Global Log and Lumber Markets

A purported ‘herd mentality’ in China has brought prices of radiata pine softwood logs for May in New Zealand down sharply. Some industry watchers think the drop is a ‘short term blip’.
New Zealand “eastern seaboard log inventories have suddenly risen to close to five million cubic metres. This represents about four months’ supply at the current consumption levels, causing more than a few nervous twitters,” according to NZ Farm Forestry Market Report for May 2014.
Figures from Statistics New Zealand show that the value of New Zealand log exports went from NZ$1.6 billion in 2012 to NZ$2.4 billion in 2013, accounting for 42 per cent of the nation’s forestry product exports by value, compared with just three per cent in 1993.
In 2013 New Zealand exported 16.6 million cubic metres of logs putting the country up with the top three softwood log exporters in the world, and the largest log exporter to China. The value of log exports to China increased in value from NZ$1b in 2012 to NZ$1.7b dollars in 2013.

PF Olsen Log Price Index May 2014
SOURCE: PF Olsen Log Price Index

Meanwhile, said Thursday, “Dramatic fall in export log prices in May — Radiata pine falls by 13.6 per cent — [was] caused by herd buying patterns in China, recovery expected.
“April’s relatively small reduction in export log prices was followed by much larger reductions in May – some prices down as much as NZ$25/JAS cubic metre. In just two months, export log prices lost 14 months of prior month on month gains.”
Madison’s has heard reports from various sources since early 2014 about dramatic increases in log inventories at ports in China.
Elsewhere, Japan’s Forestry Agency has released summarized import results of wood for 2013, according to Japan Lumber Journal Thursday. The annual import value of wood increased for the first time in two years to 1,216 billion yen, up 27.3 per cent from the previous year, or the first record exceeding one trillion yen in five years. The value converted into US dollars amounted to US$12,445 million, up 4 per cent.
For the annual volume, Japan imported 7,498,000 cubic metres of lumber, up 14.3 per cent; 4,556,000 cubic metres of logs, up 1 per cent; and, 3,026,000 cubic metres of plywood, up 2.2 per cent.
Of import volume, European lumber exceeded that of North American for the first time. European lumber imports were 3,194,000 cubic metres, up 31.1 per cent.
North American lumber imports increased 4.2 per cent from the previous year to 2,829,000 cubic metres. Canada had a 30 per cent share of the Japan’s import value of lumber, and was the second-largest exporter with 136.8 billion yen, up 37.2 per cent, says Japan Lumber Journal via the Japan Forestry Agency.

Latest Data

Canada’s forestry exports shrank in March by 8 per cent, according to Export Development Canada (EDC) Tuesday. A 19 per cent gain in sales of logs and wood sales could not compensate for a 8.5 per cent drop in pulp and paper alongside an 8.6 per cent decline in building and packaging materials.
British Columbia forest products exports in May dropped 3.6 per cent, making it the weakest contributor to that province’s revenue that month.
Still with the EDC, strong BC forestry sector growth will push total provincial international exports to an 8 per cent growth rate this year and 7 per cent in 2015, according to a forecast released also Tuesday.
The forecast said the forestry sector — the largest BC exporter with about 35 per cent of the provincial total — will grow by 15 per cent this year and 10 per cent in 2015.
“Chinese demand alone could grow to over $600 million annually,” said EDC chief economist Peter Hall in a statement. “The sector’s ability to overcome those capacity constraints will be key to export growth in this sector.”
US housing starts are expected to surpass 1 million for the first time since 2008. This year should see 1.2 million starts, the report said, and 2015 will reach 1.4 million, detailed EDC.
In Europe, Finnish exports of softwood lumber and planed products in February 2014 were roughly 8.3 per cent lower than the previous year, at a total of 545,000 cubic metres, said EUWID Thursday. Whereas exports to buyers in Europe remained practically unchanged at 245,000 cubic metre,s deliveries to buyers outside Europe fell by 14 per cent to roughly 300,000 cubic metres. Within Europe the foreign trade figures show wide variations in development.
Exports to the UK fell by over 18 per cent to 49,000 cubic metres and those to Germany by 10 per cent to 36,000 cubic metres, whereas growth was registered in deliveries to the Netherlands, up 11 per cent, and Estonia, up 14 per cent.
Outside Europe, the negative development registered in the preceding months continued unchanged, said EUWID.