China log imports - WOOD MARKETS has just released the third edition of The China Book
A new Five-Year Outlook shows no slowdown in wood products imports but China’s housing and economy will need additional government stimulus to get construction moving later in 2013.
China’s massive wood products production engine stalled in 2012 for the first time in over ten years. After posting spectacular growth in 2009- 2011, China’s wood products industry and markets struggled in 2012 as new-home sales slowed and apartment inventories rose. The housing market is now at a crossroads as new residential apartment inventories and housing prices appear to finally be moving into a balanced situation to finish off the year.
WOOD MARKETS has just released the third edition of The China Book - Wood Products Industry and Market Review: Outlook to 2017, which looks at the widening log and lumber supply imbalance and potential shortages facing China. At the heart of this report is the key question of: where will China get its wood as the global supply dynamics for imported logs and lumber tighten in the next few years?
Despite the recent slowdown in China’s massive wood products demand, the supply of imported logs and lumber is expected to remain tight over the next 1-2 years as market forces push demand and prices higher in North America. With Russian log exports in disarray and the U.S. and Canada representing almost 50% of China’s imported softwood lumber, higher prices are expected over the entire forecast period. Should the next Chinese government stimulus package contain a significant uplift for the building construction industry and/or housing sector, prices could rise even higher.China’s log, lumber, panels and other wood products sectors are expected to be tightly correlated to the government’s evolving economic strategy and/or financial economic stimulus programs. Policy decisions are waiting at the hands of the new Communist party boss and next President, Mr. Xi Jinping, who has been given the most powerful job in China, along with six new members of the Politburo Standing Committee, as China’s leaders for the next five years. The direction of the new government’s leadership and economic policies is now the biggest wild card in the future direction of wood products trade with China!
While the WOOD MARKETS analysis covers a wide variety of logs, lumber, panels and finished products, the key take away messages from The China Book include the following:
- The government’s current “affordable housing program” is expected to drive the house construction sector in 2012-2013 as the private sector sputters - the new government’s economic and/or housing plan will drive wood products consumption and imports higher.
- Total housing (concrete apartment) starts in China will average well over 15 million units over the forecast period and this market will continue to drive log and lumber demand and imports.
- The recent introduction of a reduced Russian log export tax and restrictive quotas will have only a minimal impact on stimulating Russian log exports - serious cost and logistical issues will continue to plague the Russian industry.
- China has a massive fibre deficit that is expected to continue to grow - more imports of logs, lumber and other products will be required to fill the widening gap.
- A stronger USA market demand is predicted and this is expected to push imported Chinese log and lumber prices higher where Pacific west coast log and lumber supplies could effectively be auctioned to the highest bidder (USA, China or other).
- Short-term demand dynamics may initially be quite flat to slightly increasing, but prices are certainly going to get much higher - as forecast in The China Book.
Regardless of the current market slowdown, China will remain a wood products superpower. China is one of the world’s largest producers and consumers of softwood and hardwood logs, lumber, and panels; indeed in many of these categories it is already number one globally. As a result, China will need more imports and will continue to drive and even set global log and lumber prices - just as it has done with other global commodities during the last six to seven years.
China’s growing demand for logs and sawn lumber is having a profound impact on the revitalization of the export business for many companies in many different countries.
Full details on the five-year outlook for China’s consumption, log and lumber imports, price trends, etc., are available in The China Book * Outlook to 2017.