This is a release from Plum Creek:
Economic recovery is producing promising outgrowths for the Southern timber and lumber industry. Increasing demand and constrained supply globally are inciting a long-term rebound across the U.S., which is good news for Florida where timber resources are an important economic driver.
Plum Creek is tracking how these global market forces are quickly becoming a boon to Florida’s economy, especially in the Northeast region where Plum Creek holds significant interests in timber. USA Today recently covered the link between the housing market and the timber industry nationwide, as well as the effects of rising lumber prices and reopening sawmills on local economies in the Northwest U.S. These impacts stand to be even greater in the Southeast.
Rebounding demand is tied to recovery of the U.S housing market, which is surging toward pre-housing bust levels for housing starts. In March, builders started work on the most new U.S. houses in almost 5 years. Long-term demographic demand is projected to drive 1.5 million or more annual housing starts nationwide, and repair and remodel expenditures are predicted to dramatically improve over 2008–2012 levels. Growth in housing starts in Florida gives more cause for confidence. The latest reports from the National Association of Homebuilders show 2013 YTD housing starts in Florida up 68% over 2012.
Growing demand is also fueled by timber exports to China and burgeoning bioenergy markets domestically and globally. China’s economy is expanding at a continuous and stable growth rate, including increased demand for lumber products. China’s surge in housing needs has led to a jump in lumber and log exports to the country. North American lumber exports to China surged 17-fold to 3.5 billion board feet since 2006. These upward trends in China’s housing needs, plus limited alternatives, suggest sustained demand. Additionally, the bioenergy market is expanding in the U.S and abroad, and demand is emerging from the South with several mill projects underway.
At the same time, global lumber and timber supply is constrained. The Mountain Pine Beetle has decimated timber resources in Canada, the world’s largest exporter of timber. More than half the commercial pine in British Columbia, the largest timber-producing province, has been lost to the worst pine beetle infestation on record in Canada. The country’s output fell to 23.7 billion board feet in 2012 from a peak of almost 36 billion in 2004 – a 35% decrease. Eastern Canada is lowering harvest levels by 20% to achieve sustainable rotations. And while Canada has supplied up to 35% of the lumber used in the U.S. in the past, their market share will likely shrink below 25%. Simultaneously, after years of deforestation and illegal logging, domestic forests in China cannot meet the country’s demand.
In the end, timber recovery is good for Florida. The state’s 16 million acres of forestlands make timber a key economic driver. The annual economic impact has been steadily climbing toward the pre-recession height of $18 billion. Most recent data available from 2010 showed a 12% increase in total economic impact and 40% growth in industry jobs over 2009. These conditions are encouraging a growing and sustained market for this vital renewable resource in Florida.