More than 60,000 cubic metres of softwood logs are still arriving at China’s ports every day, and despite a slight uptake in demand, China’s imports of softwood logs and lumber remain well down on past levels.
That is according to Scott Downs, PF Olsen’s Director of Sales and Marketing for PF Olsen, who reports that China’s softwood log inventory is currently stable at 3.5 million cubic metres, which includes 2.85 million cubic metres of radiata pine.
“The cost and freight (CFR) price range for A grade (logs) is currently 115-120 USD per JASm3,” Mr Downs said: “This is 3-4 USD below July pricing,” he said, adding that “the Chinese Yaun (CNY) has strengthened against the US Dollar (USD), so log exporters to China expect this will help to maintain pricing levels.”
According to China Customs, China’s imports of softwood logs have contracted 10% for the first six months of 2024 to 15 million cubic metres. In addition, the value of logs has also been in freefall, dropping 17% to $2 billion, from $141.45 per cubic metre to just $130 per cubic metre.
The latest data continues a long-term trend of softer imports, with China taking 13% fewer imports in 2023 (38,028.8 thousand cubic metres) compared to 2022 (43,603.9 thousand cubic metres).
Is China’s hot and cold lumber market in deep trouble?
In addition to softer log imports, Wood Central can also reveal that China’s traders are taking far fewer volumes of lumber. According to data from China Customs, Russia now accounts for 45% of all lumber imports – with Thailand, China’s second-largest importer, now responsible for more than 18% of lumber traded into the world’s largest forest economy.
The new data comes after Wood Central last month revealed that China’s economic growth has slowed to 4.75%, compared to the rapid annual growth rate of 7% and 8% during the 2010s heyday.
The China Caixin Manufacturing PMI slipped in July to 49.8 from 51.8 in June. This was the first drop in factory activity since October last year…output grew at the slowest pace in nine months due to a slow-down in export orders.
Scott Downs, PF Olsen’s Director of Sales and Marketing in the latest Wood Matters report.
“This should be a wake-up call for Chinese economic policymakers. It should be viewed as confirmation that the Chinese economy is in deep trouble and that its economic growth model is now well past its sell-by date,” according to Desmond Lachman, an expert in macroeconomic policy. “Unless the Chinese government introduces major structural economic reforms, China could experience a lost economic decade,” Mr Lachman wrote in the equity markets publication Seeking Alpha.
“That could have major consequences for the world economic outlook given that China is the world’s second-largest economy and, until recently, was the world’s main engine of economic growth and its main consumer of international commodities.”
- To learn more about China’s log and lumber markets and their impact on the global supply chains for timber-based products, visit Wood Central’s special feature.
