Panels & Furniture Asia Jan/Feb 2018

January / February 2018 • Issue 1 • PANELS & FURNITURE ASIA 36 MATERIALS Hardwood Market Report Business momentum for U.S. hardwood lumber to carry over into 2018 B usiness results for 2017 have U.S. suppliers feeling optimistic about 2018. Exports of hardwood lumber were trekking 13 per cent higher through the first 10 months of 2017 compared to the same period in 2016. The total volume shipped through October was the third highest of any full year (12 months); only 2016 and 2014 were higher. With two months remaining, there is little doubt U.S. hardwood lumber exports will establish a new record in 2017. To no one’s surprise, China is the dominant force driving increased export activity. While total hardwood lumber shipments from the U.S. were up 13 per cent year to date, U.S. shipments to China had increased 18 per cent (see Fig. 1). Exports to China accounted for 54 per cent of the hardwood lumber volume exported by the U.S. worldwide (see Fig. 2). In fact, the 10 month total exported to China in 2017 surpassed the 12month China record high set in 2016, reaching 2,026,233m 3 compared to 2,006,701m 3 (see Fig. 3). U.S. supplier optimism goes beyond exports. The domestic U.S. marketplace has grown consistently over the past several years. Much of that growth is closely alignedwith economic expansion. After a period of retraction, markets for key industrial timber products have rebounded and are currently energised. U.S. DOMESTIC MARKET Separately, the U.S. housing sector has been expanding at an impressive rate. New single family construction is projected to increase year over year by 10.7 per cent and 8.6 per cent in 2018 and 2019, respectively; these increases follow a 7.5 per cent increase in 2017. Also in 2017, expenditures on single family housing refurbishing projects surged 20 per cent over 2016 expenditures. Notably, new and refurbishing single family housing construction projects are significant to demand for hardwood flooring, cabinets, millwork, and furnishings. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan - Oct 2016 Jan - Oct 2017 Percentage Share of Volume China Rest of world Source: USDA FAS Graph: Hardwood Market Report Figure 2: U.S. exports of hardwood logs to China and the rest of the world 0 100 200 300 400 500 600 700 800 900 1000 1100 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *2017 Million Board Feet 1999 - 2006 US Furniture Manufacturing Shift to China and US Housing Boom. 2006 - 2009 US Housing Bust and Worldwide Economic Turmoil. 2009 to Current: China's Growing Middle and Upper Classes Consuming US Hardwoods 2009-2017 Export volumes pacing at an increase of 400% Source: USDA FAS Graph: HMR 1999-2006 Export volumes increased 760% US Exports to China in 2017 are on Track to Exceed 1Billion Board Feet and Surpass 2016 Volume by 18%. *Projected Figure 1: U.S. exports of hardwood lumber to China By Judd Johnson, Managing Editor, Hardwood Market Report

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