Since the beginning of the year, the Chinese timber market is impacted by a low availability of wood, rising prices which had brought anxiety to the market and increased the production and operation costs of Chinese enterprises. Chinese softwood log inventories are at the lowest level seen in years, with zero supply from Australia, following China’s log export ban, rising ocean freight costs, which put a heavy burden on log imports, and rising domestic demand in key wood supplying countries.
Consequently, Chinese companies contacted by GWMI, have reported a considerable rise in timber import prices.
One cause is the surprising development caused by the coronavirus pandemic. Countries like the United States, Canada and some European countries have seen an increase in demand for construction materials, as economies have gradually recovered. The strong demand from local sawmills in Europe and US has slowed the flow of wood heading to China, putting additional pressure on timber import prices
The second is the impact of global container freight rates which continued to sky-rocket into the new year as major freight companies increased the shipping costs. Thus, the availability of shipping containers and disruptions to shipping schedules is impacting the flow of Chinese wood product imports. Imports are disrupted and producer countries are facing a challenge to get timber shipments away. At present, Chinese timber traders purchasing European spruce and US southern pine have a lot of new orders but delivery schedules are difficult to determine, companies contacted by GWMI reported.
The third is the influence of supply and demand. In 2020, China’s timber import volume was 108.02 million cubic meters, a year-on-year decrease of about 5%. Among imports, 82.34 million cubic meters of softwood, a year-on-year decrease of about 2%. Russia, New Zealand, and Canada, the main sources of timber imports, experienced significant declines, and only imports from Germany, the Czech Republic and the United States increased. Therefore, there is a decrease in the amount of imported timber, and the significant decline in timber stocks at major ports, resulting in a temporary imbalance of timber supply and demand.
However, the Chinese market remains very strong with continued government stimulus pushing China’s GDP forecast to 8.2% for 2021 from 2.3% in 2020. The Chinese real estate market has rebounded post Covid and is showing positive signs for 2021. Thus, log demand in China is expected to remain strong throughout the year.
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