When researching the global supply and demand for lumber and lumber products, I was not surprised to note the dominant role that Chinese production and trading activities played on the global pricing and distribution structure. East Asia in general was a surprising market, however, and for reasons that were somewhat enlightening.
General information about global lumber supply and demand is difficult to come by. Oftentimes, the most current data I’m seeking is lagged by over a year. I’ll admit I’ve not been tracking data for very long now, but the conclusions one can draw from basic analysis is eye-opening.
I would have been quite surprised, for example, to find that Vietnam is the world’s leading exporter of Wooden Furniture and parts, and has been since 2006. It is no surprise that the United States is the leading importer of these products, and has been a worldwide leader for quite some time. The ITTO (International Tropical Timber Organization) has their 2009 Annual Report available here.
The localized Asian market is predictably dominated by Chinese activity on both the import and export end, but Japan and Malaysia are dominant players as well. Malaysia is a world leader in export activity, and Japanese imports of finished products are annually among the highest in East Asia. At Specialty Lumber Solutions, we deal predominately with South American imported lumbers, but the activity in Asia, due to its sheer volume, makes it important to note for future world supply and demand fluctuations.
As China attempts to cool its overheated economy (or not–love that central planning!), the rest of the world sits and waits. The Chinese are divesting in the US Dollar, and the global trade imbalances the US is already facing will become inflationary over time as the global markets react to trade activities. In the meantime, a weakened dollar is good news for our Canadian and Mexican neighbors, all the while pointing toward the inevitability of US inflation to reflect the weakened currency and higher commodity pricing across the board.
As current economic trends necessitate, I will attempt to provide a very basic analysis on a periodic basis concerning these and other trends. Comments are always welcome.