South Korea

B.C. softwood lumber and panel exports to South Korea

(Softwood lumber, plywood, OSB, MDF and particleboard)

B.C. Position

  • 7% of all commodity wood product (lumber and panels) imports by volume
  • 14% of softwood lumber imports by volume
  • 1% of wood panel imports by volume

Export Sales

  • 2015: 340,000 m3 of commodity wood products valued at $90 million (this represents a 19% increase in volume and a 22% increase in value over the year before)
  • 2016 (through Aug): 202,000 m3 valued at $53 million

Market Overview

In 2015, South Korea became the World’s sixth-largest exporting nation after China, the US, Germany, Japan, and France. Despite this achievement, South Korea’s exports fell 1.3% to a six-year low of 595 trillion won ($673 million CAD). This drop was due to a variety of external factors, including low crude prices, economic uncertainties in China and other export destinations, and the appreciation of the Korean won.

The economy grew 2.6% in 2015, down from 3.3% the year before; however, while exports slowed, the domestic housing market grew 41% in 2015. Spurred by a series of government interventions including reductions in the housing sales tax, property transfer tax and mortgage rates, a record 716,759 units were started. Supported by the robust housing market, imports of lumber and panels both reached record levels in 2015. In the last two years, the housing market grew 74% while Canadian lumber sold to Korea grew 26%. In 2015, Canada remained the fourth-largest supplier, with a volume of 300,000 m3 of lumber, behind the EU28, Chile and Russia.

Largely supplied by China and the ASEAN9 region, imports of wood panels grew 10% to 2.9 million m3 , led by plywood (1.5 million m3 ) and particleboard (1.1 million m3). China and the ASEAN region are also major suppliers of value-added wood products to South Korea. In 2015, South Korea purchased $1.6 billion CAD of value-added wood products, representing an increase of 31% over the previous year.

Market Trends

Desire for healthy housing – The media and public in South Korea continue to draw considerable attention to a condition believed to be caused from living and working in concrete buildings. Known as “sick house syndrome”, the condition is believed to cause atopic dermatitis (eczema). Because wood is seen as a natural, healthy alternative, single family homes and low density multi-family units are well positioned as a desirable option for affluent homebuyers.

Housing stimulus – Recent measures by government include lowering property sales taxes, easing property transfer taxes for multiple homeowners and dropping mortgage rates to historic lows.

Stricter energy and sustainability standards – Korea’s building energy standard has been updated several times and wood continues to be viewed as an excellent building material. In particular, wood excels due to its insulative properties, which offer excellent energy efficiency in Korea’s hot summer/ cold winter climate. Wood has also been recognized as one of the building materials that helps reduce carbon emissions. However, it is not exactly clear how government standards will continue to evolve. Wood may face cost-competitiveness challenges as even stricter standards demand a level of wood-frame design and construction sophistication that does not currently exist in Korea.

Standards and certifications – Some new standards and certification requirements may hinder Canadian wood sales to South Korea. The Wood Quality Mark System (WQMS) requires every piece of imported wood for structural use – and every bundle of imported wood for decorative use – to have a Korean grade stamp. While the Korea Forest Service (KFS) has agreed to appoint the Canadian Lumber Standards Accreditation Board as the official accrediting body, Canada Wood and the APA (The Engineered Wood Association) remain in negotiations with the KFS for a similar certification agreement for engineered wood products. In addition, South Korea no longer accepts FSC and PEFC certification for wood pellets, which has caused exports from B.C. to soften.

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