Håkan Ekström
A Look at China's Fiber Import Trends
ResourceWise: Apr 30, '24
More market turmoil in China as demand and import availability have both fallen. After a peak of imported lumber in 2020, we’re seeing much lower overall numbers in the country.
Will China’s decrease in imports and usage affect wood prices in the global market?
China’s Major Growth Phase Slows as Logs and Lumber Use Declines
As late as 2019, China imported almost 100 million m3 roundwood equivalents (rwe) of softwood logs and lumber. The high imports helped to meet the growing demand for forest products in the domestic market.
Since then, wood consumption has declined—quite substantially in many areas of China. As a result, the importation of forest products has decreased to levels not seen in over a decade.
Wood Resources International reports that China imported only about half the levels from its peak in the 3Q/20. These numbers show the second lowest amount of quarterly imports in ten years of our tracking.
Falling Lumber Demand Reflects Economic Shift in China
According to the World Bank, China’s economy took a big hit during the Covid epidemic. GDP growth fell to an estimated 3% in 2022, compared to a 9% average annual increase from 1978-2021.
Estimates call for the Chinese economy rebounding to just over 5% growth by the end of 2023.
Russian Strife Continues Affecting Chinese Lumber Markets
China’s dramatic reduction in log imports has predominantly been driven by the lack of supply from Russia. In January 2022, Russia implemented an export ban in the wake of the conflict with Ukraine.
Russia was the largest log supplier to China until 2012 when New Zealand surpassed it. Since then, both New Zealand and Europe provided the majority of imports to China with some ups-and-downs during the height of the pandemic.
Some disruptions occurred in late 2020 when China banned Australian log imports due to bark beetle infestation. Due to New Zealand-Australia relations, we saw some volatility in pricing to China.
However, China has lifted the ban on Australia while Russia’s assault on the Ukraine perseveres. Since Russian’s export ban, shipments have fallen consistently and were down to zero in 2022.
Russian exports fully dropped off the map due to the Ukraine conflict, while North American exports to China also receded. As a result, New Zealand has remained the primary source of logs for China.
Even with increased demand from other countries, supplies have fallen across the world. Besides Russia, log supplies from Australia, Canada, and the US plunged over the past five years. As a result, New Zealand and Europe have become the two major regions supplying China (see chart).
During the first four months of 2023, the market share for China’s log imports shook out as follows:
- New Zealand: 58%
- Germany: 14%
- Poland: 5%
- United States: 5%
- Canada: 4%
- Japan: 4%
Much of the decline in previous sources such as the US comes from a decreasing supply of available exports. The US
The outlook calls for continued decline in shipments from North America and Europe. Eventually, we’ll see New Zealand as the only remaining major log supplier.
As this shift occurs, demand will still increase to meet construction needs in China. Consequently, China will need to explore opportunities to increase lumber imports other than logs to meet future wood demand.
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