The Canadian Lumber Industry who ships a large amount of product to the USA has been in decline lately however with expansion of the middle class in China industry watchers are saying the expect higher sales in 2013.
In some cases this can be a good thing if the local and regional market is not purchasing product. This has been the case since 2008 when the US housing market saw a down turn.
However China is not purchasing finished product. Raw laws that have merely been cleaned up for transportation are being sold at a very low price. This means the value added work which brings in the bulk of Canada’s return for their natural resource won’t be made at home.
This has been the case for the American lumber industry in the pacific northwest for the past 2 years.
Canadian backers say “We expect further capacity reductions this year, setting the stage for an upswing in prices once U.S. demand starts coming back on stream.”
This is another danger of out sourcing product finishing. As cheaper lumber is sold in log form to China the Canadian market can not supply the raw or finished products for their normal markets.
By supplying cheap logs they will cause inflated prices to be paid regionally. This will stagger recovery because not only will prices be higher but the income from finished products will not be there to continue management of resources.