PORT ANGELES — A spike in demand for wood products in China has driven up exports from the North Olympic Peninsula, a Merrill & Ring official told Port Angeles Regional Chamber of Commerce members Monday.
Paul Stutesman, vice president and general manager of Merrill & Ring of Port Angeles, said 65 percent of the logs being shipped overseas are bound for China.
“China is, as they say, red hot,” Stutesman told a crowd of about 80 business people at the Port Angeles CrabHouse Restaurant.
“We get calls from three or four people a week wanting to buy logs from us. Somebody’s got a friend who’s related to somebody in China and they want to buy logs.”
Stutesman said the rise in Chinese demand has been “astronomical” within in the last 12 to 15 months.
The phenomenon has boosted the wood products industry on the North Olympic Peninsula, he said, because it’s allowed for timber harvests that wouldn’t be happening otherwise.
“It’s a bit of a gold rush mentality right now,” Stutesman said.
“I don’t know when it will change, but let’s hope it doesn’t.”
The Chinese government recently announced a plan to build 35 million affordable-housing units in the next 5 years — 10 million units this year alone, Stutesman said.
“The wood that’s going there . . . is primarily for forming material that they use to make the concrete housing units, also for packaging and pallet material,” Stutesman said.
Stutesman said it’s easy to tell which logs are going to China because they have to be debarked. Logs going to South Korea do not.
With so much demand in China, Stutesman said exports from the North Olympic Peninsula could double this year.
For most of the last decade, Japan was the only major player in log exports from Washington. That has changed.
“About 65 percent of the logs [from Port Angeles Harbor] are going to China right now and 35 [percent] to Korea,” Stutesman said.
“That jump is pretty astronomical.”
Logs going to South Korea are trucked to the Port of Tacoma and shipped on container vessels.
“We have been exporting logs out of Port Angeles for the last five or six years to Korea, and they’ve all been going by container,” Stutesman said.
Just as China’s demand for logs has skyrocketed, the demand for new homes in the U.S. has fallen.
“This export log business is giving us a chance to get our cuts back up to normal,” Stutesman said.
“It’s given us good returns to the investors, created some jobs in the community and revenue for the Port of Port Angeles.”
The price of a container voyage has dropped from about $2 million to between $1.2 million and $1.4 million per voyage during the last three years.
“That allows us to bring vessels here to the port and be more than competitive with the container business,” Stutesman said.
The Port Angeles Regional Chamber of Commerce stamps a certificate of origin for Merrill & Ring saying that the logs came from the Peninsula.
Grant Munro LLC also exports logs to China, Stutesman said.
After the March 11 earthquake and tsunami in Japan, Merrill & Ring was forced to put its business there on hold. Most of Merrill & Ring’s customers were centered in the northeast ports where the devastation occurred.
“It’s a very tragic situation for that part of Japan, and actually all of Japan,” Stutesman said.
“What will happen in Japan? I don’t expect too much near-term growth in log exports.
“When the Kobe earthquake came [in 1995], it took about a year, and this is much more devastating to the whole infrastructure there.”
Along with the decline in log exports, Japan is also closing its sawmills, Stutesman said.
“Japan continues to use more finished products, more European lumber, more Russian lumber, so it will probably not develop into too much log exports,” he said.
Merrill & Ring has an agent in Shanghai, China, which is where most of the logs exported from the Olympic Peninsula are bound.
Established in 1885, Port Angeles-based Merrill & Ring owns 55,000 acres of timberland in Washington, 10,000 acres in British Columbia and 8,000 acres in New Zealand.
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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.
