China: Log import prices rising high this year

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Fordaq
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For the Chinese timber import market, the start of 2021 can be described as spectacular. The prices of most wood species have shown a state of skyrocketing. This is quite rare in recent years, especially for prices of imported European spruce and New Zealand radiata pine logs, which have increased to a record high. 

Causes for the price increases

The most serious price fluctuations in China have been for softwood logs, At present prices for hardwood logs are relatively stable.

The first cause of price increases is the pandemic. Demand for wood products in the United States, Canada and parts of Europe has increased. Log suppliers to China see an opportunity to raise prices on due to the growing demand.

Second is the impact of ocean freight. The pandemic has had a significant impact on international trade. Port inspections and quarantine have become stricter and the flow of containers has been disrupted and shipping companies have raised container shipping costs.

The third is the impact of supply and demand. In 2020, China's timber imports totaled 108.02 million cubic metres, down about 5% year on year. The main suppliers of timber such as Russia, New Zealand and Canada saw demand fall. Moreover, back in December 2020, China introduced a log export ban on Australian logs, which created a considerable gap in log supply. 

Stocks in supply countries and in China have fallen leading to a temporary imbalance between the supply and demand of logs which has pushed up prices.

Chinese log imports rise 21% in Q1/2021

Industry data shows that in May, the Chinese national softwood log inventory has fallen to 4.2 million cubic meters, and the daily sales of ports have increased from 70,000 cubic meters in March to 120,000 cubic meters at the beginning of April, and it has fallen to about 100,000 cubic meters throughout the month of May.

In terms of log imports, New Zealand's log imports have grown significantly, with an increase of about 15% over the same period last year. The number of logs from Europe remains at around 1 million cubic meters per month, which is below the peak level of 1.5 million cubic meters per month.

China's log import volume in the first quarter of this year was 14.95 million cubic meters, an increase of 21.3% from 12.2 million cubic meters in the same period last year. The sharp rise can mainly be attributed to the fact that in the first quarter of 2021, China was in a complete lockdown due the coronavirus outbreak. Log imports from Germany surged 90% to 3.28 million cubic metres and sawnwood imports from Germany grew 37% to 950 000 cubic metres. Germany is now the second log source provider for the Chinese market, after New Zealand.

Outlook

Log exports from Europe to China are currently impacted by container freight cost increases and the lack of containers, thus supply from Europe is not expected to see any considerable rise in the upcoming period. Given the excessive concentration of global wood resources in the North American market, The European sawn timber exports to China (which complete with logs) are expected to slow as supply is diverted to the US to cope with the current housing and renovation boom.

Average prices for European spruce logs imported in China (May 2021):

Market Type Price in yuan/m3 Price converted in EUR/m3 Price increase yuan/EUR/m3 in May
Jiangsu Province European spruce logs 1,800 yuan/m3 EUR 203/m3 230 yuan/m3 (EUR 29/m3) 
Shandong Province European spruce logs 1770 yuan/m3 EUR 194/m3 260 yuan/m3 (EUR 33/m3) 
Chongqing European spruce logs 1,780 yuan/m3 EUR 213/m3 120 yuan/m3 (EUR 15/m3) 
Hebei/Tianjin European spruce logs 1750 yuan//m3 EUR 225/m3 280 yuan/m3 (EUR 36/m3) 
Jiangxi Province European spruce logs 1,860 yuan/m3 EUR 239/m3 280 yuan/m3 (EUR 36/m3) 
Fujian Province European spruce logs 1,830 yuan/m3 EUR 235/m3 270 yuan/m3 (EUR 35/m3) 
Guangdong Province European spruce logs 1880 yuan/m3 EUR 242/m3 290 yuan/m3 (EUR 37/m3) 
Guangxi Province European spruce logs 1830 yuan/m3 EUR 235/m3 280 yuan/m3 (EUR 36/m3) 
Hainan Province European spruce logs 1950 yuan/m3 EUR 251/m3 270 yuan/m3 (EUR 35/m3) 
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