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Chinese wood deficit good news for NZ wood exporters

External Reference/Copyright
Issue date: 
July 20th, 2010
Publisher Name: 
International Forestindustries
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Timber Procurement


China’s potential fibre-supply gap (the difference between total demand and total domestic supply) is projected to reach approximately 150 million m3 (roundwood equivalent) by 2015 - or a volume that is more than the entire Canadian timber harvest in 2009 - a strong indication that China’s wood imports must continue to rise in the short- to medium-term period to match with projected consumption reports International WOOD Markets Group,.
China’s surging wood products industry is becoming raw material constrained due to its heavy dependence on logs from Russia (65% of China total log imports over the last four years). Russian logs have become more expensive and scarce with the imposition of the Russian log export tax (currently 25% on softwood and 40% on hardwood sawlogs). The global supply of incremental logs is not large enough to replace the declining Russian log supply in the short term.

China needs to grow its raw material supply at 8-10% per year to achieve its desired growth rate, but WOOD MARKETS forecasts a potential global log (export) supply that will only allow China to grow its import supply at just a 3%-4% annual growth rate after 2011.

So - who are the winners? As a result of these dynamics, there are four exporting regions that should see the greatest benefits from the projected tightening of the wood supply and rising prices in China:

- Canada (mainly B.C.) has increased lumber exports to China by almost 800% in the last four years. With a tightening global export supply of low priced softwood logs available to China, low grade softwood (and now higher grades) of BC lumber imports have surged. The outlook is for rising volumes and higher prices for BC interior SPF and coastal lumber species.

- Russia has increased lumber exports by about 185% in the same four years as a result of new Russian and Chinese sawmill capacity installations in Eastern Russia.

- New Zealand has benefited from the reduced Russian log imports - its radiata pine log exports have grown by almost 400% in the last three years to attain 22% of China’s softwood logs imports (4.4 million m3) in 2009 and radiata exports are forecast to increase even further over the next five years.

- The US Pacific Northwest, Coastal BC and Alaska have recently seen substantial increases in log exports and this is expected to more than double in the next 2-3 years (albeit from low levels).


Extpub | by Dr. Radut