WORLD MARKETS China largest softwood
importer despite slowdown Reduced activities in the housing construction sector in China decreased importation of softwood logs and lumber in late 2011, according to the Wood Resource Quarterly. Despite the decline in the fourth quarter, total imports during 2011 reached a record high, making China the largest importer of logs and lumber in the world
I
mportation of softwood logs and lumber to China has increased continuously over the past 15 years, and in 2011 the country was
the largest importer of softwood lumber and logs in the world, according to the Wood Resource Quarterly (WRQ). Total import value equalled almost $8 billion
last year, which was an increase of 57% from 2010, and up from only $70 million dollars 15 years ago. Annual growth over the past five years has been almost 30%, and over the past 15 years, the CAGR has been as high as 36%. Imports of softwood lumber have increased faster than imports of softwood logs over the past few years, but log imports still constitute a higher share of the total import value of softwood products. After having increased for seven consecutive
quarters, the importation of softwood logs and lumber fell for the first time in the fourth
quarter of last year because of reduced domestic demand and high inventories at many of the country’s ports. The decline was 14% from the previous term, but the total import value was still higher than the fourth quarter in 2010.
By volume, importation of softwood logs and softwood lumber to China fell 10% in the fourth quarter last year as compared to the previous quarter. Importation of logs and lumber from Russia decreased the most, while lumber from New Zealand and logs from Canada actually increased slightly during the fourth quarter. Much of the increased import demand for softwood raw-material has been, and continues to be, driven by the fast expansion in the house construction sector combined with the fact China lacks domestic forest resources to meet the growing demand for most forest products. A tightening monetary policy with a
restricted money supply resulted in reduced activities in the construction sector in the second half of 2011. It has also been reported that there were overstocked inventories of real estate (over 20 months of unsold inventory in Beijing and Shanghai), and that housing transaction volumes in many big cities fell by more than 50% in the fourth quarter. Societe Generale reported that housing starts were down 25% in December as compared to the same month in 2010.
It can be expected that the housing market will continue to face headwinds during the first half of 2012 unless the Chinese Government steps in to ease the country’s monetary policy. As a consequence, the prospects for log and lumber imports will be faced with uncertainty short-term, but will likely continue to trend upward long-term.
Latin America wood chip exports hit record high
Global trade of wood chips has gone up substantially the past two years. Hardwood chip export from Chile, Uruguay and Brail was up 43% in 2011 compared to 2009, as reported by the Wood Resource Quarterly. A clear majority of the increase was eucalyptus chips destined for pulp mills in Japan and Europe
Wood chip exports from Latin America are on track to reach a record high of almost 8 Mt in 2011, reports the Wood Resource Quarterly (WRQ). This would be an increase of 7% from last year and of almost 60% higher than in 2006.
Chile is by far the biggest exporter, accounting for two-thirds of the total shipments from the continent, while Brazil and Uruguay both account for about 16% each. In 2011, Chile was the world’s second largest supplier of hardwood chips after Vietnam. Latin America’s hardwood chip export volumes accounted for approximately 50% of globally traded wood
12 International Forest Industries | FEBRUARY/MARCH 2012
chips, a share that has grown from 34% five years ago.
Historically, between 80-90% of the exported wood chips from Latin America have been destined for Japanese pulp mills, but there has been a diversification of consumers over the past few years. Although shipments to Japan have gone up by over 30% from 2006, the share of total exports has declined and is currently around 70%.
The biggest change from five years ago is that pulp mills in Europe have been buying much more eucalyptus chip, particularly from Chile and Uruguay. In 2011, total shipments to
Europe reached almost 1.7 Mt, which was slightly lower than 2010 but more than a doubling from 2009, according to the WRQ. The three major importing countries in Europe are Spain, Portugal and Norway. In addition, there have also been a few shipments to Finnish and Swedish pulp mills the past few years. New destinations for eucalyptus chips from Latin America the past five years include Morocco, Turkey and China. There are expectations that Chile will increase its shipments to China in the coming years because of higher demand from new pulp mills in the country.
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