Korea Institute of Construction Technology in October, 2007.

Canada Wood Korea Fire Tests Conducted at KICT: Two 2x4 wood framed walls, one for interior and the other for exterior wall, were built with No. 2 grade, Canadian S-P-F lumber by attaching two layers of 12.5 mm thick fire rated gypsum wallboards

These tests were intended to prove fire resistance performance of wood framed wall assemblies listed in the KS F 1611-1 by conducting tests with the revised fire testing method in order to maintain the said standard to be used by the Korea wood industry for their MSMF WFC projects. The fire testing method standard, the KS F 2257-4* had been revised in 2004, and the KS F 1611-1 was established based on the 1999 version of the KS F 2257-4.

Two 2x4 wood framed walls, one for interior and the other for exterior wall, were built with No. 2 grade, Canadian S-P-F lumber by attaching two layers of 12.5 mm thick fire rated gypsum wallboards. The test results of these two walls successfully showed the similar result data as the previous ones acquired based on the former KS F 2257-4.

The KICT is the government-sponsored research institute who is entitled as an official laboratory for fire and acoustical tests by the Ministry of Construction and Transportation.

(KS F 2257-4: Methods fire resistance test for elements of building construction - specific requirements for load bearing vertical separating elements)

COFI/Canada Wood Korea brought Korean government officials and Korean Technical Group members to Vancouver and Ottawa for a week long mission. The key goals were to demonstrate advanced Canadian technology in sound and fire performance of wood framed assemblies, to show them the tire drop test for impact sound and to provide an opportunity to experience Multi-Story Multi-Family Wood Frame Construction (MSMF WFC). Korean delegation members included the Head of the AIK’s Deliberate Council in KS for Fire Safety in Building, Head Researchers from the KICT, and two Korean Technical Group members who are working closely with COFI/Canada Wood Korea for the development of WFC code and standards. The KICT is a government sponsored public research institute acting as the construction material accreditation board of the MOCT. The mission included 2 days in Vancouver to visit the COFI Vancouver office, Forintek and MSMF construction sites learning about BC forestry, forest products, green construction and wood related research projects from Forintek.

 

*WFC: wood frame construction *MSMF: multi-storey, multi-family
*AIK: Architectural Institute of Korea
*KICT: Korea Institute of Construction Technology
*MOCT: Ministry of Construction and Transportation

For the past couple of years, we’ve been working closely with Korean media to write wood and building articles in related publications. As of this month, Korean media on our behalf have published more than a million dollars in free “wood is good” advertising!  So when a group of local media asked us to host six journalists in Vancouver for a week, we enthusiastically accepted. For the first time, Korean journalists would gain first hand exposure to the full spectrum of the world of Canadian wood: from the forest resource, and sustainably managed forests to lumber manufacturing, and green buildings. After a week in Vancouver, the group of journalists returned to Korea on Nov 23rd, but not before gaining a new appreciation for the Canadian wood industry. Each journalist has plans to write their take in upcoming issues of their respective publication which include:

• Casa Living
  Lifestyle magazine; 20-30yrs women. 80,000 circulation http://www.casa.co.kr/company/living_intro.jsp
  
• Architecture and Culture
  Architectural magazine, designers. 25,000 circulation http://www.archious.com/front/php/newpage.php?code=3  
  
• Plus
  Architectural magazine, designers of all ages. 25,000 circulation
  http://www.pluszine.co.kr/main.php
  
• Space-Design
  Architect, living magazine, 35-45yr professional men. 30,000 circulation
  http://www.spacea.com/kor/main.asp
  
• Maeil Business
  Leading daily business newspaper, business professionals.1 million circulation
  http://english.mk.co.kr/
  
• Green Friendly House
  Leading magazine eco-friendly lifestyle, 40yrs+ . 20,000 circulation
  http://www.uujj.co.kr/

It is worth noting that since the media campaign ramped up activities in 2006, softwood shipments have gone up by 83 percent (from 27million board feet at end of 2005 to a projected 50 million board feet in 2007.)

Canadian Industry Exposed: Korean media group tours local sawmill on mission, gaining first hand experience they will write about in subsequent articles.	Hands On Training : Korean media group are briefed on Canadian Building Materials.

There are moments in life that you feel that everything seems to have changed overnight. The moment came during an October day to me. A tour of a few wood frame construction sites revealed to me how fast the Korean wood framing construction market is growing and, at the same time, how fast it might be outgrowing itself. The case in point is a gated community of more than 100 high-end wood frame single detached houses located at the outskirt of Seoul, designed by a renowned architect and being developed and constructed by the consortium of a group of leading wood frame construction companies and a Chaebol.

