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Arbor Resources Blog Updates

​Chinese imports of softwood and hardwood wood products will be
significantly altered in 2022 if Russia’s log export ban is implemented
China is the world’s largest importer of softwood and hardwood logs, and for many decades,
Russia has been a significant log supplier for them. This relationship may change in 2022
if Russia implements their proposed ban on exports of softwood logs and valuable
hardwood logs, while also introducing export taxes on green lumber. All these policy
changes are designed to encourage increased domestic production of higher-valued forest
products.
The Russian parliament has not yet announced the final legislative proclamation, so it is
not clear if there will be a complete or phased-in ban, a significant export tax, or even the
possibility of a state-owned export monopoly. However, a signal has been sent to the
marketplace that Russia will no longer be a major supplier of softwood and hardwood logs.
One consequence of this decision is that Chinese wood manufacturers will need to explore
new long-term log supply regions.
In 2020, China imported almost 6.5 million m3 of logs from Russia, predominantly
softwood species. The trade was substantially less than in any year during the past two
decades. Nevertheless, Russia was still the largest supplier of hardwood logs to China in
2020 (more prominent than any other source of temperate or tropical logs) and the thirdlargest
supplier of softwood logs.
It is crucial to keep in mind that China has shifted from sourcing logs from Russia to
European suppliers the past few years as insect-infested timber in Central Europe has been
in temporary abundance. From 2018 to 2020, softwood log imports from Europe increased
from 1.3 million m3 to 12.3 million m3, while Russian-supplied logs fell from 7.8 million
m3 to 4.2 million m3. However, shipments from Europe are not sustainable long-term.
According to the just-released study by the consulting firms Wood Resources International
and O’Kelly Acumen (Russian Log Export Ban in 2022 - Implications for the Global
Forest Industry), China is expected to source more sawlogs from Oceania, Europe, and the
US short-term. Longer-term, the study anticipates that China is likely to shift further from
WRI Market Insights 2021
- a subscription service from Wood Resources International
Global Sawlog Markets
Wood Resources
International
importing logs to lumber, thus creating opportunities for lumber manufacturers, mainly in
Europe and Russia, to increase shipments to this growing market.
The excerpt above is from the just-released Focus Report “Russia Log Export Ban in 2022 –
Implications to the Global Forest Industry”, published by Wood Resources International LLC
and O’Kelly Acumen. For more information about the study or to inquire about purchasing the
60-page report in easy-to-read slide format, please contact either Hakan Ekstrom
(hakan@woodprices.com) or Glen O’Kelly (glen.okelly@okelly.se). A Table of Contents of the
report is available on our website. Click here!
Contact Information
Wood Resources International LLC
Hakan Ekstrom, Seattle, USA
info@WoodPrices.com

NZ Export Log Prices hit New Record

10/1/2018

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Picture
New Zealand export log prices edged higher to a new record, buoyed by continued strong demand from China, a weaker currency and historically low shipping rates.
 
The price for A-Grade export logs reached $129 a tonne, up from $128 a tonne last month, and $127 a tonne the month earlier, marking the highest level since AgriHQ began collecting the data in 2008, according to the agricultural market specialist's monthly survey of exporters, forest owners and saw millers. All of the main log grades tracked by AgriHQ either held steady or lifted as much as $2 a tonne on the previous month, AgriHQ said.
 
New Zealand is experiencing strong demand for its logs from China, which has clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market. AgriHQ said Chinese demand for New Zealand logs remained just as firm as previous months, and is set to hold that way until at least the Chinese New Year in February next year.
 
"Strong and constant demand out of China is the main factor which has pulled wharfgate log prices to record levels," said AgriHQ analyst Reece Brick. A weaker local currency, which had been trading around seven-month lows against the US dollar for most of November and early December, as well as historically low shipping rates had also supported wharfgate log values, he said.
 
Brick noted that the main issue for the export market at the moment is shipping logistics, with massive volumes of logs heading to the export market creating congestion at ports.
 
Beyond China, export markets have had mixed fortunes, he said.
 
In the New Zealand domestic market, trading continued at essentially the same level as a month ago, though some higher prices were reported, he said. This put the national average for structural logs at $129 a tonne, pruned logs at $182 a tonne and roundwood at $97 a tonne.
 
"Strong housing construction rates continue to underpin wider demand for timber from mills - a situation which is set to remain the norm for at least the medium term," Brick said.
 
Mills have benefited from consistent wood flows in recent weeks, as dry weather conditions halted any previous disruptions to harvesting, he said.
 
"All signals point to stable-to-firming domestic log prices through Q1 next year," he said.
 
Still, Brick noted that rising wharfgate prices over the past 18 months have forced mills to be more price competitive and more mills are battling to make a profit margin, even with strong end-user demand for processed wood.
 
"Although short-term cash flow is an issue, part of the concern is the mills' inability to invest in new technology," Brick said. "Many are unable to front the cash to invest in more efficient machinery that would allow them to make larger margins on logs. This calls into question the longevity of these mills, especially if there’s no reprieve in competition from overseas traders."
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    Author
    ​FRANK T DAVIS 

    A SURLY AND CYNICAL OLD CURMUDGEON WITH A JAUNDICED VIEW OF THE POLITICAL ELITE .

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