Commodity - Softwood lumber

European exporting countries
European importing countries

At the close of World War II there appeared to be a very wide gap between available supplies of softwood lumber^* and immediate needs. It was expected that as needs came to be assessed on a more realistic basis^**, supply would be seen to be in approximate balance with effective demand. The latter part of 1948 marked the beginning of this transition period, as was indicated in the softwood lumber report given in UNASYLVA, Vol. III, No. 1. Events of early 1949 have confirmed the trend. This holds true also for most other commodities.

^* The term lumber, as used by FAO, covers the following categories of sawn wood: planks, boards, deals, battens and large timbers both rough and planed; squares; flooring; laths; singles; and boxboards. Railway sleepers (crossties) are excluded. Wherever possible, adjustments are made to national statistics which do not conform to this definition; if adjustments are not possible, the difference in coverage is noted where known. Differences in coverage may account for many of the discrepancies between figures quoted by FAO and figures shown ill other sources.

^** Needs as measured by governmental and business expectations, not real requirements for social progress.

On a world basis, supplies in 1948 of softwood lumber available for international trade actually appear to have been in excess of effective demand, owing to the inability or unwillingness of many countries to make large lumber purchases in hard currency areas. In addition, demand was affected by the reluctance to buy which always marks periods when it is anticipated that prices may take a downward trend.

PRODUCTION AND TRADE IN SOFTWOOD LUMBER

Country			Production		Imports		Exports
			1948	1947	1948	1947	1948	1947
			Thousand standards
North America
	Canada		1 2,590	1 2,700	10	30	1,248	1,378
	United States		2 14,200	2 14,150	836	556	240	591
Europe
Importing Countries
	Belgium		26	3 30	85	100	...	1
	Denmark		62	51	144	106	4 38	*
	France		642	697	150	147	58	42
	Germany:
		Bizone	1.032	832	...	-	159	249
		Fr. Zone	249	260	...	...	159	249
	Greece		11	26	38	12	-	-
	Hungary		5 7	6 5	7 64	61	...	...
	Ireland		6	10	31	25	...	-
	Italy		153	214	7 64	61	...	...
	Luxembourg		3	3	...	1	...	*
	Netherlands		3	2	320	237	...	-
	Switzerland		268	247	47	22	...	10
	United Kingdom		8 75	239	884	1.195	...	7 2
Exporting Countries
	Austria		269	231	...	*	104	9 35
	Czechoslovakia		...	583	...	-	70	125
	Finland		810	740	...	0.2	489	445
	Norway		10 280	275	15	30	10	7 7
	Poland		561	376	...	5	37	-
	Sweden		2 976	1.200	18	27	545	416
	Yugoslavia		...	...	...	...	101	52
Near East
	Turkey		26	25	...	*	...	7

... Not available.
- None.
*Less than 500 standards.
1 standard = 4.672 m³(s) or 1980 board feet
¹ Includes hardwood lumber production which in 1947 was about 337,000 standards.
² Estimated
³ Includes 9,000 standards produced in Germany.
⁴ January-June only
⁵ January-March only
⁶ January August only
⁷ May include hardwood lumber
⁸ Incomplete. Production from domestic sawlogs only. In 1947 the corresponding figure was 67,000 standards.
⁹ Includes prefabricated houses
¹⁰ January-September only. May include some hardwoods.

A weakening of prices for lower grades was evident at the end of 1948 and definitely marked during the beginning of 1949. The better grades of lumber have, however, continued to be in good demand and by all reports prices have not been appreciably lowered.

The table on page 151 shows the 1948 information available on production and trade in softwood lumber in North America and in Europe, firm data for other areas not being available. Softwood lumber production in North America as a whole declined somewhat in 1948 from 1947 levels; but at the same time production in many European countries such as Austria, Finland, Germany (Bizone), and Poland was increasing. Production in Italy decreased considerably.

Imports into the United Kingdom in 1948 appear to have been much lower than in 1947, while imports into the United States of America and into prominent European importing countries such as Denmark and the Netherlands show a marked rise.

Total lumber exports from North America dropped considerably in 1948. U.S.A. exports were 50 percent below the 1947 level. (Plywood exports dropped 74 percent.) Exports from Austria, Finland, Sweden, and Yugoslavia showed definite gains.

Some notes on the softwood lumber situation in individual countries follow.

