The year 1951 was characterized for many countries by a speeding-up of special defense programs, a replenishing of stocks and, in some cases, the stock-piling of strategic materials.
All this was planned to come about without serious interference with civilian requirements. But in a number of countries it occasioned control measures which, directly or indirectly, affected the production, consumption, trade and prices of sawn softwood.
The extent of controls varied widely. In the United States they embraced different phases of merchandising and consumption, including prices, but in Canada they were kept to a minimum, although a governmental Department of Defense Production with relatively extensive powers was established.
The strong demand for sawn softwood that resulted from the Korean situation at the turn of the year 1950/51 led to the high prices which were maintained for most of 1951. There were slight declines in prices in North America in the summer, and an obvious reluctance on the part of a number of importers to accept prices quoted by North European exporters; but it was evident that only a profound change in the demand-supply pattern, resulting from a combination of high production, completion of stockpiling and a slowing down of consumption, would temporarily ease the situation. A shortage of sawn softwood has become axiomatic in the postwar years, but at the end of 1951 there appeared to be some indications that appetite was for the moment lessening.
By early December 1951 it seemed that the sawn softwood production for the whole year in the United States would be comparatively close to the level of 1950, and in Canada and Europe would possibly exceed that of the previous year. There were no signs of a serious slackening of consumption in North America, but those European importing countries which already decreased their purchases of sawn softwood, in 1951 still did not show any particular eagerness to re-enter business on a large scale. At the same time, the strongly improved supply position in the United Kingdom was creating a new situation in the European sawnwood trade.
Because of the large stocks apparently possessed by that country and the quantities purchased in 1951 which would carry over to the 1952 shipping season, the United Kingdom's total new import requirements for 1952 were estimated at only 650,000 standards. Importers would reportedly be allowed to make contracts for the first 350,000 standards at the beginning of 1952, a quantity representing only 25 percent of the country's total purchases in 1951; purchase of the remaining 300,000 standards would be permitted only later in the year.
For this reason it appeared that the opening of the 1952 season in Europe would be more subdued than a year before, and that prices would be the main topic of discussion.
Several factors tended to bolster the existing price level toward the end of 1951, the most important being the rise in log prices due to keen competition with pulpmills and even pitprop producers. In the State Forest auctions in Finland and Sweden during October and November, average prices were 60 to 70 percent above the 1950 levels, but in December there were some abrupt fluctuations. The importance of these cannot at present be clearly judged, but more recently a certain lack of trust in the maintenance of the level of sawnwood prices seems to have developed in the exporting countries. In many quarters the belief is held that a trend towards a buyer's market might cause exporting countries to decrease fellings in the present logging season and reduce their output of sawn softwood in 1952.
The timber trade can display remarkable flexibility and the efforts of trade circles will probably obviate any serious situation in the coming year. Since Canada can, if necessary, always come to the assistance of Europe and many other parts of the world, it will be interesting to watch future financial policies concerning dollar allocations.
Europe
Rising prices made importers in most European countries adopt a cautious attitude in concluding contracts for 1951. At the same time, the restrictive measures taken in the building industries of some of the importing countries, as a result of the scarcity of raw materials and high prices, together with increasing difficulties in financing timber purchases, had already foreshadowed a possible decline in the general level of civilian consumption of sawn softwood.
The increased stocks in most of the importing countries also contributed to the weaker buying, as there was no immediate need for replenishment. The buying by these countries for 1951 shipments practically came to an end in March 1951, after which month only insignificant purchases were made. The United Kingdom, however, and to some extent Western Germany, continued buying throughout the spring until the summer of 1951, at which time there were the first signs of hesitation to accept whatever was offered. The purchases effected by the United Kingdom during this period could be considered as covering requirements for the whole year and even for a part of 1952; they made it possible to envisage the raising of stocks of sawn softwood to a high level and the creation of a stronger position for buying for 1952.
By the summer of 1951 most of the exporting countries had disposed of practically all their sawn softwood available for export during the year, and the small quantities still on hand were mostly goods of inferior quality or unpopular dimensions, which did not attract importers, particularly at the prices asked.
From that time on the European sawn softwood market was practically dormant. Both importing and exporting countries were ready to wait and see what future developments would bring about. The new roundwood prices for to winter 1951/52 and for 1952, on which prices of sawlogs for the coming season would depend, were observed not without a certain anxiety by both parties. Importers seemed to be determined to resist the rising prices of sawn softwood, and exporters on their side watched the continuous rise of roundwood prices, caused mainly by competition with pulpwood and pitprops, with a feeling of uncertainty. There were in many cases indications that the prices which were expected to be paid for sawlogs already corresponded to the top prices paid for sawn softwood during the 1951 season. In the main exporting countries the small sawmills, which were not integrated with other industries such as pulp, paper or wallboard industries, seemed to be particularly anxious, as they had no means of making up eventual losses on sales of sawn softwood by obtaining higher prices for other products.
