February 22, 2011 / 8:50 PM / 7 years ago

Western Canada lumber sales to China soar in 2010

VANCOUVER (Reuters) - Lumber sales to China from British Columbia skyrocketed last year and a top official in Canada’s largest timber-exporting province believes it can continue to grow despite increasing U.S. competition.

Forestry firms in the western Canadian province shipped 4.6 million cubic meters of softwood lumber products to China in 2010, a 76 percent increase from 2009, according to figures from B.C.’s Ministry of Forests, Mines and Lands.

Total lumber sales to China were valued at C$687 million ($694 million) in 2010, more than double the 2009 level.

Forestry Minister Pat Bell believes the province can sell as much as 5 million cubic meters in 2011, although he expects the growth rate will tail off a bit from what was experienced in the fourth quarter of 2010.

December’s sales of C$107 million were higher than for all of 2003, when province launched a major campaign with industry officials to enter the Chinese market.

British Columbia has turned to China as an alternative export market to the United States, which has traditionally been its major buyer. However, U.S. sales have been hampered by the slow housing market and simmering trade disputes.

About 22 percent of lumber exports from the province went to China in 2010, compared with 57 percent to the United States, according to provincial officials.

Producers in the U.S. Pacific Northwest have also begun to ship to China, but Bell downplays concerns about increased competition. “I think the market is far bigger than anything we can supply,” he said.

TARIFFS AND TRANSPORTATION STRAINS

Canada gained a Chinese foothold several years ago after Russia imposed high export tariffs on logs Chinese mills had depended on. The tariffs will likely be dropped as part of Russia’s bid to gain World Trade Organization membership.

The tariffs allowed Canadian firms to develop relationships with Chinese customers, who say they intend to keep buying Canadian wood even if the Russian tariffs are removed, Bell told reporters on releasing the 2010 sales report.

But Bell acknowledged the growth of Canadian exports faces a “major challenge” from the strained transportation capacity at British Columbia ports such as Vancouver and Prince Rupert.

Lumber is normally shipped to China in containers that had brought Chinese goods to Canada, but volumes are now exceeding the available container supply, he said.

Industry officials say that while Chinese buyers initially purchased lower-grade lumber, they have increasingly bought higher-grade products that traditionally had been destined to the U.S. market.

Provincial and industry officials hope to expand that market with a project in China next month that demonstrates how wood can be used to construct prefabricated apartment buildings, which the Chinese have traditionally built with concrete.

($1=$0.99 Canadian)

Reporting Allan Dowd; editing by Rob Wilson

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