CHINA - The Chinese government has enacted a ban prohibiting commercial timber harvests in its natural forests. The ban is designed to counter decades of over-cutting in Chinese forests, which contributed to a 5 percent drop in the country's log production in 2017.
 
Though the country will need to import more logs, it’s unclear how motivated Chinese buyers will be to compete with domestic sawmills, which are currently offering high prices.
 
“To expand the market, they’re going to have to go head-to-head with the mills,” said Gordon Culbertson, international business director at Forest2Market, an Oregon-based consulting firm for wood product companies.
 
Since 2013, China’s log production has fallen from more than 2.8 billion cubic feet to just under 2 billion cubic feet. The logging ban is expected to cause shortages for at least another three years.
 

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Exports of red oak rise dramatically, market tightens

Despite having roughly the same amount of log exports for the first three-quarters of the year as last year, exports of red oak have risen dramatically in the United States.


China remains the top recipient of U.S. hardwood logs, boosting its imports by 19 percent. 

With an increased Chinese interest, removing logs from an already tight U.S. market could raise lumber prices inside the country. Chinese buyers are paying 50 percent more than the typical sawmill price for logs, says Wood Doctor Gene Wengert. They are paying the equivalent of $900 per 1000 bf, which means the wood will be very expensive when they saw it.
 
The species they want are red oak, white oak, hickory and cherry. These woods are trending in China among the newly wealthy, who have a taste for a higher quality product. They have markets that will pay this high price.
 
This, overall, will increase lumber prices within our country due to the shortage of logs, Wengert said. Already, sawmills are running very low in log inventory; this will make it even tighter. Wengert’s speculation is that cabinet and furniture operations will have to buy standing timber, or work closely with sawmills that buy standing timber if they want to control their supply and costs.
 
China's demand for logs could help establish a price floor for U.S. timber producers however, says Paul Owen, president of Vanport International, an Oregon forest products firm.

 

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