JoC Breakbulk Conference: Lumber flat in 2004

JoC Breakbulk Conference: Lumber flat in 2004

NEW ORLEANS - Even as the U.S. housing and construction markets continue to fuel demand for lumber, industry observers believe the domestic market for forest products will see little to no growth in the coming year.

Panelists at a seminar on forest products at the 14th Annual BreakBulk Conference & Exhibition sponsored by The Journal of Commerce noted that competition from Asia and South America has kept the sales of domestic lumber down despite the record number of housing starts.

"U.S. exports continue to decline and there's no change in that predicted," said Michael Hawe of Star Shipping. "U.S. producers are just unable to compete with foreign products." Hawe noted that strong domestic sales in 2002 have slowed recently, spurring domestic producers to focus their efforts on exports, where they face stiff competition.

"We see the growth possibilities much more on the import side," Hawe said.

Jim Baldwin, an executive with Forest Lines in New Orleans, agreed: "There's been a huge change in the traffic of the Deep South; because of the Brazilian and Indonesian's success, we don't have as much plywood or bales to go after." Baldwin added that the market for forest products will be flat in the next year, but "if the dollar stays cruddy, exports might stick around."

There was some good news for the forest industry: the worldwide market for specialty pulps, such as fluff pulp, is showing great potential. China is still a great consumer of pulp and its pulp needs continue to rise - Hawe predicted that China's pulp requirements will reach 7 million tons annually by 2006.

Another market that's still strong is brown paper. "There's still a good future for brown paper, which should last until somebody changes the way you wrap packages in this country," said Baldwin. That's not such a farfetched scenario: Baldwin noted that "40,000 tons of cargo evaporated just like that" when consumers switched from drinking cans of diet supplements to eating diet bars.

Low freight rates are also helping keep the domestic lumber market afloat. "North American producers are enjoying drastic reductions in ocean freight rates," said Hawe. "You can move a container to Antwerp or to Hong Kong for essentially the same price."

"Rates are not that great, but it's interesting cargo," added Baldwin. But because of the variety of forest product cargo, Baldwin said "if the container rates go way out of whack, the good old boys in breakbulk will still have something to chew on."

It's breakbulk ports that may have trouble if the rates don't change, said Baldwin. Carriers will "have to make decisions on port calls." Improvements will be required to accommodate larger breakbulk vessels, said Hawe.

Robyn Nissim is editor of Florida Shipper.