Term "liquid wood" has likely appeared in the course of development of polymer technologies, particularly related to the field of new advanced composite materials based on plastics and wood fiber, well known today as wood-plastic composites (WPC).
It is not known for certain who introduced the term. Supposedly, it could be used in a professional field since the very beginning of development and/or industrial production of wood composites. However, judged by the Internet citing, "liquid wood" came into consumer language only in the late 1990s, when WPC market entered in a new cycle of dramatic growth.
It's quite probable that the term was introduced exactly that time by European developers of bioplastic WPCs based on natural polymers (starch, maize, lignin), such as Fasalex, Technaro, who make natural wood liquid without using of synthetic components, thus, obtaining real natural "liquid wood". The fact that conventional wood and synthetic thermoplastic based WPC is practically not referred to as "liquid wood" in the US and Europe indirectly speaks for this assumption. While searching the web, one can come upon the products of the above said developers (e.g. Techanro's Arboform) or epoxy-based deep-penetrating wood consolidant which regenerates rotted, dried-out or spongy wood by restoring structural strength and integrity to wood fibers, named LiquidWood. Although the latter has nothing to do with wood plastic composites.
Worth to mention that "liquid wood" has gained popularity in Russia becoming one of the most used synonym for synthetic thermoplastic (PE/PP/PVC) based WPC.
WPC is a composite material consisting of wood (or other lignocellulosic) filler, thermoplastic polymer, either synthetic or natural, and additives. It is made through extrusion, injection or compression molding.
In the course of either of the above production processes wood plastic blend is hit and melt into viscous liquid which is extruded through (flows from) a die/mold or fills in a pressmold, shaping into WPC lumber profile (e.g. decking) or WPC molded product (e.g. flowerpot) after cooling.
It is this ability of WPC to turn into viscous liquid and be consequently molded into many different shapes that made wood plastic composite to be sometimes referred to as "liquid wood".