China is not winning the battle on structural LVL because of cheap labour or subsidies. It’s winning because its industrial system is structurally better aligned to the economics of engineered wood.
That is according to Steve Walker, Principal of Terrafolia Advisory, who earlier this month travelled to LVL manufacturing hubs in Linyi, Suqian and Guigang. Walker is behind Why China’s LVL Industry Holds a Structural Cost Advantage, and wants to help Australian, NZ and European businesses that are making decisions right now.
In LVL manufacturing, wood typically accounts for well over two-thirds of production cost. Small differences in effective fibre price therefore translate into large differences in finished product cost.
Steve Wallker has developed a short strategic brief outlining the real drivers and the implications for producers, investors and policymakers in Australia, New Zealand and Europe.
For Walker, the industry’s standard explanation for China’s dominance is wrong — and that mistake has a cost.
“Most commentary focuses on energy, labour or subsidies. Those factors matter, but they are not decisive,” he said. China already leads global industrial plywood supply and is rapidly scaling low-cost LVL production, rerouting markets — including Australia — that were previously supplied by higher-cost producers.
It comes as Wood Central reported that Chinese LVL arrivals at Australian ports surged 63 per cent in the ten months to October 2025, with ABS data recording more than 205,000 cubic metres in that period alone.
The cost structure is built from five interlocking elements: flexible global log sourcing across domestic and imported supply; measurement conventions that reduce payable log volume; recovery economics that monetise the whole log rather than select grades; thousands of independent peeling mills generating tradable veneer supply; and short shipping corridors into Asia-Pacific markets. Pull any one element out, and the others still hold. Pull them all together, and the fibre floor drops below what integrated Western producers can match.
European producers operate under a fundamentally different model — higher-quality logs, integrated forestry supply chains and elevated operating costs. “That system produces premium material,” Walker said, “but limits flexibility in commodity structural segments.” It suits specification markets well enough. In commodity structural supply, the landed cost gap is simply too wide.
“Competitiveness is not decided at the press line,” Walker said. “It is decided in the forest and at the log yard,” he said. Construction procurement is price-sensitive by design — and as long as it stays that way, producers able to secure usable wood at the lowest effective cost will set the market. For organisations weighing domestic manufacturing viability, long-term fibre strategy, or import-substitution exposure, these dynamics are now central to investment outcomes.
Walker’s new briefing paper, published weeks after he helped author a new white paper on high-productivity forestry and renewable carbon supply pathways, which calls for Australia to increase productivity from its existing plantations.
- For more information about the briefing paper, please contact Steve Walker today.
