Size matters: B.C. lumber sales to China suffer - B.C. not cutting export wood to lengths that the Chinese prefer
SHANGHAI — British Columbia has only a small slice of the growing Chinese lumber market because most forest companies are shipping lumber cut to North American — not Chinese — specifications.
Distributors, sawmillers and lumber remanufacturers alike say they love Canadian wood and would buy even more of it if they could get it in the lengths they prefer.
“For B.C. lumber into China, the greatest issue is length,” Ken Cao, deputy manager of one of the country’s major wholesale distribution companies, China National Building Materials, said in an interview at the company’s warehousing facility on the outskirts of Shanghai.
CNBM has built a massive new facility at Shanghai’s new Taicang port with the space to hold much more inventory of B.C. wood.
China’s demand for wood products is growing along with its economy but forest-rich Canada accounts for only 11 per cent of China’s lumber imports. Russia accounts for 25 per cent and more than half China’s log imports.
The B.C. government and trade association Canada Wood have been trying to turn that around by promoting construction techniques that use dimension lumber sized to the North American market.
Cao said there is a place in China for North American grades — buyers cite certainty of delivery and high quality standards as reasons they buy B.C. wood — but demand is growing faster in wood sized for the existing Chinese market.
Cao made the comments while hosting a tour by B.C. Forests Minister Pat Bell and leading forest industry executives.
State-owned China National Building Materials is the largest importer of B.C. wood. It has been described as China’s Home Depot.
Cao said the issue over length comes down to the difference between Russian wood and B.C. wood. The Chinese are accustomed to Russian logs which are cut to metric lengths, usually four metres long. The lumber fits applications specific to China, like the distance between supports in Chinese scaffolding.
B.C. Interior sawmills cut to meet construction demands of the U.S. housing industry. That lumber typically comes in eight-foot and 16-foot lengths, meaning the boards are not long enough or have to be re-cut in China back to 13.1 feet, the equivalent of four metres.
It’s not that B.C. isn’t selling wood into the Chinese market. Cao said shipments this year are approaching one million cubic metres of lumber. But they could be higher. A lot higher.
“If we can have Chinese sizing here, I would conservatively say the volume could increase by five times to 10 times,” Cao said. “By way of comparison, China takes 20 million cubic metres at a minimum of Russian logs every year. And all those logs come in to China at four metres long. So the end users automatically follow that length, four metres. So that’s the practice in China, everyone takes that length.”
He is not the only one wanting B.C. to treat China as a market on its own, rather than a place to sell excess two-by-fours.
Forest products manufacturer Beijing Ouyahuasen executives said in interviews that they need to be flexible themselves in getting the right lengths and sizes to their customers. China does not have standardized lumber sizes, said company head Zheng Jinshu, and if Canadian producers cannot be flexible in turn, it leads to more waste in the remanufacturing process. And in China, where margins are thin, waste can mean the difference between profit and loss.
In the southern province of Fujian, where the Putian Standard Wood Corp. has invested in a computerized sawmill using European technology, principal Jinliang Wu said the demand for sizes to suit the Chinese market was a factor in embarking on the $50-million sawmill venture. The mill imports its logs from B.C. “The current three grades of lumber [sold by Interior producers] are just not suitable for the Chinese market,” he said. “If B.C. sawmills are to survive [by diversifying into overseas markets] the only option is to make other grades.”
B.C. producers are responding to what they are hearing, but face technical issues in changing over to new dimensions, said Don Kayne, vice-president of wood products sales at Canfor Corp. Canfor leads Interior companies in penetrating the Chinese market. “There are a lot of options we are exploring,” Kayne said, noting that within the last 50 days Canfor has begun cutting different sizes for the Chinese market.
He said the Interior B.C. industry, badly battered by the U.S. housing collapse, is rebuilding itself to become more of a global player.
“When we do come back, we do not want to be so reliant on Imperial sizes,” he said. “We are trying to give our Chinese customers the product they want so there will be less waste. But we also have to work with them so they understand the benefits of those new products; that they recognize the value. In other words, we want to get paid for it.”
Forests Minister Bell said he has been aware of the issue over lumber sizing for about a year.
“I think there is a market for the sizes we are producing today. But I think what you are hearing and what I am hearing is that there is more market there that we are currently not taking advantage of for other dimensions, in particular metric sizes.”
He said B.C. producers are beginning to see the Chinese market as something that is long-term, rather than as a place to sell low-grade lumber while waiting for the U.S. housing market to return.
Coastal producers, who have been cutting metric sizes for the Japanese market, are already making the switch to Chinese sizing: the Teal-Jones Group and Western Forest Products are both selling hemlock and fir into the Chinese market cut to Chinese specifications.
Western vice-president Bruce St. John said the company’s shipments have quadrupled over the last four years selling three product lines: lumber for concrete forms, wood for remanufacturing into high-value products such as windows for Italy, and landscaping products for the domestic market.
“The market is huge,” St. John said.
Teal-Jones co-owner Dick Jones said 40 per cent of the company’s whitewood production is going to China. Its hemlock is selling for a premium because it can be reused for construction forms more often than other species. He said Teal-Jones is aiming at the construction end of the market, but not to sell wood-frame houses. The market for scaffolding and construction forms alone is huge, he said.