China has likely reached the bottom of its buying cycle, with demand for logs expected to pick up over the coming months. That is according to a new report produced by NZ-based Agri HQ, which revealed that reduced supplies leaving New Zealand for China’s mega ports have added to challenges faced by traders struggling to sell into a market hurt by a long and protracted trade war between China and the United States:
“It’s a question of how much upside we see from here on out, though the general consensus is that any gains that are achieved in the coming weeks/months will be moderate until wholesale log prices in China improve,” the report said. And whilst “there continues to be talk about the opportunities that could come from the potential New Zealand-India free trade agreement that is in discussion. It’s unlikely they’ll pull a major volume of logs away from the Chinese market FTA or otherwise – they’ve only exceeded a 5% market share by volume once in the past 12 months.”
In recent years, successive governments have looked to increase trade with India – one of the world’s fastest-growing markets for log and lumber imports – as a hedge against the Chinese market. Last month, Wood Central reported that trade in radiata pine – which peaked at NZ $326 million before Covid – could be the biggest winner in a deal with India.
In March, Todd McClay – New Zealand’s Agricultural Minister – said that India’s trade in NZ timber could multiply in the coming decade, with timber trade increasing from just NZ $9.5 million in 2023 to NZ $76.5 million last year: “Our relationship with India is a key priority for New Zealand, and this agreement reflects our commitment to deepening this strategic partnership,” McClay said. “Many of our forestry exporters have long-standing relationships in India and are keen to expand.”
- To learn more about the Chinese log market and why China is now pivoting from log imports to lumber, click here for Wood Central’s special feature from last year.
