Matching market signals to the Canadian wood … · Canadian wood products value chain ─ a disaggregated trade model approach ... 604 3 44071049 Lumber, Spruce, Nes 665,416

October 15-18, 2013 Chris Gaston, Ph.D. 1

Matching market signals to the Canadian wood products value chain ─ a disaggregated trade model approach

Chris Gaston, PhD

Forest Sector ModellingLillehammer, Norway

TM

2Chris Gaston October 2013

Overview

• Some context for evolving wood attributes• Forintek Trade Model (1998 and 2006)

• Model description• Base-line forecasts• Scenario analyses

• Application to VCO Network (2013/14)• Model expansion

– Countries– Lumber categories– Logs


Some context: wood-use in the U.S.

Source: RISI, Boston, Massachusetts


U.S. housing starts

Source: APA, Tacoma, Washington


‘Stick-built’ platform frame construction

The average cost of rough framing, sheathing, soffit, and door / window installation is roughly $8 per sq. ft.($16,000 for a 2,000 sq. ft. home)


‘Pre-fab’ platform frame construction


Move to 6-story multi-family

Source: WoodWorks

Library Square, Kamloops, BC, 2010


Source: Adera, Vancouver, BC

Residential, University of BC

Move to 6-story multi-family


Six story hybrid wood-concrete

Source: FPI, Quebec

Quebec, QC2010


Six story hybrid wood-concrete

Source: FPI, Quebec

Concrete cores/walls to resist lateral loads

Glulam post & beam

+ Three levels of parking (concrete)


Five story hybrid wood-concrete

Source: Perkins + Will

Earth Sciences Building, UBC


Five story hybrid wood-concrete

Source: Perkins + Will

Earth Sciences Building, UBC


‘Tall Buildings’

Source: Michael Green Architecture

Wood Innovation Design Centre, Prince George, BC


‘Tall buildings’

Source: Michael Green Architecture

“We are in a unique moment in architectural and building engineering history when shifting world needs has asked us to question some of the fundamentals of how we have built for the last century and how we will build in the next.”

Michael Green


The Forintek Trade Model

Source: Gaston, et al., 2006


Product categories defined by price

Source: Gaston, et al., 2006; Mississippi State University, Extension Service

Current product mix of grades (US South)

Grade (2x4s) PercentageNo. 1 and Btr. 18No. 2 51No. 3 16Other 15

Price Category Export price ($ CDN)1 > 8002 650 – 8003 250 – 6494 < 250


Canada SW lumber exports to the U.S.

Source: Statistics Canada

HS Code Description Quantity Value Unit Value Pricem3 $CDN $/m3 Category

44071010 Lumber, Coniferous (Softwood), End‐Jointed 665,800 132,356,984 199 444071020 Lumber, Coniferous (Softwood), Painted, Stained Or Preserved 82,209 21,132,209 257 344071031 Lumber, Spruce, Pine And Fir (S‐P‐F), Nes 29,820,797 6,883,044,744 231 444071032 Lumber, Douglas fir and western larch (Doug‐Fir), Nes ‐ 44071033 Lumber, Western Hemlock And Amabilis Fir (Hem‐Fir), Nes 650,232 140,767,573 216 444071041 Lumber, white and black spruce44071042 Lumber, Sitka Spruce, Nes 2,225 1,343,029 604 344071049 Lumber, Spruce, Nes 665,416 176,036,407 265 344071051 Lumber, Ponderosa Pine, Nes 13,524 3,759,305 278 344071052 Lumber, red pine ‐ 44071053 Lumber, Red And White Pine, Nes 215,016 95,366,296 444 344071054 Lumber, Lodgepole Pine, Nes 14,860 2,882,588 194 444071059 Lumber, Pine, Nes 14,748 3,970,549 269 344071061 Lumber, Hemlock, Nes 161,012 41,595,151 258 344071062 Lumber, True Fir And Balsam, Nes 160,962 27,721,307 172 444071071 Lumber, Western Red Cedar, Nes 1,104,001 714,775,251 647 344071072 Lumber, Yellow Cedar (Cypress), Nes 10,431 5,907,386 566 344071079 Lumber, Cedar, Nes 51,466 18,862,706 367 344071080 Lumber, Douglas Fir, Nes 695,268 182,803,968 263 344071090 Lumber, Coniferous (Softwood), Nes 527,876 97,520,920 185 4

Total SW Lumber 34,855,843 8,549,846,373 245

SWL 1SWL 2SWL 3 3,015,316 420SWL 4 31,840,527 229


Spatial trade-model


$

Q

$

Q

$

Q

ES

ED

Region B World Market Region A

Pb

Pa

Qb Qa

P*

Q*

Supply

Demand

Px

Pi


Model calibration


Canada Exports SWL 1

0.000.050.100.150.200.250.300.350.40

US_im Japan W. Eur Other Im.

