A look at the future of hardwood

lltHAT lies ahead for the hard- UU wood industry? Sheldon Engler, economist for the Bank of America, has some answers.

Explaining the position of the United States in supply, he says that, although this country has traditionally been a major importer of hardwood lumber from tropical regions, in recent years it has become a net exporter of hardwood lumber. He feels it unlikely that this shift represents a new trend, but rather that it is a consequence of recessionary levels of wood demand here.

As background, he explains that Asia produces 32v/o of the world output of hardwood and 52Vo of all exports with China, Japan and Malaysia as leading producers and Malaysia the major exporter. The U.S. contains the majority of the 140/o of hardwood species located in North America and produces 1990. Europe is third in world production with 18.4Vo.

Although most hardwood has historically been traded in the form of logs, this pattern is beginning to change, he reports. Overcutting of tropical forest in Southwest Asia has led to export restrictions by traditional log exporting countries. In the Philippines logs exporting has come

Story at a Glance

Changes in hardwood trading patterns scarcity will lead to exploitation of inaccessible forests . . prices to rise, dou. ble by 1990s.

to a virtual halt. Many Southeast Asian producers are attempting to secure the remaining hardwood log supplies for local wood processing industries.

This action will bring changes in Japan which has been a leading importer of logs to process into lumber at their own sawmills. Log importers will be forced to import hardwood in processed form or to import logs from further distances.

Vast hardwood forest reserves exist in Asia, Africa and Latin America, but because of the remoteness and Iack of commercially attractive species, it will be extremely costly to produce hardwood lumber from these forests. By some estimates, according to Engler, lumber prices would have to increase 5090-10090 before production would become profitable.

It is inevitable, he says, that scarcity of hardwood forest reserves will some day lead to exploitation of more inaccessible forest areas and hence to higher log and lumber prices. The speed with which this will occur depends upon the techniques that are utilized in maintaining the more accessible forests.

During most of the 1970s hardwood lumber consumption gained, particularly in tropical hardwoods. Southeast Asian producers derived benefit from these developments as Europeans and the U.S. relied upon hardwood lumber imports from the Asia/Pacific area.

Since 1980, hardwood lumber consumption has been stagnant. The world recession reduced lumber demands. The Japanese housing slump impacted the tropical timber market substantially. In addition, tropical timber producers reduced exports to lContinued on next pagc)