China's log imports climb 26% year-over-year in Q2, with US, New Zealand, filling gap left by downturn in imports from Russia; US shippers achieve biggest increase at 400,000m3/month at higher average unit price than New Zealand exporters
DUNEDIN, New Zealand
August 30, 2013
– NEW ZEALAND EXPORTS
New Zealand exports increased in June to make the first half of 2013 a record half for exports. Having now exported 7.88 million m³, NZ is on track to export over 16.4 million m³ of logs in 2013. Export prices have held relatively steady at the wharf gate, and this month pruned prices have staged a bit of a recovery after a huge drop in value during July. Average pruned log export prices are still below June prices and this looks to be where prices will settle. This has meant that there has also been a re-balancing in proportions of logs going offshore and being sold domestically.
A-grade and K-grade log prices are steady to down, but KS and KI are up in price by $2/tonne on average as exporters still feel the effect of the dropping currency as past currency hedging at higher rates is worked through. High prices and massive volumes exported from NZ has meant that export values of logs for the first half of 2012 have been the highest on record for any half year. The total value of log exports were just over NZ$1 billion. The previous highest half year was the first half of 2011 when total export values were 13% lower at NZ$910 million.
Imports to China decreased in June, though the second quarter imports were 26% above the second quarter 2012. Imports were very similar though to the second quarter of 2011 when demand was very high in China and prices reached record levels. Imports from NZ, however, are well above 2011 second quarter imports as there has been a massive downturn in log imports from Russia. The biggest increase in imports has come from the US where imports are ticking over at about 400,000m³ a month. This mix of pine and spruce imports are achieving a higher average unit price than the NZ imports.
There has been no significant downturn in demand within China which has meant that port inventories have stayed relatively low. There are mixed feelings from importers as to the outlook for the season from here, as the lack of a price drop will have provided optimism, though some fundamentals, such as global lumber prices and competing exports from other countries are still providing some concern.
SOUTH KOREA & INDIA
The South Korean market has remained steady this year with imports at, or very close, to 200,000m³ a month. The South Korean economy is very closely linked to exports and its global competitiveness is being tested currently as the Japanese yen has devalued significantly. As Japan is a close competitor for the same export markets this is meaning tough competition for South Korea. As a result of the slowing economic growth, construction is waning. Though port stocks are low, they are at sustainable levels and the market is capable of maintaining inventories at the low levels and buying to meet construction demand.
Exports to India have been relatively steady this year though the ability of India importers to keep up with prices in China may not continue as credit conditions are very tight and this has meant that some large volumes of timber are being pushed on the market to maintain cash flow at the sawmill level. The Rupee has dropped significantly this year which has cut purchasing power and a general lack of structure in the Indian industry has meant that this drop is difficult to absorb for many.
Russian exports to China continue to drop and now Russia has a much lower market share in China than NZ. China’s imports of logs from Russia have been 385,000m³ lower than imports from NZ in the first half of 2013. It was only in the third quarter of 2012 that imports from NZ outnumbered imports from Russia for the first time for a quarter.