MM

Cub

ic M

etre

s

ProjectedActual


0.000.501.001.502.002.503.003.504.00


MM

Cub

ic M

etre

s

ProjectedActual


0.000

0.200

0.400

0.600


MM

Cub

ic M

etre

s

ProjectedActual


0.0005.000

10.00015.00020.00025.00030.00035.000


MM

Cub

ic M

etre

s

ProjectedActual


Model calibration


US Exports SWL 3

0.00

0.40

0.80

1.20

1.60


MM

Cub

ic M

etre

s

ProjectedActual

US Exports SWL 4

0.0002.000

4.0006.000

8.00010.000

12.000


MM

Cub

ic M

etre

s

ProjectedActual

US Imports SWL 3

0.000.501.001.502.002.503.003.50

CanadaUS_ex

ScanBaltic

sRussia NZ

Chile

Other Ex.

MM

Cub

ic M

etre

s

ProjectedActual

US Imports SWL 4

0.0005.000

10.00015.00020.00025.00030.00035.000

CanadaUS_ex

ScanBaltic

sRussia NZ

Chile

Other Ex.

MM

Cub

ic M

etre

s

ProjectedActual


Model calibration


Japan Imports SWL 3

0.00

1.00

2.00

3.00

4.00

CanadaUS_ex

ScanBaltic

sRussia NZ

Chile

Other Ex.M

M C

ubic

Met

res

ProjectedActual

Japan Imports SWL 4

0.0000.1000.2000.3000.4000.5000.6000.7000.800

CanadaUS_ex

ScanBaltic

sRussia NZ

Chile

Other Ex.

MM

Cub

ic M

etre

s

ProjectedActual


Predicted trade flows for 2007 and 2012


Demand Supply Demand Supply Demand Supply Demand Supply

SW L 1 SW L 3Export Regions Export RegionsCanada 1.00 -1.00 1.00 -1.00 Canada 1.00 1.00US_ex 1.00 -1.00 1.00 -1.00 US_ex -1.00 -1.00Scan Scan 0.50 0.50Baltics BalticsRussia RussiaNZ NZ 2.00 2.00Chile Chile 2.00 2.00 2.00 2.00Other Ex. Other Ex. 3.00 2.00 3.00 2.00Import Regions Import RegionsUS_im 1.00 -1.00 1.00 -1.00 US_im 0.50 -1.00 1.50 -1.00Japan JapanW . Eur W . EurOther Im . Other Im .

SW L 2 SW L 4Export Regions Export RegionsCanada 1.00 -1.00 1.00 -1.00 Canada -1.00US_ex 1.00 -1.00 1.00 -1.00 US_ex 1.00Scan ScanBaltics BalticsRussia Russia 2.00 2.00NZ NZ 2.00 2.00Chile Chile 5.00 10.00 1.00 2.00Other Ex. Other Ex.Import Regions Import RegionsUS_im 1.00 -1.00 1.00 -1.00 US_imJapan JapanW . Eur W . Eur -1.00 1.00 -1.00 1.00Other Im . Other Im . 5.00 5.00

2007 2012 2007 2012





0.00

0.02

0.04

0.06

0.08

0.10

0.12


MM

Cub

ic M

etre

s

200220072012


0.00

1.00

2.00

3.00

4.00

5.00

6.00


MM

Cub

ic M

etre

s

200220072012


0.00

0.10

0.20

0.30

0.40

0.50


MM

Cub

ic M

etre

s

200220072012


0.005.00

10.0015.0020.0025.0030.0035.0040.00


MM

Cub

ic M

etre

s

200220072012




US Exports SWL 3

0.000.200.400.600.801.001.201.401.60


MM

Cub

ic M

etre

s

200220072012

US Exports SWL 4

0.001.002.003.004.005.006.007.008.00


MM

Cub

ic M

etre

s

200220072012

Scan Exports SWL 3

0.002.004.006.008.00

10.0012.0014.0016.00


MM

Cub

ic M

etre

s

200220072012

Scan Exports SWL 4

0.000.100.200.300.400.500.600.700.80


MM

Cub

ic M

etre

s

200220072012




Japan Imports SWL 3

0.001.002.003.004.005.006.00

CanadaUS_ex

ScanBaltics

Russia NZChile

Other Ex.

