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Fiscal 1998
Outlook for U.S. Forest Products Trade
U.S. Solid Wood Exports to
Decline Slightly; Imports Expected to Increase Further
Commodity and Market Export
Highlights
U.S. solid wood exports in fiscal 1998 are forecast to decline slightly to $7.4 billion, roughly $100 million less than last year's record. Increased exports of hardwood lumber, panel products and other value-added solid wood products are expected to only partially compensate for the expected export declines in logs and chips and softwood lumber.
U.S. solid wood products are expected to maintain a second strong year of export sales throughout most of the world outside of Asia. Sales to our number one export market, Japan, and to our markets in Korea and Southeast Asia are expected to face declines. U.S. exports of primary processed products (lumber, veneer, poles and railroad ties) and secondary processed wood products (plywood, engineered wood products, and other value-added wood products) are forecast to attain record sales of $3.3 billion and $2.2 billion respectively, as markets in Europe and Latin America experience relatively good economic health. Specifically, the European Union is entering into a new period of housing growth, Chinese furniture manufacturers are purchasing record volumes of U.S. hardwoods, and Mexican and Caribbean processors are expected to purchase more American products for furniture, construction, and further processing for re-export as shutters, and window and door frames.
At the individual product level, the largest
increase will be for hardwood lumber, which is forecast to climb
$220 million to a record $1.6 billion in fiscal 1998. Other major
gainers include: other value-added wood products, up $45 million
to $645 million; hardwood veneer, up $35 million to $380 million;
softwood plywood, up $35 million to $355 million; and, other
panel products, up $30 million to $155 million.
U.S. exports of unprocessed products in fiscal year 1998, especially softwood logs and chips, will reach a ten-year low as Japan faces difficult economic problems. Japan=s Ministry of Construction recently revised its Japan fiscal year 1997 housing starts forecast from 1.47 million to 1.3 million units, significantly less than the 1.63 million starts of the previous year. The yen is also weakening, falling from 110-115 yen to the dollar six months ago to current levels of 125-130 yen to the dollar. Weak income growth, banking and business failures, and large wood inventories, along with increased competition form Canada, Scandinavia, New Zealand and Russia, will significantly depress Japanese demand for American softwood logs and lumber.
U.S. softwood lumber sales to Canada for further processing will also decline as the Canadians feel the impact of the shrinking Japanese market.
Japan will continue to be our largest export market (nearly 40 percent of U.S. foreign wood sales), with export sales forecast to total $2.9 billion in FY 1998, $400 million less than the previous year. The slower economic growth and sharp currency devaluations in Korea and Southeast Asia resulting from the financial crisis are expected to lower exports to these countries in fiscal 1998. (These two areas, however, take only 6 percent of U.S. wood exports.)
Import Highlights and Top Supplying Countries
Total solid wood products imports reached a
record $12.8 billion in fiscal 1997 and imports are expected to
climb even higher to $14.6 billion in fiscal year 1998 due to a
continued strong domestic economy and a strong American dollar.
U.S. housing starts are expected to continue at near all-time
highs, (1.5 million units are forecast for calendar year 1997),
while unemployment is expected to remain very low. U.S.
developers and contractors are increasingly looking to overseas
markets to meet their softwood lumber needs as sales from federal
forests face expanding harvesting restrictions, and fiber supply
from plantations in Chile, New Zealand and Brazil becomes more
readily available. Recent currency devaluations in Southeast Asia
will also make their plywood and other value-added wood products
more competitive in the U.S. market.
The leading import commodity in fiscal 1997 was softwood lumber at $7.1 billion. Over 90 percent of this product comes from Canada and is destined for U.S. construction. Other leading fiscal 1997 import commodity groups include other value-added wood products at $1.6 billion, builder's carpentry at $821 million, hardwood plywood at $754 million, and oriented strandboard (OSB) and waferboard at $546 million. These products are expected to remain the top import products and increase further in fiscal 1998.
The leading foreign suppliers in fiscal 1997
include Canada with $9.4 billion, Indonesia with $485 million,
Mexico with $441 million, Brazil with $387 million, and
China/Hong Kong with $333 million. Total imports from the rest of
the world were $1.7 billion. Canada is our leading supplier of
softwood lumber, veneer and plywood. Imports from Indonesia and
Brazil consist mainly of tropical hardwood panel products. Mexico
provides other value-added wood products, such as windows and
doors and their frames, blinds, shutters, and softwood molding.
China/Hong Kong is also a major supplier of other value-added
wood products, but consisting primarily of statues, ornaments,
and frames of wood. These countries are expected to remain the
leading U.S. suppliers, with increased shipments, in fiscal 1998.
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