Consumption
Total consumption of sawn softwood in Europe increased in 1950 as a result of high industrial activity and at the beginning of 1951 appeared to be continuing on the same level. Civilian consumption showed some signs of declining, due to governmental restrictive measures and high prices. This falling-off, particularly in house building, seems to have been compensated by the increasing needs for industrial and military purposes, particularly packaging, and therefore total 1951 consumption may prove to have been high.
Production
A big boost was given to felling operations in most countries in the autumn of 1950, when it seemed apparent that the rise in timber prices would continue. While previously only sawlogs and pulpwood had been competing, the increased demand for pitprops and also for fuelwood brought in a new competitive element, which in countries where there was a shortage of forest labor may have had some adverse effect on the output of sawlogs, the targets set for which were not always reached. Fellings in most European countries however increased, and the total production of sawlogs was somewhat higher than in previous years.
The increase in sawn softwood production in the main exporting countries in the first six months of 1951, due to the extremely favorable market conditions, was further stepped up during the second half of the year, and available figures suggest that the total 1951 production in Europe will exceed the 1950 output, despite decreases in several countries. The changes in production appear in Table I.
Stocks
The heavy demand for sawn softwood during 1950 led to a substantial reduction in the stocks of most of the exporting countries, despite increased production. Simultaneously, stocks in most of the importing countries markedly increased, and were in general higher than a year before. This was chiefly a result of purchasing above normal requirements' in the expectation of even higher prices later on. Stocks in the United Kingdom showed a contrary development; they declined steadily and by the end of 1950 were only about half the quantity of a year before.
TABLE I. PRODUCTION OF SAWN SOFTWOOD (Thousands of standards)
|
|
1951 |
1950 |
||
|
January - June |
January - June |
January - December |
||
|
Total for Europe 1, ² |
4 400.0 |
4 200.0 |
8 180.0 |
|
|
of which: |
||||
|
|
Austria |
376.7 |
286.8 |
567.3 |
|
|
Belgium |
25.7 |
18.2 |
31.0 |
|
|
Denmark |
a 30.0 |
a 30.0 |
a 51.3 |
|
|
Finland |
551.0 |
508.0 |
874.8 |
|
|
France |
299.6 |
299.6 |
b 620.6 |
|
|
Germany (Fed. Rep.) |
836.8 |
793.2 |
1 679.3 |
|
|
Italy |
.. |
.. |
222.1 |
|
|
Norway |
.. |
.. |
b, c 343.9 |
|
|
Portugal |
.. |
.. |
a 128.0 |
|
|
Sweden |
.. |
.. |
1 199.7 |
|
|
Switzerland |
47.1 |
79.2 |
184.9 |
|
|
Turkey |
a 26.5 |
35.5 |
79.3 |
|
|
United Kingdom |
a 23.7 |
a 27.9 |
144.9 |
|
|
Yugoslavia |
1 172.1 |
234.0 |
415.6 |
1 Partialy estimated
² Excluding the U.S.S.R.
Source: ECE and FAO Statistics
a estimated figures
b preliminary figures
c including sawn hardwood
During the first half of 1951 the position of the United Kingdom showed a marked improvement, and was expected to improve still further as a result of arrivals of large quantities purchased for 1951. Other importing countries also strengthened their holdings by the arrival of large quantities of goods lying over from 1950.
Although little data were available on stocks in exporting countries at the end of 1951, it appeared unlikely that they could be as large as at the end of 1950, assuming that shipments of 1951 sales proceeded normally.
Imports
Imports of sawn softwood in 1951 substantially exceeded those for 1950, mainly due to the increase in the imports of the United Kingdom which more than compensated for the small declines in other European countries. The falling-off in the imports of Belgium, Denmark and France appeared due to the large stocks at the beginning of the season and the weakening in building activity.
While the bulk of 1951 imports into continental Europe came from the northern European countries, these exporters provided less than in 1950. Imports from eastern and central Europe, on the other hand, showed a marked rise; of particular interest was the resumption of large imports from Poland and Czechoslovakia into other continental countries, particularly into Belgium and the Netherlands. During 1950 such imports had mostly been insignificant.
