China’s importation of logs and lumber plunged by over 50% from 4Q/21 to 1Q/22 as GDP fell sharply.
China's economy weakened in the 1Q/22 as the COVID epidemic took its toll in cities such as Shanghai. US financial institutions forecast the GDP growth to range between 3-4% in 2022, less than the Chinese government’s target of 5.5% for the year.
The GDP outlook is on pace to be the second-lowest, after 2020, in 45 years.
COVID Again the Cause of Shaky Chinese Economy
The weak economy, widespread Covid-related shutdowns of the manufacturing industry, logistical bottlenecks with supply chain interruption, and less demand for housing and apartments have reduced consumption of wood products in the past years. The decline in wood demand has resulted in a sharp drop in the importation of logs and lumber.
From the all-time high in 3Q/20 to 1Q/22, China’s import volume of softwood forest products fell over 50% (see chart). In 1Q/22, softwood log imports declined sharply to 6.1 million m3, 45% lower than the previous quarter and the lowest quarterly volume over the past ten years.
Russian Export Ban Also Affecting Chinese Imports
With Russia implementing a log export ban beginning in January 2022, import volumes to China fell substantially, from 800,000 m3 in 4Q/21 to only 80,000 m3 in 1Q/22 (customs data show no imports at all for March and April, 2022).
Other supplying countries also have reduced shipments from the last quarter of 2021 to the first quarter of 2022, including Uruguay (-93%), the US (-58%), Germany (-43%), and New Zealand (-35).
With the reduced demand for imported logs, average import prices have fallen for two consecutive quarters from their all-time high of $190/m3 in 3Q/21 to $170/m3 in 1Q/22. However, despite the decline, prices in early 2022 were still among the highest they have ever been.
This is a preview post of our Market Insights report from Wood Resources International (WRI). For the past 13 years, Wood Resources International has distributed Market Insights on a regular basis to over 8,000 forest industry executives, analysts, investors, consultants and journalists worldwide. These Market Insights have covered the most recent developments in regard to global wood supply, forest industry production, forest products trade, and pricing of sawlogs, pulpwood, wood chips, lumber and biomass.