China's wood product sector is expanding after hitting bottom in Q1, data suggests; lumber imports grow 1.5% in H1 over last year, Canadian lumber exports to China advance 4%
Wendy Lisney
VANCOUVER, British Columbia
,
August 8, 2012
(press release)
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The August issue of WOOD MARKETS' China Bulletin for August, released today, shows a number of positive statistical trends about what is going on in parts of China's economy as well as in the log and lumber markets in China. In fact, the bulk of the data suggests that China's wood product sector is expanding after hitting bottom in the first quarter of 2012. This comes after a wave of doom and gloom predictions by many arm chair and hobby economists suggesting that China was heading for a hard landing. As WOOD MARKETS has been stating for the last six to nine months, we have expected a soft landing and the latest data tends to support this assertion.
Statistical trends that compare 2012/H1 with 2011/H1 show flat to slightly declining trends in many Chinese market segments. However, this is comparing a rising economic period in 2011/H1 with one in 2012/H1 that has essentially been coming out of an economic slowdown where high inventories needed to be reduced and purged before more buying could occur. That is where the quarterly data becomes important, as 2012/Q2 shows strong growth in most sectors as compared with 2012/Q1. It is starting to look like 2012/Q1 will be the low water mark in this log/lumber cycle.
Some of the highlights that show improving industry and market conditions from the WOOD MARKETS' China Bulletin include the following:
In China's log import trade, total log imports declined by 8.9% in volume and 4.8% in value in the first half of 2012 as compared to the same period in 2011. The import volume and value of softwood logs decreased 16% and 22%, respectively, from the same period of last year, whereas hardwood log imports were up 9% in volume and 19% in value.
However, in looking at quarterly trends in total log imports by volume, 2012/Q2 is higher than 2012/Q1 by 9%. Similarly, quarterly trends in total softwood log imports by volume show that 2012/Q2 is higher than 2012/Q1 by 7%, again indicating that the market is bouncing back from its low point in 2012/Q1. More important has been the soft log prices in China, as reported in the China Bulletin.
The main reason for the decline in softwood log imports was the slowdown of the real estate industry, causing lower consumption in softwood for the construction industry, that resulted in lower log imports in fourth quarter 2011 and first quarter 2012, as inventories had to rebalance.
Canadian lumber shipments to China (almost all from B.C.) increased by 4.0% in the first six months of 2012, over the same period in 2011; however, the export value decreased by 6.4% in first half of 2012 due to falling prices. Russian lumber exports to China reached 3.0 million m3 in volume, representing an increase of 6.5% from the same period last year. U.S. lumber exports to China have seen a decline of 14.5% in volume and 9.8% in value during first six months of 2012, compared with the same period last year.
It is hard to know how the market will perform in the next six months, but the industry expects no further decreases, with the expectation that a recovery will take hold later in the year. It is starting to appear that China is working its way out of its house construction slowdown, at least based on a review of the latest monthly data. A more thorough analysis as well as a full five-year forecast on timber harvests, log and wood products, as well as prices, will be released in September in WOOD MARKETS latest China Book Outlook to 2017 (3rd Edition).
About International WOOD MARKETS:
International WOOD MARKETS Group (www.woodmarkets.com) comprises wood products industry, market and business consulting services for industry and government clients. The firm maintains a global data-base and also offers numerous industry or market specific multi-client reports, including its landmark WOOD Markets Monthly International Report.
Strategic business assessments of matching the timber resource to the global commodity and specialty wood products market coupled with our feasibility analyses of timber processing options are trademark skills of the firm. Our ability to conduct in-the-field investigations coupled with our global network of contacts and comprehensive data-base delivers strategic results for clients looking to review or expand their domestic or global business and marketing or in evaluating investments.
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