United Kingdom imports from Canada and the northern countries increased, and in June 1951 Canadian supplies were already about five times those of the corresponding 1950 period. Imports from eastern European countries, and Yugoslavia, substantially declined; those from Poland, which were smaller in 1950 than in 1949, were expected to cease completely, and those from the U.S.S.R. and Czechoslovakia remained considerably below the previous year's.
Changes in sawn softwood imports by some European countries to the middle of 1951 appear in Table II.
TABLE II. EUROPEAN SAWN SOFTWOOD IMPORTS (Thousands of standards)
|
Importing countries |
1951 |
1950 |
|
|
January - June |
January - June |
January - June |
|
|
Belgium |
49.0 |
56.4 |
151.1 |
|
Denmark |
57.7 |
58.2 |
229.2 |
|
France |
15.6 |
26.8 |
58.9 |
|
Germany (Fed. Rep.) |
51.4 |
47.0 |
151.5 |
|
Greece |
34.2 |
34.0 |
73.6 |
|
Ireland |
27.5 |
32.1 |
76.1 |
|
Italy |
101.5 |
92.0 |
231.7 |
|
Netherlands |
177.1 |
144.7 |
430.1 |
|
Switzerland |
9.9 |
4.3 |
12.0 |
|
United Kingdom |
562.2 |
226.3 |
770.6 |
|
Other West European countries |
19.1 |
30.2 |
41.9 |
|
TOTAL |
1 105.2 |
752.0 |
2 220.0 |
Source: ECE and FAO statistics.
Exports
The increase in sawn softwood exports from most of the exporting countries continued from 1950 into 1951. The market conditions remained on the whole favorable, and the total 1951 exports may therefore reach and even exceed immediate prewar exports.
TABLE III. EUROPEAN SAWN SOFTWOOD EXPORTS (Thousands of standards)
|
Exporting countries |
1951 |
1950 |
|
|
January - June |
January - June |
January - December |
|
|
Austria |
272.9 |
229.1 |
475.5 |
|
Finland |
225.5 |
187.4 |
657.0 |
|
France |
107.4 |
49.5 |
130.5 |
|
Germany (Fed. Rep.) |
18.4 |
21.6 |
47.3 |
|
Norway |
8.2 |
9.0 |
16.9 |
|
Sweden |
277.6 |
278.4 |
747.2 |
|
Yugoslavia |
66.3 |
65.1 |
157.3 |
|
Other West European countries |
24.2 |
13.2 |
16.5 |
|
TOTAL |
000.5 |
853.3 |
2 250.0 |
Source: ECE and FAO statistics.
The falling-off in continental demand for northern sawn softwood did not affect total sales and exports, as the United Kingdom offered a practically unlimited market until the summer of 1951, and overseas markets - mainly South America, South Africa and Australia - were also strong, and sales to these areas had in most cases exceeded the 1950 figures.
In short, the northern exporting countries increased their exports to the United Kingdom and overseas, whereas exports from the central and eastern European countries were directed more to continental Europe.
Available figures for European exports (excluding the Russian bloc) during 1950 and the first half of 1951 are shown in Table III.
Prices
Despite the strong reaction of importers, prices continued to rise throughout the second quarter of the year, although less steeply than in the first. This can, however, be considered as partly due to the traditional increase of prices for the quantities remaining after the bulk has been disposed of, and should therefore not be considered as indicative of the general price level.
The question of prices has been widely discussed in the trade press all over the continent, but the final consumer reaction still remains to be seen. It was feared, in most importing countries, that an increase in retail prices caused by the arrival of more expensive goods might have undesirable effects on future consumption Such increases in retail prices would reflect not only the higher export prices, but also the rises in freight rates and handling costs, all passed on to the consumer.
Table IV gives average f.o.b. prices of Swedish sawn softwood to demonstrate the price development from January 1949 to August 1951, and the slowing down of the price rise from April 1951 onwards.
Source: Kommersiella Meddelanden, Kommerskollegium, Stockholm.North America
CANADA
Consumption
Residential construction in Canada began to show a downward trend about June 1951. Statistics for unit completions to the end of June were still ahead of the 1950 figures, but houses started totalled 38,500 compared with 42,150 for the corresponding period of the previous year. To the end of August new units started had fallen off about 16 percent compared with 1950. The number of immigrants during the first half of the year, almost 80,000, already exceeded the total immigration figure for 1950 (73,700), and the housing situation was becoming tight. In autumn 1951, the Canadian government relaxed some restrictions, giving special emphasis to the construction of houses urgently needed in the defense program, but it was believed that only somewhat over 85,000 homes would be provided in 1951, against 91,000 in 1950.
