Slowing Economy Reduces China's Log Importation from New Zealand, Russia, U.S.
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China's phenomenal GDP growth of between 9% and 14% annually during the past decade slowed down last year and is forecasted by International Monetary Fund (IMF) to be "only" 8.25% in 2012. Reduced investments in public projects and a cooling residential property market have resulted in a decline in the importation of saw logs during the first six months of 2012, according to the Wood Resource Quarterly (WRQ), Seattle, Wash., USA.
Softwood log imports to China in the first and second quarter this year were 6.2 million cubic meters and 6.6 million cubic meters, respectively, down from the all-time high of 8.6 million cubic meters seen in the 3Q/11, WRQ reports. Total imports for the first half of 2012 were 15% lower than during the same period last year, with the biggest declines occurring in shipments from Russia, the U.S., and Australia. Western Canada is the only major supplier that has increased shipments so far this year. Its annual shipments may reach more than 2.5 million cubic meters, which would be a record high.
The reduced demand for logs in China has not only impacted import volumes, but also prices for domestic and imported logs. The average price for imported softwood logs is down 14% from 2Q/11 to 2Q/12. Prices for New Zealand radiata pine logs dropped the most, while red pine logs from Russia showed the smallest price drops compared with other species of imported softwood logs.
Domestic log prices in China have also fallen over the past year, with Chinese-fir prices being down 6% year-over-year in the 2Q/12, according to the WRQ. Mongolian pine and larch prices were also lower by 8% and 16%, respectively.
Contrary to the recent downward price trend for softwood logs, prices for domestic hardwood logs, including Eucalyptus, birch, and poplar, have gone up this year and were close to or at record-high levels in the 2Q/12.
Much uncertainty surrounds investment activities in the Chinese construction sector, private consumption in the country, and the demand for Chinese forest products in North America and Europe. If the Chinese domestic consumption and private investments improve somewhat in the 2H/12, as IMF forecasts, both softwood and hardwood log prices are likely to stop falling and instead increase slightly in the second half of 2012.
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