The price for logs in China has risen steadily through Quarter 1 with the price for A-grade logs now at 177 USD per m3. The inventory of pine logs at the 23 main log ports in China has been stable despite a below-average daily offtake of 65k m3 per day.<\/p>\n
Log supply has been constrained with less supply from both New Zealand and Europe. In January 2022, log supply by value to China from New Zealand was down 40% compared with January 2021 supply. This was due to many crews taking extended breaks over the New Zealand Christmas \/New Year Holiday period. Even with increasing AWG prices through Quarter 1 in New Zealand, many forest owners are still limiting production levels or not starting new jobs until they see consistency in the AWG pricing. March is traditionally a big month for log production in New Zealand due to good weather, good log prices and a high amount of workdays (23 this year). Due to interruptions in the supply chain caused by Covid absences and weather events, log production will also be lower than expected this March.<\/p>\n
Other factors reducing supply will be Uruguayan exporters dealing with increased ocean freight costs, and a reduction in European log supply due to Russia invading Ukraine. While we will likely see an increase in Russian lumber supply (and possibly even logs despite an earlier ban of export logs) this would take time to ramp up, while the reduction from the rest of Europe is more immediate. European supply was already reducing before the war, due to falling salvage harvest levels and increased internal processing and consumption.<\/p>\n
While the China log market is ticking along, there is a concern about the lingering effects of the financial crisis in the real estate industry as well as the effect of mass lockdowns as China continues an elimination strategy for Omicron. Currently, the reduced supply is maintaining price pressure in the China log market. However, if any demand reduction exceeds the reduction in supply, then this price pressure will disappear.<\/p>","protected":false},"excerpt":{"rendered":"
The price for logs in China has risen steadily through Quarter 1 with the price for A-grade logs now at 177 USD per m3. The inventory of pine logs at the 23 main log ports in China has been stable … Continue reading