As a contrast to residential building, there was an increased rate of heavy construction, made up in large part of defense production contracts. The cumulative figure for construction during the first eight months of 1951 was about Can. $1,693 million, as compared with about $882 million in 1950. The trend continued in the autumn.
Production
Output of sawn softwood in 1950 reached a very high level, according to preliminary estimates 3.2 million standards as against 2.9 million standards in 1949 due largely to demand from the United States Production during the first quarter of 1951 rose to almost 30 percent above the first three months of 1950.
The production of all lumber to the end of July 1951 was estimated at about 18 percent above the figure for the same period of 1950. In June 1951 the output of sawn softwood was 15 percent and in July 5.5 percent higher than in the corresponding months a year earlier the largest increases being in British Columbia.
Later in the summer, an exceptional drought in British Columbia, causing a very grave fire risk, compelled the authorities to impose forest closures. Felling in the affected areas was brought to a standstill, and operations discontinued in a large number of sawmills. The ban, lifted only after the first autumn rains in September, resulted in heavy losses in logging and sawmilling operations.
Exports
Shipments of sawn softwood to the United States reached an exceptionally large volume in 1950, totalling 1.443 million standards, a rise of about 114 percent, over the corresponding figure for 1949. While exports to Europe, primarily to the United Kingdom dropped considerably, the total exports of 1.85 million standards, were about 42 percent above the 1949 figure.
During the first three months of 1951, shipments continued to maintain a high level, attaining a total volume of 389,000 standards, as against 290,000 standards a year earlier. However, there was a change in the pattern of trade, inasmuch as shipments to the United States slightly decreased and those to the United Kingdom were greatly increased.
By the end of the first six months of 1951 exports of all lumber were nearly 13 percent, and a month later 6.5 percent, above the corresponding figures for a year earlier.
Prices
Prices for sawnwood in Canada were affected by fluctuations on the United States market and by changes in domestic demand. Certain anxiety was felt in the fall of 1951 about the cutting back of building programs in many centers. In the eastern provinces of Nova Scotia and New Brunswick, stumpage costs have shown an upward trend in the last few years, thus keeping costs of lumber at a high level and forcing many operators to do business at a relatively small margin of profit.
After the lifting of the ban on logging operations in British Columbia in September 1951, log prices were firm for all species. Hemlock was reported to be selling at an unprecedented high level, owing to the heavy demand from pulp and paper plants. Toward the middle of October, however, the domestic market for pulpwood slackened and had less affect on prices paid by sawmills.
UNITED STATES OF AMERICA
Consumption
Construction activity during the whole year 1950 was very high, and remained so through the first three quarters of 1951, particularly in the industrial and government sectors. In the first half of 1951, housing construction activity did not catch up the previous year's level; new houses begun numbered 583,500 compared with 705,700 a year earlier. Starts of new non-farm dwelling units rose again slightly in September, as credit restrictions were eased.
The demand for lumber, relatively strong at the beginning of 1951, decreased in the second quarter as a result of government credit restrictions and market regulations. In May and June the softening of the market was reflected in the decrease of shipments and new orders, while stocks at mills were building up. Military requirements for sawnwood had not yet taken up the slack in demand. In the third quarter the relaxation of credit restrictions on lower cost construction was believed to encourage the demand for sawnwood, and, in addition, there were expectations of possible large purchases later in the fall for military purposes.
Production
According to estimates, total lumber output in the United States for 1950 was 36,722 million board feet the highest since 1929; of this, sawn softwood accounted for 29,160 million board feet, corresponding to 14,725,800 standards, an increase of almost 10 percent over 1949.
According to the National Lumber Manufacturers' Association, production at reporting mills during 44 weeks of 1951 was much the same as a year earlier Output of the most important softwood item, Douglas fir, was 104 percent, production of Western pine 94 percent, of Southern pine 95 percent, and of the less significant Northern pine 131 percent of the corresponding 1950 total.
Toward the beginning of November 1951, the balance of unfilled orders and gross stocks for the main sawn softwood items were, on the whole, as satisfactory as a year earlier.
Trade
Exports of sawn softwood in 1950 totalled 195,200 standards compared with 254,600 in 1949. At the same time that domestic production rose as already indicated, imports from Canada exceeded the 1949 imports by more than 110 percent, and imports from sources other than Canada almost doubled.
During the first quarter of 1951 exports were more than twice as high as in January-March 1950, shipments to the United Kingdom and Latin America having increased particularly. On the other hand, imports remained roughly equal to those in 1950.
