American Hardwood Southeast Asia Supplement 2019

8 AMERICAN HARDWOOD Southeast Asia Supplement 2019 Vietnamese Growth Offsets Challenging Year in China for US Hardwoods Tripp Pryor, International Program Manager, American Hardwood Export Council T rade wars, tariffs, slowing Asian economies, and even a harsh winter all led to a challenging year for US hardwood exports in 2018. Nevertheless, thanks to a strong start to the year and growing demand in SE Asia, 2018 still totaled the 2 nd best year ever for exports of US hardwood products. Last year the China market for American lumber decreased by 16% in volume and 13% in value YOY in comparison to 2017. The trade was impacted by multiple factors including Chinese economic deceleration, depreciation of the RMB, and continued market and tariff uncertainty among other things. All species of American hardwood lumber decreased in trade year over year except for walnut, birch, and beech. Red oak, the most popular American species in China, dropped by 18% in volume. Ash and tulipwood (also called yellow poplar) lumber also decreased by over 20% in volume in 2018, and white oak was down 11%. Figure 1 shows the trade of US hardwood lumber to China month by month for 2016-2018. As you can see, 2018 (in red) started off strong, but as trade concerns became a reality in early summer both the US and Chinese industries were affected. There was a slight jump in October when a “tariff delay” was announced, but trade immediately dropped back down to sub 2016 levels in November and December. Even though the China market for US hardwoods still posted the second highest trade totals ever, the reduction in trade from 2017 has many American companies looking to new markets for growth opportunities. The growing market first and foremost in everyone’s mind is Vietnam. Vietnam has continued its dramatic growth, leading SE Asia and now totaling a larger volume of US hardwood lumber imports than all of Europe (500,060m 3 vs 359,616m 3 ). This is particularly welcome news for a US industry pushing for new markets in the face of trade difficulties in China. In 2018 Vietnam grew 13% in volume and 17% in value, led by strong years for red & white oak, walnut, and western red alder. Red oak in particular grew by 42% in volume from 2017 to 2018. This growth represents over $5.5 million USD in new sales of red oak lumber. The total value of red oak shipped from the United States to Vietnam is now roughly even with walnut at $22 million each. Figure 2 shows the value growth in $USD for several major species of US hardwoods. In total, the Vietnamese market for US hardwood logs and lumber is valued at over $275 million USD. Figure 1 US Lumber to China and Hong Kong (m 3 )