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China has come out of the Covid crisis with a huge amount of infrastructure spending which has, in turn, created sustained demand for all raw materials, softwood logs included.

At the moment, Chinese softwood log and lumber imports are at the highest point ever, at around 8 million cubic meters per month.

The Chinese Government has got into some trade war with Australia which has culminated in the banning of all Australian softwood imports into China. This has left a supply hole of around 400,000 cubic meters per month (10 per cent of total supply into China) which is likely to be filled by NZ radiata. European supply has been thwarted by the Covid resurgence and a global shortage of container freight (most European logs arrive in China in containers).

In addition to this, the supply from Canada and the US continues to reduce due to declining allowable cut levels and strong internal housing demand. Other Asian markets are not performing as well as China, with India feeling the full effects of Covid and the re-direction of the Australian supply putting pressure on these markets.

In market, Chinese softwood inventories have reduced from more than 5 million cubic meters to around 2.7 million in late December. This will likely increase somewhat as China goes into Chinese New Year celebrations in late February.

It is expected, however, that the Chinese Government will implement a staggered holiday period to prevent any Covid outbreaks, which may see some production continuing over this period. In any case, heading into CNY with inventory below 3 million cubic meters is a very good place to be for suppliers.

The post Demand for softwood logs in China expected to rise as inventories shrink appeared first on Timber Industry News.