A logging ban in China’s natural forests will likely increase its demand for foreign logs, but the impact on the Northwest’s timber market is uncertain.
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, experts say.
“To expand the market, they’re going to have to go head-to-head with the mills,” said Gordon Culbertson, international business director at the Forest2Market consulting firm.
According to USDA, a prohibition against commercial timber harvests in natural forests — as opposed to plantations — was enacted by China’s government to counter decades of over-cutting, contributing to a 5 percent drop in its log production in 2017.
Since 2013, China’s log production has fallen from more than 80 million cubic meters to less than 60 million cubic meters, and the logging ban in natural forests is expected to cause shortages for another three to five years, according to the agency’s Foreign Agricultural Service.
“There’s definitely increased demand from China. Whether U.S. suppliers want to fill that demand depends on their alternatives,” said Kent Wheiler, director of the Center for International Trade in Forest Products at the University of Washington.
Ever since excessive logging in the headwaters of the Yellow and Yangtze rivers was blamed for massive flooding during the 1990s, China’s government has moderated its harvest levels, Wheiler said.
The natural forest logging ban is the latest example of China’s growing concern about the environment, which the government has been working to improve to avoid upsetting the country’s populace, he said.
“They need to do what they’re doing,” Wheiler said. “They had significantly overharvested.”
New Zealand controls the largest share of China’s market for imported logs at 36 percent, followed by Russia with 24 percent and the U.S. with 13 percent, he said.
Culbertson of Forest2Market said the strong U.S. dollar and healthy domestic timber market may prompt Chinese buyers to seek logs from Australia and New Zealand.
In the U.S., the log market has greatly improved as demand for lumber has strengthened.
The price per thousand board feet of framing lumber now averages about $440, up from less than $200 during the depths of the financial crisis in 2009, according to the Random Lengths timber industry information service.
“There’s a lot of domestic competition for logs,” Culbertson said.
Even so, China’s demand for logs helps establish a price floor for U.S. timber producers, since the country provides an export outlet even if the domestic market softens, said Paul Owen, president of Vanport International, which specializes in log exports.
“It will keep prices, particularly in the Pacific Northwest, strong,” he said.
The Northwest has an advantage in the species it provides to China: Hemlock and Douglas fir that are often used for concrete formwork in the construction trade, Owen said.
New Zealand, by contrast, ships radiata pine and New Zealand pine, which are often milled for furniture, he said. “It’s a different market.”