1 / 54

Opportunities and Pitfalls in International Trade: The View from 4,000 Feet

Opportunities and Pitfalls in International Trade: The View from 4,000 Feet. Dan Meyer Northern Regional Editor. Opportunities and Pitfalls in Trade with CHINA : The View from 4,000 Feet. Dan Meyer Northern Regional Editor. Overview. Observations about U.S. Log and Lumber Trade with China

salena
Download Presentation

Opportunities and Pitfalls in International Trade: The View from 4,000 Feet

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Opportunities and Pitfalls in International Trade: The View from 4,000 Feet Dan Meyer Northern Regional Editor

  2. Opportunities and Pitfalls in Trade with CHINA: The View from 4,000 Feet Dan Meyer Northern Regional Editor

  3. Overview • Observations about U.S. Log and Lumber Trade with China • Pitfalls • Opportunities to Avoid Pitfalls • Tracking Alder Pricing

  4. Observation:Trends in U.S. Log and Lumber Exports to China

  5. Alder LUMBER Exports to China Up

  6. Alder LUMBER Exports to China Up

  7. Alder LOG Exports Down

  8. Observation: Chinese Lumber Purchases Cyclical in Nature

  9. Chinese Buying Cyclical

  10. Chinese Buying Highly Cyclical

  11. Chinese Buying Highly Cyclical

  12. Chinese Buying Highly Cyclical

  13. Chinese Buying Highly Cyclical

  14. Observation:Chinese Buying Strongly Influenced by Price

  15. China’s Lumber Price-Sensitivity

  16. China’s Lumber Price-Sensitivity

  17. Less Price-Sensitive to Logs?

  18. Perhaps More So This Year?

  19. Observation:Chinese Appear to React to “Threshold” Prices

  20. Threshold Prices

  21. Threshold Prices

  22. Observation:Log Exports Generally Growing Faster Than Lumber

  23. Log & Lumber Exports Converging

  24. Log & Lumber Exports Converging

  25. Log & Lumber Exports Converging

  26. Observation:Rising Export Volumes ≠Rising Export Values

  27. Log vs. Lumber Export Values

  28. Log vs. Lumber Export Values

  29. Log vs. Lumber Export Values

  30. Log vs. Lumber Export Values

  31. Log vs. Lumber Export Values

  32. Alder LOG Export prices track inflation

  33. Alder LUMBER Export prices not keeping up with inflation

  34. Pitfalls in Trade with China

  35. Chinese are price-driven • Chinese are less loyal to N.A. species than other world buyers. • Difficult to remain low-cost leader. • There will always be a new supplier on the block with acheaperalternative

  36. Substitution • Alder remains a relatively small player in most markets. • A small volume of a substitute could have large impacts in domestic and international Alder markets. • The higher Alder prices become, the more vulnerable Alder is to substitution

  37. Cyclical buying patterns • Can you seasonally adjust your production? • Will your domestic and other export customers accept seasonal supply interruptions?

  38. Watch for shift to logs • No reason to believe Chinese won’t continue to work back down the supply chain, eventually owning U.S. sawmills or importing logs for sawing in China. • Gives them morecontrol oversupply & pricing

  39. Opportunities to Avoid Pitfalls in Trade with China

  40. Control log costs • Don’t get caught driving log prices so high you cannot absorb a little depression in lumber prices • Lumber prices will inevitably fall faster than log prices.

  41. Resist raising lumber prices • The higher Alder prices become, the more quickly will come substitutes. • Higher prices benefit you in the short-term but hurt down the road • Rarely have we seen a species maintain high prices for as long as Hard Maple

  42. Diversify • If you cannot diversify your species mix, diversify your markets • Consider limiting your allocation to China, even if it means forgoing short-term profits

  43. Diversify (cont.) • Do not put more into China than you could quickly redirect if China were to shut off tomorrow.

  44. Pay attention to domestic customers • If supply issues alienate domestic consumers, they’ll turn to other species • Healthy domestic user-base critical to stabilize volatile export markets

  45. Standard grades? • Does it make long-term sense to be the only North American hardwood graded so differently from all the rest? • Does it make Alder more difficult for buyers around the world to work with, adding costs?

  46. Act, don’t be forced to react • Stay out of reactionary, defensive position • Extremely difficult to get back on offense when warehouses are full and cash reserves are tied up in logs that are too expensive to saw. • Pay attention to market signals

  47. Should We Track Alder Prices in theWeekly Hardwood Review?

  48. Benefits of a Pricing Guide • Easier to spot market changes • Historic pricing—trend analysis • Weekly benchmark of industry prices • Can help you justify sales prices to customers

  49. Hurdles to Alder Tracking • Which Grades? • Whose Prices? • Two markets? • Do we track one or both?

  50. Which Grades? NHLAProprietaryProprietary Sel&Btr Superiors Superior No. 1 Shop Cust. Jacket Board Cabinet No. 2 Shop Cabinet Cust. Shop No. 3 Shop Cust. Shop A-Strip Frame Grade Jacket Board B-Strip Com/#2 C-Strip Premium Frame Rip Standard Frame Skip (x3) Econo/#3 Stain #3 Shop

More Related