Australia’s Trade Minister has returned home after a short trip to China, where he advocated for continued efforts to resolve trade bans.
After talks with Chinese Trade Minister Wang Wentao in Beijing, Don Farrell said he was “very pleased to confirm that we agreed to step up dialogue under our free trade agreement and other platforms to resolve our outstanding issues.”
Don Farrell pushed the Chinese government to lift its prohibitively expensive tariffs on Australian barley, beef, wine, lobster, coal, and … timber.
But those trade bans remain in place for now.
Speaking at a press conference after the talks, Mr Farrell said there was “positive momentum” in the meeting but acknowledged more work needed to be done.
“We made the decision on coming to Government 12 months ago we wanted to stabilise our relationship with the Chinese Government and to get our relationship back on track and to lift all these trade impediments,” he said.
“This is just another step in the road … I’m very confident that as a result of this face-to-face discussion today that we are well on track to get a stable, normal relationship with China.
“The trade impediments didn’t occur overnight and they’re not going to be resolved overnight.”
Rewinding Trade Restrictions on Australian Timber Exports
In February 2023, Wood Central reported that the Chinese Government was looking to rewind restrictions on timber (and beef).
“Now suddenly there is dialogue, and it is not just minister to minister, but it’s government to government and businesses are feeling a bit more confident to talk to each other about potential,” Australian Meat Industry Council CEO Patrick Hutchinson told The Australian Financial Review.
The restrictions still remain in place, but the latest developments are a positive step for the Australian forest products industry.
In 2020, China suspended imports of Australian timber after local customs officers claimed they found bark beetle in cargo.
Before the sanctions, Australia had a $1.6 billion ($1.23 billion (USD)) timber trade with China.
The four-million-tonne log timber trade with China has been largely suspended since 2020, with Woodchips exempt from the ban.
It was revealed that China’s Foreign Minister Qin Jang plans to visit Australia in July following a meeting with Foreign Minister Penny Wong last December.
Mr. Wang welcomed “positive progress” after years of escalating tensions.
“China and Australia are important countries in the Asia Pacific. We do not have fundamental conflicts of interest,” he said.
“We need to see our differences and divergence in perspective, improve and maintain our bilateral economic relations.
“This is in our fundamental interests.”
NZ Log Prices Drop 14% Amid China Construction Slowdown
Last week, Wood Central reported on New Zealand’s declining log export prices due to a lack of expected growth in China’s seasonable demand.
From March to April, A-grade log prices declined from $130-$133 NZD to $112-$115 NZD.
Allan Laurie, Managing Director of Laurie Forestry, expressed frustration with the situation, stating, “prices must be north of $120” for harvesters to break even.
This situation has reached a tipping point where the market has essentially signaled that it has an adequate wood supply, and sellers must now offer discounted prices on the log supply.
“Some ships were en route without contracts or letters of credit, forcing exporters to accept whatever price was offered for the logs upon arrival in China”, Laure said.
The New Zealand Forest Owners Association – which represents all NZ exports, acknowledged that the NZ forest products market is heavily reliant on the Chinese market for export.
Though a lower-priced and challenging market, Laurie identified India as a potential market. However, Europe perhaps presents the greatest opportunity for NZ’s radiate pine.
“Europe is a standout. We’re seeing significant reductions in harvest across Europe of the softwood species, and that must be destined to continue. So we should be looking for opportunities in Europe also.”