Sawlog and Pulpwood Market Update – Asia & Oceania
Log imports to China the lowest in six years
• China’s imports of logs in the 1Q was the lowest in more than six years, a clear sign of reduced demand for both domestic and exported forest products, as reported in the Wood Resource Quarterly. The decline in log imports is not just a result of the recent financial crises, but also a continuation of a trend going back to the 2Q/07 when the imports reached a peak of 10.4 million m3 for the quarter. Since the peak two years ago, shipments of foreign logs have fallen by almost half. The biggest decline has been that of tropical hardwood logs from Southeast Asia and Africa, and of softwood logs from Russia.
• Although shipments of roundwood into China fell in 2008, imports of processed wood products such as softwood lumber and wood-based panels were actually higher last year than in 2007. Russia, the largest supplier of softwood lumber to China, has doubled its shipments between 2004 and 2008.
• The reduced demand for logs has impacted both the costs of imported logs and prices for domestic logs. In the 1Q/09, domestic Eucalyptus pulplog prices were down for the second quarter and were five percent lower than the peak in 3Q/08. Chinese fir sawlog prices were down 11 percent from their peak last year.
• Customs data indicate that import prices for logs also fell in the 1Q/09 with softwood log prices down 18 percent from the previous quarter and three percent down from the same quarter a year ago. Prices for imported hardwood logs followed the same trend with a reduction of 17 percent from the 4Q/08, and 11 percent from 1Q/08.
Almost one million hectares of additional plantations in Indonesia announced
• Pulp production in Indonesia was slightly higher in 2008 than in the previous year, reaching an estimated 6.4 million tons, or about 85% of capacity. Although production is likely to be lower in 2009, there are plans to expand capacity in the coming five years. Last year, International Paper reported the possibility of building a green field pulp mill with a capacity in excess of one million tones in Indonesia. In March earlier this year, the South Korean company Korindo signed a MoU to build a 600,000 tpy pulp mill in Kalimantan over the next two years. If both these projects move ahead, pulp capacity will reach over 10 million tons by 2011-2012. To supply these new mills with 100 percent plantation wood, it will be necessary to establish about 700,000 hectares of plantation forests.
• Another announcement earlier this year, also involving South Korean interests, was the establishment of 200,000 hectares of plantations and a new wood pellet plant on Kalimantan Island to produce pellets for the Korean market.
Radiata pine log prices in New Zealand are still among the lowest in the world
• Pulplog and sawlog prices hardly moved at all in the 1Q in NZ dollar term despite a reduction in demand, particularly by domestic sawmills. However, with a continued weakening of the currency against the US dollar, log prices fell about eight percent in US dollar terms, reaching their lowest levels in over six years. The pulp industry still has very competitive wood fiber costs compared to most other regions worldwide.
• Radiata pine sawlog prices in New Zealand are, together with Chilean radiata pine and hemlock in western US and Canada, currently the lowest softwood log prices in the world, according to the Wood Resource Quarterly.
• China’s imports of logs in the 1Q was the lowest in more than six years, a clear sign of reduced demand for both domestic and exported forest products, as reported in the Wood Resource Quarterly. The decline in log imports is not just a result of the recent financial crises, but also a continuation of a trend going back to the 2Q/07 when the imports reached a peak of 10.4 million m3 for the quarter. Since the peak two years ago, shipments of foreign logs have fallen by almost half. The biggest decline has been that of tropical hardwood logs from Southeast Asia and Africa, and of softwood logs from Russia.
• Although shipments of roundwood into China fell in 2008, imports of processed wood products such as softwood lumber and wood-based panels were actually higher last year than in 2007. Russia, the largest supplier of softwood lumber to China, has doubled its shipments between 2004 and 2008.
• The reduced demand for logs has impacted both the costs of imported logs and prices for domestic logs. In the 1Q/09, domestic Eucalyptus pulplog prices were down for the second quarter and were five percent lower than the peak in 3Q/08. Chinese fir sawlog prices were down 11 percent from their peak last year.
• Customs data indicate that import prices for logs also fell in the 1Q/09 with softwood log prices down 18 percent from the previous quarter and three percent down from the same quarter a year ago. Prices for imported hardwood logs followed the same trend with a reduction of 17 percent from the 4Q/08, and 11 percent from 1Q/08.
Almost one million hectares of additional plantations in Indonesia announced
• Pulp production in Indonesia was slightly higher in 2008 than in the previous year, reaching an estimated 6.4 million tons, or about 85% of capacity. Although production is likely to be lower in 2009, there are plans to expand capacity in the coming five years. Last year, International Paper reported the possibility of building a green field pulp mill with a capacity in excess of one million tones in Indonesia. In March earlier this year, the South Korean company Korindo signed a MoU to build a 600,000 tpy pulp mill in Kalimantan over the next two years. If both these projects move ahead, pulp capacity will reach over 10 million tons by 2011-2012. To supply these new mills with 100 percent plantation wood, it will be necessary to establish about 700,000 hectares of plantation forests.
• Another announcement earlier this year, also involving South Korean interests, was the establishment of 200,000 hectares of plantations and a new wood pellet plant on Kalimantan Island to produce pellets for the Korean market.
Radiata pine log prices in New Zealand are still among the lowest in the world
• Pulplog and sawlog prices hardly moved at all in the 1Q in NZ dollar term despite a reduction in demand, particularly by domestic sawmills. However, with a continued weakening of the currency against the US dollar, log prices fell about eight percent in US dollar terms, reaching their lowest levels in over six years. The pulp industry still has very competitive wood fiber costs compared to most other regions worldwide.
• Radiata pine sawlog prices in New Zealand are, together with Chilean radiata pine and hemlock in western US and Canada, currently the lowest softwood log prices in the world, according to the Wood Resource Quarterly.