The Associated Press
LONGVIEW — A small boost in domestic housing starts and China’s growing demand for lumber are giving Western producers encouragement for the new year.
“We’re hopeful that we’ll be able to run our mill in Longview full time in 2011,” Doug Reed, vice president and general manager of Tacoma-based Simpson Lumber Co., told The Daily News of Longview.
The Western Wood Products Association reported Monday that lumber production in the West was up 7.9 percent through the first 10 months of the year compared to 2009.
Prices have risen to an average of $274 per thousand board feet in November, about 15 percent higher than last year, reports Random Lengths, a Eugene, Ore.-based forest products trade publication.
Both prices and production have plummeted in the recession because of drastically lower construction.
Exports to China are still a tiny fragment of the market. China takes 106 million board feet a year, just 1 percent of total western U.S. production.
But Random Lengths says China’s purchases from U.S. mills more doubled over the year through September, and China has increased its overall lumber imports by 128 percent.
Analysts say that’s the first big jump in years in lumber demand from the world’s most populated country, and could be long-lasting.
“The China thing is the big talk among producers in Western Canada and the Western U.S.,” said Jon Anderson, Random Lengths’ publisher.
Anderson said that while Chinese demand has helped, it’s not the biggest factor in stabilizing prices.
“This decline has lasted long enough that the producers have downsized to equal demand levels, so you get some price firmness out of that,” he said.
Reed said Simpson has curtailed operations for fewer than five weeks at its Longview mill this year, far better than the 13 1/2 weeks in 2009, the industry’s worst year since World War II. Simpson hopes to avoid any curtailments next year, he said.
Simpson has 97 mostly full-time employees in Longview. It also has four mills in Shelton, one in Tacoma, one in Georgia and one in South Carolina. The company has 1,302 employees nationwide, including its door division and pulp and paper operations.
Simpson’s Longview mill doesn’t have a dry kiln, and trade agreements prohibit exporting green wood to China, Reed said. Still, he said the increased Chinese demand is good for all producers.
Log exports to China also have doubled and tripled over the year at West Coast ports, largely because a new Russian tariff has made U.S. and Canadian logs more competitive, The Daily News said.
The U.S. housing market is still the biggest driver of lumber sales, and producers expect it will stay sluggish the next few years, Anderson said.
“I don’t think anybody’s got any hopes for a significant upswing of housing,” he said.
Housing starts nationwide are expected to rise to 655,000 in 2011 — a 40 percent increase from 2009 — and to 970,000 in 2012, the National Association of Home Builders reported.
But that’s far short of the 30-year average of 1.6 million starts. Analysts say full recovery of the housing market is at least three to five years away.
