Asia has been an important lumber market for the Canadian forest industry for more than 40 years. Since establishing a Tokyo office in 1971, COFI alongside provincial and federal governments, has worked to develop wood building codes and wood product standards in Asia.
Due to continued poor U.S. housing starts and lumber consumption, BC has had little choice but to focus on market diversification starting with Asia. For the first time in history, BC now ships more lumber to overseas markets in Asia than to the U.S.
Japan has a long history of importing Canadian lumber. Today, Japan is Canada’s 2nd largest overseas lumber market (behind China), but Japan remains B.C.’s largest market for high grade lumber. Additionally, Canada is Japan’s largest supplier of softwood lumber to Japan (40% market share), just ahead of Europe. When it comes to wood products, the Japanese are the most quality conscious customers in the world, and expectations for the very best are reflected by the highest quality lumber they buy.
In May 2010 Japan announced its Act for the “Promotion of Wood Usage in Public Buildings”. The Act is designed to expand the market for wood products in public buildings such as schools and hospitals. Wooden structures constitute only 7.5% of public structures at present, compared with 36% for all structures. The Forestry Agency’s aim is to generate 100,000’s of cubic meters of additional annual demand for wood products. Structures up to three storeys will be initially targeted. While structural wood will not be required in all public buildings, wood will have preferential status. In buildings where structural wood use is not practical, finished wood materials use will be promoted. The Act is expected to benefit demand for SPF in truss applications.
Today, Japan builds approximately 100,000 2X4 homes a year. However, due to Japan’s aging population and decreasing house sizes COFI currently focuses much of its effort to increase wood consumption in apartment buildings, elderly care housing and other public facilities, rather than in single family construction.
China’s flourishing economy, coupled with policy constraints limiting domestic forest production, has resulted in skyrocketing lumber imports over the last several years. Today China is the largest importer of lumber in the world, surpassing the U.S. in 2010.
China continues to realize positive growth rates despite the global economic downturn. The Canadian efforts to develop the Chinese market are now showing encouraging results as China is the fastest growing market for Canadian lumber. In 2003, at the start of the joint provincial-federal-industry market development program in China, B.C. exported $69 million worth of softwood products to China. In 2010, after seven years of hard work and clear focus, B.C. exported $687 million worth of softwood lumber – an increase of almost 900 percent.
Although the majority of the lumber going to China is lower grade SPF for concrete forming & furniture, the wood building market is gaining noticeable traction due to newly developed building codes. Today, there are more than 20,000 wood building projects either in the planning stages or under construction. A property price bubble has in some urban areas caused the government to tighten requirements for home buyers and developers. While these measures may dampen demand growth, the stimulus nature of the government’s plan for 36 million affordable housing units by 2015 is expected to boost disposable household income and domestic consumption.
China is expected to remain the fastest-growing importer of softwood lumber in the world in the coming years. In 2010, Canada passed Russia to become China’s largest supplier of softwood lumber. China was the second-largest market for B.C. sawmills after the U.S., and accounted for 21 percent of total softwood lumber exports from B.C.
Although a relatively small lumber market compared to Japan and China, continues to grow in both volume and sophistication in the products it imports. B.C. remains Korea’s largest supplier of softwood lumber products, primarily structural products, exterior envelope products, and value-added products. Korea is similar to the U.S. in its product preferences in that Korea customers buy predominantly 2 &better grade for wood frame construction. Additionally, Korean’s buy higher grade “square edge” BC SPF for pressure treating in Korea for use in domestic landscaping.
Housing starts in Korea are increasing at a rate of 5% annually while wood housing starts are increasing by a rate of 10%. Korean consumers are passionate about wood buildings because they readily believe that wood homes are much healthier and better for the environment. The respect that Korean’s have for wood bodes well for the future of wood used in construction, especially as environmental concerns continue to influence consumers. Additionally, the Korean government is working to address their carbon footprint and the “sick house” syndrome from non-wood construction methods which dominate city developments. In April 2010, the Korean government announced its “Low Carbon, Green Growth” Act which gives rebates and tax relief for using green building materials.
COFI is working to position wood frame construction as a sustainable healthy alternative to other building materials and leverage Korean preferences for wood in their traditional home design. Multi-family 2X4 residential construction has great potential if stringent fire and sound insulation requirements can be met.