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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

Log prices hit new record highs on buoyant demand

27/3/2017

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Buoyant New Zealand activity has pushed up local log prices to new record highs.

The average price for round wood logs used in the horticulture sector rose to $92 a tonne in March, up $2 from February's average price and at the highest level since AgriHQ began collecting the data in early 2002.

Structural log prices also increased, with S3 logs hitting $114 a tonne, also the highest since AgriHQ began collecting the data in early 1995, while S1 logs rose to $122 a tonne, the highest since mid-1994.

Record high net migration and low interest rates are putting pressure on the nation's housing market, boosting prices and stoking construction activity. A booming horticulture industry is also spurring investment activity in that sector, helping push demand for round wood.
​
"The New Zealand domestic log market has maintained its incredible strength in recent weeks," AgriHQ analyst Reece Brick says.

"Orders are flowing into sawmills at a constant but rapid rate, mainly underpinned by the ever present housing construction sector, especially around Auckland. This procurement competition between mills means the AgriHQ price for the majority of key domestic log grades lifted."
Mr Brick says demand remains firm in the pulp, pruned and round wood markets.
"There's been little sign of any stagnation in the round wood trade," he says.

Mills at maximum 
"Reports suggest many mills are running at or near their maximum capacity as orders keep coming in, and log supply is too tight to prevent any prices increases."

Mr Brick says there is some concern about whether structural log prices may soften as inventory levels increased at North Island mills heading into winter when construction demand tended to slow.

Meanwhile, export prices for New Zealand logs softened by about $2 a tonne across the range of logs measured by AgriHQ.

"The key factor behind the weaker wharf-gate markets was the sudden increase in shipping rates," Mr Brick says.

"Unlike other months, it was not oil prices that created this small surge. Instead, an increase in commodity shipments to China, such as iron ore from Australia, has been the key factor. This has engaged a significant amount of previously idle shipping capacity in the Pacific, shifting the market in shipping companies favour."

Mr Brick says exporters are watching the situation closely to see if the change is short-term, or part of a longer-term trend.
"From a domestic mill's perspective, this softening is a step in the right direction, as it may entice more logs to stay within the New Zealand market," he says.

"That said, a number of logs are still making premiums over domestic trading at the wharf-gate, so any change in trading patterns is unlikely to be major for now. Additionally, exported pruned logs tend to be of lower quality than locally traded product, so not all of these logs would be sought after by New Zealand mills."

Shipping rates to China edged up to $US20/JAS from $US19/JAS last month and $US15.50/JAS a year ago, while rates to South Korea advanced to $US19.10/JAS from $US17.80/JAS last month and $US15.20/JAS a year ago, and rates to India lifted to $US26.30/JAS from $US23.60/JAS last month and $US20.90/JAS a year ago.
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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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