Prices
Prices had been comparatively firm after the 1950 summer upsurge. A further boom was experienced at the beginning of 1951, when it became obvious that the government was about to extend price controls. The level of ceiling prices was actually set at the highest point in January 1951. Strong demand, partially limited by freight car shortages, scarcity of logs and unfavorable weather conditions, kept prices firm until the end of the second quarter when a gradual decline in average wholesale sawnwood prices was noticed. The price drops experienced were somewhat larger than in Canada. The situation changed relatively quickly as construction activity became more lively and stocks, which had been allowed to dwindle during the period of uncertainty, had to be replenished. By October/November prices had again reached firmness.
Other regions
BRAZIL
Production of Paraná Pine, which had been decreasing in 1948 and 1949, showed an upward trend during 1950 and the first six months of 1951. This was partly due to a more vigorous policy by the government-controlled National Pine Institute in encouraging increased pine production and finding new export markets. During 1950 a comparatively much larger proportion of 3rd and 4th quality sawn pine lumber was exported, principally to the La Plata market, and as a result there was some concern about the home production of boxboards and the construction of simple houses used by a large percentage of the working classes in Brazil.
By October 1951, shipments to Argentina, which in 1948 and 1949 accounted for 70 to 80 percent of total exports were now below 50 percent of the total. Exports to Uruguay remained fairly constant. There had been some purchases by the United States and Australia, but the termination of the barter scheme covering Brazilian trade virtually stopped new United Kingdom purchases of Paraná Pine, as f.o.b. prices increased from £60 to £70 a standard to a level of £90 to £100 a standard at the official currency exchange rate. Total exports in 1950 were 175,000 standards.
MEXICO
Production of sawn softwood, originating from the forests of the central high plateau, totalled about 1,169,000 m³ or 250,000 standards in 1950. Exports almost exclusively to the United States, absorbed roughly one-third of the softwood timber produced in the country, mainly because transportation northwards is easier than to the domestic center of consumption, Mexico City with its surroundings, where there is a large unsatisfied demand. The government made efforts in 1951 both to limit the exploitation of the forests, and to restrict exports to the United States.
The only other big producing country in Latin America in 1950 appears to have been Honduras, which turned out about 180,000 standards.
JAPAN
According to reports, a major shortage of timber is developing in Japan. The continuation of overcutting, permitted over the past 25 years, could result only in the total elimination of the remaining softwood resources within a relatively short period. In recent years more than 8,000 sawmills are reported to have discontinued operation because of shortage of logs. Production in 1950 is reported as 1.738 million standards.
There is every likelihood of a lower level of production of sawn softwood in the future, as legislation is under way imposing severe restriction on fellings, to build up the depleted growing stock. At the same time the Japanese Government intends to tighten control on wood exports to conserve the country's dwindling supplies.
NEW ZEALAND
Construction of new dwelling units in New Zealand, calculated on the basis of those begun in 22 larger centers, was maintained at a relatively stable level through 1950. Activity slackened in 1951 despite the expanded house building program, and the rise in domestic production of timber.
Production of sawn softwood during the year ending 31 March 1950 was 225,000 standards, about equal to the preceding year. For the next year output reached a new high record 247,600 standards. The production of exotic timber had increased by 24 percent and that of indigenous timber by 4 percent. Insignis pine accounted for 35 percent of the total timber sawn. On the other hand, kauri had only a dwindling share of total output, less than one percent. The production of sawn exotic timber by State Forest sawmills reached the record level of 32 million board feet, equal to almost 19,000 standards of sawn product.
New Zealand has been exporting certain amounts of sawn softwood, practically all to Australia.
AUSTRALIA
Building activity in Australia has considerably expanded during the postwar period. The monthly averages of completed new dwelling units went up from 4,038 in 1948 to 4,407 in 1949 and 5,157 in 1950, the total for 1950 being close to 62,000. In the first quarter of 1951, a drop in construction activity limited the monthly average of completed houses but this was apparently only seasonal.
In 1949/50, total domestic sawn softwood production amounted to 46,400 standards and according to early forecasts, was believed to be running at approximately an equivalent level in 1950/51.
However, imports of soft sawn wood in 1950, totalling 129,500 standards, far exceeded domestic production. While it was believed that 1950/51 imports would come close to 200,000 standards, including increased purchases from Scandinavia and further supplies from Brazil and Roumania, the Australian Government has reportedly set a construction target of 96,000 new houses per year. The timber allowance per unit being 4.5 standards, over 400,000 standards will therefore be needed for houses alone. In order to overcome the timber shortage, the government has placed a total ban, on timber exports and even on inter-state trading.
