Forestry must look beyond protecting individual parts of Australia’s timber supply chain, with China’s squeezed mills shipping 55 per cent more plywood to Australia in the first half. That is according to Steve Walker, Principal of Terrafolia Advisory, who says the profit figures China’s National Bureau of Statistics released on Monday are “really a margin story.”
“We shouldn’t be afraid of those supply chains simply because they look different from the ones we have today,” Walker said. Chinese mills are “competing aggressively for a smaller pool of demand” as a property and construction slowdown weakens sales at home, he says.
China’s timber processors turned 408.38 billion yuan of sales into 6.34 billion yuan of profit over the first eight months, the smallest profit of any part of Chinese manufacturing. The country has “too much manufacturing capacity relative to its domestic demand,” according to Walker, who does not expect the pressure to lift quickly.
Australian and New Zealand growers face pressure on log demand and prices, according to Walker, with struggling Chinese mills able to afford less for imported logs. At the same time, he says, mills with spare capacity will be chasing buyers in markets such as Australia for increasingly competitive plywood, panels, and laminated veneer lumber (LVL).
That is “potentially good news” for Australian home buyers, Walker says, with a buyers’ market for wood products able to cut what builders pay for timber framing and components. Lower material and construction costs would also help “take inflationary pressure out of housing,” he says, when construction inflation and interest rates are constraining affordability and borrowing.
For Walker, the bigger opportunity is strategic, with more competitive engineered wood shifting the contest with steel in timber’s favour, particularly where forest owners combine domestic sawn timber with LVL. Forestry is not just competing with other timber producers, he says, but with steelmakers such as BlueScope “for share of the building system.”
As it stands, Australia relies heavily on imported LVL for timber framing, with Forest and Wood Products Australia counting 254,065 cubic metres of imports in 2025-26 at the lowest average import price in five years. If more of that product were made from Australian and New Zealand plantation fibre, Walker says, builders would get competitive structural products and growers a higher-value market.
It comes as China brings significant volumes of domestic pine to market, according to Walker, who says its Masson pine is generally significantly stiffer than radiata. Chinese manufacturers now blend it with New Zealand radiata and, in some cases, plantation eucalyptus to produce LVL and plywood to specified performance standards, he says.
Increasingly, products that once relied heavily on Russian larch, European spruce, or poplar can be engineered from those blends, with the manufacturer “no longer necessarily selling a species,” according to Walker. The trade may then turn less on China being short of wood, he says, than on its mills buying the right certified Australian and New Zealand fibre for international markets.
Walker says the opportunity is to connect Australian and New Zealand plantations, sawmilling, and certification with some of the world’s most efficient engineered-wood manufacturing capacity. That could mean their logs made into engineered products offshore and shipped back, he says, with more of that manufacturing returning to Australia over time where scale and economics support it.
Lower-cost products and new supply chains will inevitably bring pressure for protectionism, according to Walker, who says trade remedies have a legitimate role where trade is genuinely unfair. Still, he says the sector needs to be “very careful about the consequences of simply making imported building products more expensive” when Australian families are experiencing homelessness and housing stress.
Change will create winners and losers, Walker says, with genuine risks around trade practices, biosecurity, certification, and sovereign manufacturing capability that need to be managed. Protectionism aimed at stopping structural change “also has a cost,” he says, at a time when Australia needs to build more homes, faster and more affordably.
The real contest is increasingly not Australian timber versus imported timber, according to Walker, but “timber construction versus steel, concrete and other building systems.” The objective, he says, should be “to build the most competitive, productive and sustainable timber supply chains we can: and use them to help Australia build more homes.”
