Slowdown in exports drag domestic log prices in Western US

SPOKANE (Scrap Monster): The US log export volumes to Asia plunged sharply by nearly 25% during 3Q/2014 when compared with the previous quarter. The total log exports to Asian countries fell sharply to touch their lowest level in two years. The shipments to China witnessed drastic decline of 32% during the quarter, posting its lowest level since Q1/2013.

The log exports to Asia had been constantly on the rise during past several quarters. The shipment volumes had reached an all-time high of 2.5 million cubic metre during the second quarter of 2014. Log exports volumes to major Asian destinations such as China, Japan and South Korea doubled over the past four years. The spiraling export demand resulted in sharp rise in sawlog prices. The average sawlog price in Western US sawmills had more than doubled in 2Q/2014 when compared with 2009 levels.

However, the slowdown in exports has put pressure on domestic log prices in the region. Log shipments from the US to China witnessed sharp decline during 3Q/2014 mainly on account of weaker demand from the country’s housing sector. In addition, huge log inventory levels within China led to lack of new orders from Chinese importers.

Domestic log prices dropped almost 10% during the quarter. The average price of Douglas-fir sawlogs in the 3Q/14 were down almost 9% when compared with the prices during Q1/2014. The prices then had touched eight year record levels. According to industry experts, the price decline in logs is likely to be short-lived. The higher production level by regional sawmills have successfully arrested further price declines during Q4/2014.