A slowdown in the Chinese economy impacted the construction sector in early 2014 resulting in a decline in lumber import volumes by 16% in the 1Q/14 as compared to the previous quarter. The biggest drop was in Canadian lumber shipments, which fell to their lowest levels in two years, according to the Wood Resource Quarterly (WRQ). The reduced activities in the building sector during the winter months also impacted log import volumes to China, but it was more of a break in the upward trend rather than a decline, with the 1Q/14 imports being about the same as in the 4Q/13.
Later in the spring the economy picked up steam and the GDP rose by 2.0% in the 2Q, up from 1.4% in the 1Q/14. The annual growth rate is now on target to reach close to 7.5%, which would be slightly lower than in 2013 but still considerable growth compared to most other major economies around the world. Most of the positive news in the 2Q came from the industry and retail sectors, while the real-estate market continued to be weak with housing sales being more than nine percent lower the first half of this year compared to the same period in 2013.
Log importation reached an all-time high in the 2Q/14 with New Zealand, the number one supplier, increasing volumes by 15% from the previous quarter. Shipment from the US and Canada were also higher, while log supply from Australia and Russia fell about five percent in the 2Q. Much uncertainty hovers over how the Chinese economy will do for the rest of the year but it is not likely that we will see the same bump in wood imports in the third quarter as was the seen in the second quarter. Rather, the short-term forecast is for a flat line, or even decline in log and lumber volumes landed at Chinese ports in the 3Q/14.
Wood Resources International LLC (WRI), an internationally recognized forest industry-consulting firm established in 1987, publishes two quarterly timber price reports and have subscribers in over 30 countries. The Wood Resource Quarterly, established in 1988, is a 52-page market report and includes sawlog prices, pulpwood and wood chip price and market commentary to developments in global timber, biomass and forest industry. The other report, the North Americam Wood Fiber Review, tracks prices of sawlogs, pulpwood, wood chips and biomass in most regions of Canada and the US.