CANADA

Production: The latest official reports of total softwood and hardwood lumber production estimates give figures of 2.59 million standards in 1948 and 2.7 million standards in 1947. Production in 1948 increased by 11 percent over 1947 in Alberta and by 2 percent in British Columbia; production in all the other provinces declined. Production estimates for January and February 1949 for all provinces except British Columbia indicate a decline in production for these two months of 3 percent under the corresponding period of 1948. It is assumed that this decline is occasioned principally by cuts in European sales.

Trade: Total softwood lumber exports in 1948 declined 130,000 standards from 1947 levels. Exports to the United States, however, were 824,000 standards, contrasted with 543,000 standards in 1947. Exports to the United Kingdom, which totaled 542,000 standards in 1947, fell to 277,000 standards in 1948, and exports to other important destinations also dropped. The problem of rapidly shrinking international markets for Canada's forest products merits special action.

The total 1948 softwood lumber exports included 429,000 standards Douglas fir, 408,000 standards spruce, 136,000 standards hemlock and 95,000 standards pine. The volume of red cedar shingles alone totaled 80,000 standards.

UNITED STATES OF AMERICA

Production: Latest reports from the United States Department of Commerce, which take into account revisions necessitated by the publication of census data, estimate production of both softwood and hardwood lumber to have been 17.2 million standards in 1946, 17.9 million standards in 1947, and 18.2 million standards in 1948. For softwood lumber, census data indicate that 1946 production was 13.07 million standards in 1946, and 14.15 million standards in 1947. Industry estimates place 1948 production at 14.20 million standards. Almost all the 1947 increase took place in the western states.

Domestic requirements in 1949 for softwood and hardwood lumber for construction purposes are expected to be 3 ½ percent lower than in 1948, 11.78 million standards against 12.17 million standards. A decline in production during 1949 may therefore be expected. This expectation appears to be supported by data collected by the National Lumber Manufacturers Association (NLMA) for the first eighteen weeks of 1949, which show that production by southern pine mills declined 9 percent from the figure for the same period of the previous year. West coast mills declined 13 percent, and western pine mills declined 19 percent. Since the mills reporting to the NLMA tend to represent the larger and more stable producers, total production may be still lower than these percentages indicate since many non-reporting marginal mills have been forced to close.

Stocks: NLMA data for stocks in the hands of Southern pine, west coast, and western pine mills as of 7 May 1949 indicate that stocks are more than 40 percent higher than a year previous for the same mills. Unfilled orders in the hands of these mills were about 19 percent lower than a year earlier.

Prices: U.S. WHOLESALE PRICE INDICES (1939 = 100)

	Item
	1948			1949
	Jan.	June	Dec.	Jan.	Feb.
All Douglas fir lumber	359	391	371	360	361
All Southern pine lumber	361	341	330	320	313
All Western pine lumber	305	333	341	341	341
All lumber	330	336	328	321	318
All other building materials	214	218	223	223	223

Source: U.S. Department of Commerce, Office of Domestic Commerce, Lumber Industry Report, Washington, D. C.

Latest reports for the month of March indicate that most prices have remained steady; a few have gone up and a few have declined still further.

Regional reports to the Department of Commerce for February and March 1949 indicate that prices for higher grades are firmer than prices for lower grades.

Trade: Quota controls over lumber exports have been removed from all items although licenses may still be required in certain instances. Efforts are being made to secure additional export trade both on government and private levels, as the decline in business is causing serious concern.

Softwood lumber exports in 1948 totaled 240,000 standards of which 70 percent were Douglas fir, 23 percent Southern pine, about 3 percent Ponderosa pine, and the remaining 4 percent other softwoods. In 1947 softwood exports totaled 592,000 standards.

European exporting countries

AUSTRIA

The lumber industry is said to be working at about one-third of its normal capacity and no change is expected in the immediate future. Attempts are being made to regain the normal German export market which is of particular importance to the bordering districts, but this has not been possible on scale.

Private building activity remains somewhat curtailed. Domestic prices are controlled.

FINLAND

At the opening sales for sawlogs for the 1948/49 season, prices showed a downward trend. During 1934-38 it is said that stumpage prices averaged about 71 percent of the cost of sawlogs at the mill, whereas now it is estimated that stumpage prices represent about 36 percent of the total cost of sawlogs, which is due to the rise in transportation and other costs.

Trade: Exports to the United Kingdom, the U.S.S.R., Denmark, the Netherlands and Belgium accounted for more than 75 percent of total 1948 lumber exports, the countries being listed in order of their importance.

A trade agreement has been concluded with the United Kingdom for delivery in 1949 of 190,000 standards of lumber.

