Canadian softwood lumber exports to China establish new highs in the face of renewed demand from the U.S.
January 20, 2014
In June 2011 the Vancouver Canucks lost the Stanley Cup finals to the Boston Bruins. But as a consolation prize to the good people of western Canada, that month set a record for shipments of softwood lumber to China -- 840k cubic meters. It was the culmination of an incredible run of growth: from June 2005 to June 2011 Canada averaged 104% year-over-year growth in softwood lumber exports to China. This was an important pivot point in Canada’s softwood lumber export markets, from south to east. China started with 0.4% of Canada’s softwood lumber exports in June 2005, and stabilized at 28% in June 2011. Since then, however, exports to China have been relatively flat (though volatile), averaging 628k cubic meters per month, but never breaching the 800k mark.
Until October 2013, that is.
Strong exports over the July-September period led to a new record high in October, with a truly impressive 860k cubic meters of softwood lumber shipped to China. This brings total China-destined Canadian shipments for the first 10 months of 2013 up to 6.6 million cubic meters, also an all-time high.
Monthly Canadian softwood lumber exports to China (June 2005-October 2013)
This peak is likely driven by Chinese firms rebuilding inventory after a drawdown earlier in the year. It is highly unlikely that this new record represents a return to exponential growth – but it is reassuring, insofar as exports to the U.S. were also robust in October.
There is some concern that Canadian exporters could be hard-pressed to continue to serve an increasing China market once the U.S. returns to growth. However, so far in 2013 Canadian softwood lumber exporters have managed to increase shipments to both the U.S. (+14%) and China (+8%) simultaneously. Reaching new highs in our trade with China simultaneous to a U.S. recovery is good news for lumber exporters.