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China softwood log inventory is about 4.7-4.8m m3\u00a0with radiata accounting for about 3.2m m3. Port off-take has increased to over 80k per day. This is a slightly higher daily offtake than the same time in the last two years. The problem is poor sentiment as the China market was expecting higher log demand.<\/p>\n
The CFR price for New Zealand A grade radiata logs in China is in the range 140-145 USD per JASm3. There is price pressure as wholesale log prices in China have fallen. Wholesale prices for A grade radiata logs in Lan Shan have dropped from 970 to about 920 RMB in the last month. European spruce logs that had maintained their wholesale price when the price for radiata had dropped 5% in February, have now fallen significantly in the last two weeks from over 1200 RMB to below 1100 RMB per m3.<\/p>\n
Log buyers are also struggling to open Letters of Credit (LCs). Hopefully, this situation will improve as China has freed-up approximately 500b CNY (72b USD) by cutting its Reserve Requirement Ratio (RRR) to 7.6%. This is an attempt to stimulate the China market, so it can achieve a GDP growth target of 5% that was announced at the National People\u2019s Congress in early March. China achieved 3% growth last year. The IMF reports that China has achieved this target in the first two months of 2023, and predicts China will achieve GDP growth of 5.2 this year.<\/p>\n
The China Caixin manufacturing PMI increased 2.4 points in February to 50.6. The index is above the significant level of 50 for the first time in seven months. (A reading above 50 indicates an expansion of the manufacturing sector). Sentiment also improved to a 23-month high as markets expect the recovery in consumer demand to be sustained.<\/p>\n
This general positivity in China markets does not seem to be manifesting in the construction industry. China generally is battling with a drop in productivity and this may be even more pronounced in the construction industry where state-owned companies have started to replace private companies. There is often a productivity gap between state-owned enterprises and private companies.<\/span><\/p>\n Source: PF Olsen<\/p>","protected":false},"excerpt":{"rendered":" China softwood log inventory is about 4.7-4.8m m3\u00a0with radiata accounting for about 3.2m m3. Port off-take has increased to over 80k per day. This is a slightly higher daily offtake than the same time in the last two years. The … Continue reading