Prices: An agreement with the United Kingdom was concluded in the latter part of April 1949 after lengthy negotiations. The new prices are on the average 4-5 percent lower than those prevailing during 1948. Prices of the lower grades went down by 7-15 percent. The prices of most of the better grades went down slightly or not at all, although some of the most valuable grades advanced somewhat.

In Finland the result of these price changes will affect adversely high cost mills unfavorably situated. If the exchange rate remains unchanged, the only way to avoid losses is reported to be reduction in costs.

NORWAY

It is believed possible for domestic production to meet the needs of the building program and still leave small quantities available for export. Domestic prices are under strict control and are about half the export prices.

POLAND

Production increased over 50 percent in 1948 as compared with 1947. Production was highest in the newly acquired territories which contain about half of all the woodworking industries.

Trade: The year 1948 marked the entrance of Poland into the lumber export market during the postwar period. It is reported that plans for 1949 call for an increase in lumber exports to 50,000 standards, as compared with the 37,000 standards exported in 1948. The government has announced the policy to export wood in the most highly manufactured form possible.

SWEDEN

At the important forest auctions in October 1948 it is reported that the prices obtained for sawlogs were higher than those for the preceding year. This may be due to the feet that more of the attractive large dimension sawlogs were offered for sale. On the whole, average stumpage prices for all roundwood seemed to have remained at the 1947/48 level.

Consumption: The government's four-year plan foresees increased timber exports. The housing program calls for a steadily decreasing percentage of buildings made of wood and a larger percentage made of brick. For this reason domestic consumption of lumber, which totaled 700,000 standards in 1947, fell to 550,000 standards in 1948.

Trade: Total 1948 exports of 545,000 standards were about 20 percent higher than 1947 exports. The destinations showing increases over 1947 levels were Australia, Egypt, Germany, Greece, Ireland, Netherlands, Union of South Africa, and the United Kingdom.

Prices: As a result of negotiations with the Swedish Wood Exporters Association concerning 1949 shipments, the British Timber Control came to an agreement with respect to prices for the purchase of 225,000 standards in normal British specifications if available from sellers. After 1 July 1949 both parties were free from any price commitment. The new prices are £42 10s. for 7" u/s redwood battens, the 1948 price being £43; £49 10s. for 7" redwood boards, the same as the 1948 price; and £41 10s. for 7" whitewood battens for which the 1948 price had been £42 10s. It is said that the 1949 price list for British specifications is equivalent to an average reduction of about 4 percent from 1948 prices. As in the Finnish-British agreement, the price list agreed on is a step towards restoring the spread of prices that previously existed between the higher and lower grades of lumber.

European importing countries

BELGIUM

Demand: In 1948 only half of the set building program goal of 30,000 dwellings was reported to have been attained; the goal for 1949 is again 30,000 dwelling units. Reduced export levels lowered the demand for lumber for packaging. Consumption of all lumber in 1949 is expected to approximate 605,000 standards, of which about 240,000 standards are to be from domestic production.

Trade: Because of the reduction in demand, 1948 imports were only 85 percent of those of 1947. As the U.S.S.R. is able to deliver lumber of good joinery quality in dimensions which are difficult to obtain in large quantities from Sweden, importers are anxious to conclude satisfactory contracts with the U.S.S.R.

DENMARK

Consumption in 1948 was smaller than anticipated. Shipyards were reluctant to make new purchases and egg shippers were reported making shipments in paperboard packages. Stoeks, which had been low in 1947, increased about 50 percent but were still 30-40 percent below prewar levels. In 1949 consumption is expected to be at 1948 levels.

Trade: For seven years purchasers were required to purchase their entire supplies of Finnish lumber from specified Finnish mills. In the last quarter of 1948, 25 percent of the Finnish imports were freed from quota purchases and importers could purchase from any mill they chose. Distribution of 75 percent of imports from all sources had formerly been controlled but this quota is now reduced to 60 percent.

Trade agreements for 1949 provide for the import of 55,000 standards from Finland, in addition to 14-15,000 standards which were undelivered in 1948, 45,000 standards from Sweden, and 10,000 standards from the U.S.S.R., i.e. a total quantity of 125,000 standards. Imports in 1948 amounted to 143,300 standards.