MM

Cub

ic M

etre

s

200220072012

Japan Imports SWL 4

0.000.100.200.300.400.500.600.700.80

CanadaUS_ex

ScanBaltics

Russia NZChile

Other Ex.

MM

Cub

ic M

etre

s

200220072012

"Other" Imports SWL 3

0.00

0.50

1.00

1.50

2.00

2.50

CanadaUS_ex

ScanBaltics

Russia NZChile

Other Ex.

MM

Cub

ic M

etre

s

200220072012

"Other" Imports SWL 4

0.001.00

2.003.00

4.005.00

6.00

CanadaUS_ex

ScanBaltics

Russia NZChile

Other Ex.M

M C

ubic

Met

res

200220072012


Trade-flow scenarios


The following eight scenarios were developed and compared against the 2007 and 2012forecasts:

- Quality demand shift from SWL 4 to SWL3 in US.- Disaster and poverty relief increases the demand of SWL 4 in Other Import Region.- Increase in Canadian supply of SWL 4 as a result of Mountain Pine Beetle

infestations.- Increase in Russian production of SWL 4.- Decrease Western European demand of SWL 3.- Increase Western European supply of SWL 3. - US-Canada Softwood Lumber Agreement.- Increase in New Zealand supply of SWL 4.


Quantity demand shift in US from SWL 4 to SWL 3


+6% / yr

-2% / yr

(million m3) Production Consumption Production Consumption Production Consumption

Canada 12.242 5.026 12.590 5.219 12.778 5.432US_ex 6.957 5.491 6.932 6.932 8.006 8.006Scan 24.845 10.359 25.952 10.261 26.862 10.203Baltics 0.000 0.000 0.000 0.000 0.000 0.000Russia 3.328 2.954 3.389 2.927 3.430 2.910NZ 3.233 1.383 3.423 1.389 3.614 1.394Chile 3.718 1.637 3.936 1.775 4.152 1.913Other Ex. 31.827 28.501 35.621 31.910 39.094 35.423US_im 2.757 6.594 2.657 8.397 2.533 10.225Japan 14.367 19.739 14.595 19.572 14.741 19.466W. Eur 25.163 42.666 25.684 42.202 25.997 41.924Other Im. 7.659 11.745 7.596 11.792 7.530 11.842

Canada 51.136 18.307 49.255 19.174 46.130 19.726US_ex 26.212 18.640 25.420 17.968 24.106 16.534Scan 1.836 0.726 1.832 0.728 1.903 0.692Baltics 2.503 0.052 2.496 0.052 2.621 0.049Russia 12.283 10.153 13.482 10.177 15.031 9.708NZ 0.573 0.218 0.588 0.235 0.640 0.223Chile 0.822 0.362 1.092 0.436 1.167 0.436Other Ex. 9.324 7.634 9.306 7.659 9.660 7.180US_im 35.992 77.109 34.881 70.479 33.035 64.587Japan 2.326 3.410 2.318 3.428 2.209 3.696W. Eur 1.331 2.977 1.555 2.396 1.553 2.489Other Im. 12.639 17.389 12.617 22.112 13.027 25.760

SWL 4

2002 2007 2012

SWL 3


Quantity demand shift in US from SWL 4 to SWL 3



-2.50-2.00-1.50-1.00-0.500.000.501.001.502.002.50


MM

Cub

ic M

etre

s

20072012


-12.00-10.00

-8.00-6.00-4.00-2.000.002.004.00


MM

Cub

ic M

etre

s

20072012


Application to VCO Network (2013/14)

- 2011 production and trade data- Add China, Middle East, etc.- Split up SWL 4 into No. 2 and utility- Breakout SPF - Add logs


Questions?

Chris GastonSenior Scientist, Markets & EconomicsFPInnovations&Associate ProfessorDepartment of Wood Science, UBC

[email protected]@ubc.ca

+1 604 827 1417

Documents

Matching market signals to the Canadian wood … · Canadian wood products value chain ─ a disaggregated trade model approach ... 604 3 44071049 Lumber, Spruce, Nes 665,416