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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

Improved demand of New Zealand Radiata Pine logs

23/3/2017

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​Log exports have recovered strongly following the improved demand over the past year from China, New Zealand's largest market for logs and sawn timber. The recovery follows a slump caused by excessive inventory in 2015.

The healthier China market was reflected in Port of Tauranga's interim first half results announced this week, which showed log exports from Tauranga had rebounded from the previous corresponding period, increasing 21 per cent in volume to nearly 3 million tonnes.

Tauranga is New Zealand's major log export port, accounting for around one-third of total exports.
According to Ministry of Primary Industry data, New Zealand log exports by value increased in the 2016 year by $568 million to a total of $2.5 billion, a jump of 29 per cent on 2015. China accounted for 77 per cent of this increase, with an additional $440m worth of export log sales. South Korea and India accounted for an additional 10 per cent and 7per cent respectively.

Prices paid by log exporters for logs at ports around New Zealand increased sharply in January with a slight reduction in February, Rotorua-based forestry consultant PF Olsen said in its latest report.

"Export markets are expected to remain steady for the next few months with any price changes for logs at New Zealand ports a reflection of shipping and exchange rate fluctuations," says PF Olsen business development manager Scott Downs.

PF Olsen noted that inventory at the China ports had risen sharply from the reported 2.2 million cubic m in December 2016 to a current estimated 3.5-4.0m cubic m. But the report attributed the buildup to the Chinese New Year as factories across China closed down in late January, and said it was not a major concern.

While market observers were keeping a watching brief on the increase in inventory, they do not hold major concerns for the state of the market, said Mr Downs.

"Whilst there has been an absence of market information over this holiday time in China, several factors should assist with reducing this inventory," he said.
These include the fact that consumption in China is about to start again with the New Year holidays concluding, and demand expected to ramp up.

There are also early reports of a slowing down in supply of North American logs to South Korea and China. China currently imports approximately 700,000 cubic m per month from North America, so any reduction will have a material effect.

As well, the Indian market has started to take more logs again after several months of lower demand. The market has suffered from the effects of the government's demonetisation last November, aimed at curbing India's enormous black economy.

PF Olsen's report quoted Satinder Singh, New Zealand manager for Indian log exporter Aubade NZ, as saying the impact brought economic and business transactions in many sectors to a virtual standstill from November through to January.

Most New Zealand exporters did not ship to India for a couple of months, creating a gap in supply, which in turn increased demand with prices catching up with China this month.
New Zealand Forest Owners Association spokesman Don Carson described the export log market as stable.

"But we're keeping a weather eye on the possible trade impact of the Trump presidency," said Mr Carson.

There has been concern in the forestry sector for some time that Canada's failure to renew its lapsed softwood lumber trade agreement with the US has the potential to impact New Zealand log exports to China.

If the US imposes a tariff on Canadian imports, squeezing them out of the US market, that could divert production to other markets where New Zealand is active, such as China.
However, said Mr Carson, if Canada cannot export the volumes they used to across the border, then it's likely the cost of timber will go up in the US as a result, which could make it a more competitive market for New Zealand exporters.

Forestry facts - Year ending December 2015
- Total exports of forestry products from New Zealand for 2015 were $4.8 billion.
- Of total forestry exports, 38% went to China.
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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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