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Market demand recovery, the ban on imports of Australian logs and rising ocean freight rates have recently triggered a sharp rise in timber prices in China.

The Chinese softwood timber market has recently experienced a major recovery, market entry has risen sharply, timber prices have risen accordingly, and the profitability of timber merchants has increased. Business confidence has also increased substantially.

Judging from the situation reported by timber dealers contacted by GWMI, starting from October, China’s construction timber market has shown a clear upward trend, with prices following the same path starting from November. China’s ban on imports of Australian pine has been a trigger for the market. In just one month, the market price of Chinese construction materials has risen by 80-150 yuan/cubic meter (12-23 US$/m3).

Moreover, the surge in international ocean freight costs has brought certain pressures on timber procurement, with CIF prices of southern pine and European spruce in the Guangdong market increasing by about 10 US dollars or 10 euros per cubic meter. Guangdong, Chongqing, Jiangsu, Shandong, important markets for construction materials such as Guangxi and Fujian are all reporting price increases.

Take the Guangdong market as an example. At present, the price of southern pine logs is reported to be 900 yuan/m3 (137 US$/m3), the price of better quality grades reach 1,000 yuan/m3 (153 US$/m3) or even 1050 yuan/m3 (160US$/m3). The price of European spruce logs below 28cm in diameter is 1,000 yuan/m3 (153 US$/m3), below 30-38cm is 1100 yuan/m3 (168 US$/m3), and above 40cm is 1180 yuan/m3 (180 US$/m3). This is an increase of 80-100 yuan/cubic meter as compared to October.

Chinese market participants said that the overall rise in the price of construction materials is related to the increase in market supply constraints and the increase in costs. On the other hand, it is also the acceptance of the market’s restorative demand.

At present, a large number of infrastructure projects across China are being developed, the construction activity is accelerating, and the demand for wood is rising accordingly. The rapid consumption of domestic construction material inventory will undoubtedly intensify the pace of rising wood prices.

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