US lumber boosted by China demand

Exports of US timber to China are surging, helping lumber companies like Weyerhaeuser (WY.NYSE) emerge from the red, the Wall Street Journal reported. While the industry remains depressed due to enduring weakness in the US housing market, Weyerhaeuser announced last Friday that it had returned to profitability in the fourth quarter, and noted that the tripling in log exports to China had helped offset an overall decline in logging volumes. According to Weyerhaeuser CEO Dan Fulton, most of the wood exported to China is being used for non-residential purposes such as crates and pallets. Seattle-based Plum Creek Timber (TCl.NYSE) said it expects 7% of its log production to go to China in the first quarter of 2011. The surge is contributing to price increases for selected wood products. Hemlock logs, for example, rose 43% to US$66 per board foot in 2010, up from US$46 in 2009. Most of China’s wood demand is being served by forests in the American Pacific Northwest region, which accounts for 44% of all US timber production and has the best logistical access to the China market.