Huge growth potential and softwood opportunities – Softwood is gaining market share over hardwood in the Indian market, assisted in part by limited volumes of renewable or certified hardwood fibre. A variety of initiatives are pointing to huge future increases in Indian wood products demand, with the country poised to become the third- largest economy in the world by 2030.
India is a difficult market to access for most major log/lumber export-ing countries. New Zealand is its most dominant softwood country supplier, accounting for 70% of total softwood log and lumber imports; Malaysia is the country’s largest hardwood supplier. Rapidly depleting global hardwood supply and huge consumption growth anticipated in India mean that the demand for imported softwood will only expand. One forecast is for massive softwood expansion: from approximately 2.5 million m3 in 2017 to over 65 million m3 by 2027.
The Indian log market has reached China price parity with ‘A’ longs now selling for USD 159-160/JASm3. While volumes delivered to this market are 14% down year on year to May 2018, it has been a steady market and exporters still expect an increase in demand in Q4.
There is an increased schedule of ship arrivals from NZ over the next six weeks, so this will be a good test of this market. Containers of logs are also arriving from Germany, South Africa and southern yellow pine from the USA.
The labour shortage mentioned in previous Wood Matters continues, but some labour has returned to the mills from agricultural work. Log stocks are about 120,000m3 in Kandla and 30,000m3 in Tuticorin. The cash flow of log buyers is still tight after the introduction of GST and the increased scrutiny on bank lending compounding the weakening of the Indian Rupee against the US dollar.