Sound like a winning combination in every aspect? Yes, it has all the right ingredients we have worked hard for in Korea. WF houses for primary residence use, large scale of construction, and the participation of a big builder; a stepping stone to an even bigger residential market share and expanding beyond single family housing market into much anticipated multi-storey multi-family housing market, and establishing wood frame construction as a mainstream construction method. But there is a missing element: properly engineered drawings with details. Housing and small buildings can be built without a full structural design using prescriptive requirements, but these houses are not the ordinary gable roof houses we see every day. These are houses with complicated load paths due to cantilevers, large openings, offset walls between floors and are very vulnerable to lateral forces. The architect’s signature design is being translated into wood frame construction without the proper structural design, even though it falls outside of prescriptive boundaries and must be designed by design professionals for structural integrity.

However, the higher level of expertise in design and construction required for buildings with complicated configurations and irregular shapes, and for lateral force resisting system is still lacking in Korea. And the industry, as a whole, is still fragmented and very cost competitive, not an environment inducible for quality construction. There is a danger of WFC market expanding too fast to the point where it might become a victim of its own success by failing to meet the challenges and to deliver quality houses.

So how do we guide this burgeoning industry to the next level of market development without outgrowing itself or losing the momentum? How do we assist them to become a self-sustaining industry?

Tai, is the Director of the Canada Wood Korea program, bringing over 20 years of technical expertise in wood design and construction to the CW team. Tai graduated from the New York Institute of Technology with a Bachelor of Architecture degree and had practiced as a professional architect in the States of Massachusetts and California, U.S. for over 13 years. During this period, he has designed and built many wood framed condominiums and multi-storey, multi-family buildings.

He came back to Korea and joined the AF&PA*-Korea in 1999 for 6 and half years as Technical Director and also served as Korean Representative of the APA. While Tai was working for the AF&PA, he had conducted series of fire tests in Korea and developed the KS F 1611-1*, the one and only Korean Industrial Standard for fire resistance performance of light-frame wood structure. Through series of technical seminars and lectures for over 9 years from 1999, Tai has been training thousands of wood related professionals and produced many professional WFC* trainers who are currently taking an active part in education nationwide.

COFI's Steve Kozuki (left) and Tai Jeong(right) at Canfor’s PG Mill	Tai Jeong (left) teaches Korean builder Mr. Lee about engineered wood.

Tai has developed two in-depth WFC technical courses for professional architects, builders and engineers, which are being considered as the most advanced and comprehensive courses for the Korean wood industry: Design-construction-inspection of MSMF* WFC; and WFC structural calculation course. He is providing these two courses at the Wood University Centre in Korea. Through these lectures at the Wood University Center, Tai has assisted many university professors for them to develop curricula for WFC at their universities. Occasionally, he is also providing special lectures at various local universities in Korea, such as In-Ha University, and University of Seoul.

Tai also serves on several Codes and Standards technical committees in Korea and is actively involved in code and standards development to allow wood use in MSMF and commercial building sectors. He is working on the development of fire, acoustical and seismic design codes along with Korean technical committees. As a result of his effort, SPF species group will be recognized as an equivalent species group in the KS F 3020* and the Korea Building Code in 2008.

Korea is a relatively small offshore market for Canadian wood products compare with Japan. However, Canadian SPF dimension lumber is predominant in Korean WFC sector and steadily growing and growing. Tai strongly believes that Korea has a big potential for Canadian wood products and, therefore, COFI/Canada Wood can further develop this emerging market.

European market conditions are expected to weaken slightly during the winter months, leading to a drop in sawn timber prices followed by a degree of recovery. The market is characterised by diminishing construction activity in the USA and in Europe, a weak US dollar that hinders European sawmilling industry exports to non-EU markets, and brisk growth of sawn timber output - particularly by Germany. The result is that supply is outstripping demand, and mills are selling to whoever they can. Reports suggest that softwood trade in the UK has barely reached levels normally expected for this time of year. Importers now find themselves over-committed, with stocks arriving at relatively high prices in a market where price levels have fallen.

Rising stocks at Baltic mills, under current market conditions, are allowing importers to negotiate price reductions for future shipments. Prices for CLS have already dipped from summer highs of around £155/m3 to figures closer to £140/m3 in recent weeks. The drop in sawn timber prices will be modest if Russian roundwood can no longer be economically used after the beginning of 2009, due to the high export duty which will be in force then. The impending duty may lead to increasing demand for roundwood and sawn timber at the end of 2008, as European and Asian sawmills, plus consumers of sawn timber, begin building up stocks ahead of 2009.

The UK is now committed to meet the EU target to generate 20% of its energy from renewables by 2020, compared with perhaps 5% today. Bio-fuels, including sawdust, chips and pellets have a part to play, and in spite of a preference for indigenous supply, imports are required in a variety of forms. Prenergy, a developer, has recently been given permission to build a 350MW wood-chip fuelled electricity generating plant in Port Talbot, South Wales. The £400m plant will generate enough clean electricity to power half of the homes in the region, and is intended to contribute around 70% of the Welsh Assembly's 2010 renewable electricity target. The wood fuel is expected to come from sustainable sources in the US and Canada.