FRANCE

Prices: Roundwood prices continued to increase during the last quarter of 1948. While some of the price rises may be due to capital investments, expectations of a future rise in wholesale prices and in lumber prices may have supported the trend. Official basic prices of lumber were raised some 7 percent in October 1948. By the end of 1948 lumber prices seemed to have become stabilized and this continued throughout the first quarter of 1949

Trade: During 1948 more than 70 percent of all softwood lumber imports came from the French zone of Germany, from which, in addition, softwood sawlogs were obtained in quantity. As long as imports from Germany continue on their present scale, there will be small all interest in obtaining large quantities from other sources.

ITALY

Demand: Private and public building activity in Italy remained at a low level during the last quarter of 1948. In the whole of 1948 softwood lumber consumption is estimated to have been about 35 percent of the prewar level. There was a rising demand for the better grades but lower grades were difficult to sell.

Trade: More than three-quarters of all lumber imports were obtained from Austria through bartering arrangements. It is expected that barter deals will be terminated shortly. Small quantities of U.S.S.R. lumber reached the Italian market in 1948

Trade agreements for 1949 provide for the import of 43,000 standards of softwood lumber from Yugoslavia, 32,000 standards from the U.S.S.R., 16,000 standards from Germany, and 2,000 standards from Sweden.

NETHERLANDS

Demand: In 1948 housing construction reached 35,000 units, although plans called for 70,000 units.

Trade: Sweden, Finland, Germany, and Czechoslovakia, in order of importance, provided some eighty percent of the softwood lumber imported during 1948. Of the 32,000 standards of lumber covered by the trade agreement with the U.S.S.R., some 15,000 standards arrived during 1948. This trade agreement expires in June 1949 and may be renewed, calling for larger quantities.

A new trade treaty with Austria specifies the delivery of 14,000 standards during 1949.

SWITZERLAND

Demand: Consumption of lumber in 1948 declined slightly, but appeared to be about normal. Building activity for the year was some 60 percent higher than in 1947. A shortage of the higher grades of lumber persisted throughout the fourth quarter of 1948 and demands were difficult to satisfy.

Prices: Strict government controls over production distribution and prices were removed on 1 October 1948 and replaced by a voluntary agreement between producers of roundwood and sawmill organizations.

Trade: The French zone of Germany supplied more roundwood to Switzerland in the last quarter of 1948 than had previously ever been imported during a whole year from that source. A trade treaty concluded with Yugoslavia calls for the export of some 2,000 standards of lumber in 1949. A new trade treaty has also been concluded with Czechoslovakia, involving the export of about 3,000 standards of lumber. It is expected that softwood lumber imports in 1949 will not exceed 11,000 standards.

UNITED KINGDOM

The announcement of the lifting of controls on almost all hardwood lumber consumption in March 1949 gave impetus to rumors of similar action pending with respect to softwood lumber, a subject of considerable comment in the trade.

Demand: During the fourth quarter of 1948 there was considerable building activity and the demand for wood for export packaging continued strong. In 1949 the proposed housing program will be curtailed.

Prices: The last quarter of 1948 saw no change in the prices paid for imports. The important 1949 agreements with Finland and Sweden have already been discussed, and as indicated, resulted in lower prices.

Trade: A striking feature of the 1948 import picture was the reduction of North American softwood lumber imports received. While actual imports were cut in half, purchases were cut 85 percent. Total 1948 imports declined 28 percent from the 1947 level.

Arrangements have been made to obtain in 1949 imports totaling 225,000 standards from Sweden, 190,000 from Finland, and 110,000 from Canada including unshipped balances on old contracts. In addition it is believed that some 160,000 standards may be obtained from Yugoslavia and some 70,000 standards from Poland. Additional supplies are due from Rumania, Germany, and Brazil. The 1949 purchases in Canada have to date only been for specialties; further purchases have yet to be made. The quantities which may be received from the U.S.S.R. still cannot be estimated.*

* These are now reported to be over 100,000 standards.

The report of the Keith Price Committee estimated that 1949 requirements of softwood lumber and sawlogs would be around 1,600,000 standards, but conditions have changed since the preparation of the report. Domestic fellings of conifers have been cut 50 percent; effective requirements are much lower. It is now believed that imports in 1949 will total about 1,100,000 standards of lumber and sawlogs. If this import level is to be attained, considerable further purchases must be made.^** There is considerable agitation by the trade against the low level of imports from Canada. If the "dollar difficulties" can be resolved, Canada will remain a dependable source of softwood supplies.

^** The latest ECA authorizations total $10 million for the purchase of about 28,400 standards from the United States and 40,600 standards from Canada. In addition, $2.26 million and $670,000 have been authorized for purchase of hardwood lumber and softwood plywood.