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NZ set to gain market share in Chinese softwood log market, AgriHQ says

Monday 1st December 2014

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New Zealand, the largest supplier of softwood logs to China, is likely to continue to gain market share over the next five years, according to an industry report.

In 2013, New Zealand accounted for 32.3 percent of China's record softwood log imports for the year, according to the DNS Forest Products AgriHQ China Forestry Report 2015.

While China will be able to meet more of its own demand for timber in the future, supplying 59 percent of its domestic needs by 2020 from 52 percent in 2013, it still won't keep up with forecast demand, AgriHQ forestry analyst Ivan Luketina said in the report.

"The burden of supply of the increasing imports of softwood logs and lumber is expected to fall mostly on NZ," Luketina said.

"Russian supply has been slowly decreasing for the past seven years and the increasingly high harvesting costs there are prohibitive to growth. Supply out of North America is likely to be curtailed by the recovery of its own housing market," he said. "Meanwhile, supply from NZ is forecast to increase and this means NZ will increase its market share in China over the next five years."

While growth in the Chinese construction sector is slowing, it is still likely to expand over the next five years to 2020, underpinned by migration from rural to urban areas, he said. The Chinese government's long-term plan for urban migration means another 120 million people will need to be housed in urban centres by 2020.

Some 80 percent of New Zealand log exports to China are destined for the construction market.

Figures released today by Statistics New Zealand showed export prices for the country's forest products fell 3.9 percent in the third quarter, following a 7.9 percent drop in the second quarter, as the prices for pine logs fell amid decreased demand and a stock build up in China.

Still, Luketina said that while Chinese demand for softwood logs and lumber is likely to fall below 50 million cubic metres in 2014-15 from more than 55 million cubic metres in 2013, it would likely pick up again to 59 million cubic metres by 2020.





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