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Hakan Ekstrom
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Mr. Ekstrom is the President of Wood Resources International LLC . The company is an internationally recognized forest industry consulting firm established in 1987, which publishes two quarterly timber price reports and have readers in over 25 countries. The Wood Resource Quarterly, established... More
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  • Softwood Log Imports To China Slowed In The 4Q/14, But 2014 Was Still A Record Year With The Import Value Surpassing 5.4 Billion Dollars

    China is the largest importer of logs in the world and although the log shipments to the country slowed in the 4Q of last year, import volumes hit a record high in 2014, reports the Wood Resource Quarterly. The import cost of softwood logs in the 4Q/14 was seven percent below the prices seen in the 4Q/13, with the costs for logs from New Zealand and the US having fallen the most.

    China continued to dominate global log trade and was setting a new record high in the consumption of imported softwood logs in 2014. The seemingly endless increase in demand for wood raw-materials from the manufacturers of wood products in China has resulted in year-over-year import increases in eight of the past ten years. The total value of the imported logs has surged from 2.2 billion dollars in 2009 to 5.4 billion dollars in 2014, according to the Wood Resource Quarterly.

    Over the past five years there has been close to a doubling of the log volume being unloaded at Chinese ports with a majority originating from three countries; New Zealand, Russia and the US. The biggest change in the past five years has been that the group of supplying countries has expanded. In 2009, the logs from the "big three" accounted for 93% of all softwood logs imported to China. In 2014, this share was down to 76% with log sellers in Canada, Australia and Ukraine having increased their presence in the world's largest log import market. Australia alone shipped almost 2.2 million m3 in 2014 as compared to 1.1 million m3 in 2011.

    Because of high log inventory and lower demand for wood in China, the country reduced its log imports towards the end of 2014, with import volumes in the 4Q/14 reaching their lowest levels in almost two years, report the WRQ. The biggest year-over-year declines were seen in the importation of logs from New Zealand and the US, while import volumes from Russia have been fairly stable the past three years.

    Not only have the log volumes arriving to China declined this fall, so have the costs of the imported logs, which were seven percent lower in the 4Q/14 as compared to the same quarter in 2013. Prices for radiata pine from New Zealand and hemlock from the US fell more than ten percent year-over-year, while Russian log prices remained practically unchanged. Russia, New Zealand and Australia continue to be the low-cost softwood log suppliers to China.

    Mar 12 5:52 PM | Link | Comment!
  • Exportation Of Logs And Lumber From Russia Failed To Increase In The 4Q/14 Despite The Advantage Of An Almost 50% Depreciated Rouble

    The much-depreciated Russian rouble has given Russian exporters of logs and lumber a good opportunity to increase shipments of their products. However, softwood sawlog export volumes in the 4Q/14 were up only by 2-3% from the same quarter in 2013, while lumber exports declined over the same time period, reports the Wood Resource Quarterly.

    Two major events in Russia changed the outlook for production and exports of forest products in 2014. First came Russia's involvement in Ukraine last spring, which resulted in an array of sanctions by governments in the US and Europe. Later in 2014, the world market oil prices fell by over 50 percent. This price drop had major ramifications for Russia because oil is the major export commodity for the country. Together, these two events have shaken the Russian financial institutions and will likely result in a 3-5 percent contraction in the Russian GDP in 2015.

    The real income for households in Russia is expected to decline this year for the first time in over 15 years and as a consequence, there is likely to be some serious belt-tightening throughout the country. Reduced disposable income, declining investments in construction and infrastructure, and an abysmal outlook for economic growth over the next few years are all factors that are going to negatively impact domestic consumption of wood products in Russia during 2015 and 2016.

    Reduced demand for wood products domestically and cheaper Russian goods in the export market, as the result of the Rouble having lost almost 50 percent of its value, are encouraging the manufacturers of forest products to explore opportunities for increasing exportation of logs and lumber during 2015.

    From August to December of 2014, the export prices for Russian softwood logs, hardwood logs and softwood lumber increased by over 50 percent in Rouble terms, while the prices in US dollar terms stayed practically unchanged for logs and even fell for lumber, as reported in the latest Wood Resource Quarterly (WRQ). Despite the prospects of substantially higher profits in the export market, there has not yet been a surge in export volumes of forest products from either Eastern Russia to the major market in China, or from Northwestern Russia to consumers in Europe. The shipments in the 4Q/14 were practically unchanged from the same quarter in 2013.

    Inadequate ability to promptly increase timber harvests when opportunities arise, limited excess of manufacturing capacity, lack of loggers and truckers, and logistical bottle necks in the entire supply chain from the forests to the ports have made it difficult for many logging companies and sawmills to take advantage of the improved export markets so far.

    Mar 12 5:32 PM | Link | Comment!
  • Sawlog Prices Fell Throughout Much Of North America During The 3Q/14 Because Of Reduced Lumber Production And Slowing Log Exports To Asia

    Lower lumber production and slowing log exports to Asia resulted in generally lower sawlog prices in both the US and Canada in the 3Q/14, according to the North American Wood Fiber Review. The biggest price declines were seen in the US South and in the Interior of British Columbia, where prices were down 3-10% from the 2Q/14.

    Sawlog prices were generally lower in the 3Q/14 than in the same quarter in 2013 in most of the major log-consuming regions of the US and Canada, according to the North American Wood Fiber Review (NAWFR).

    A noticeable decrease in log exports from Western US and lower production in the sawmilling sector resulted in declining prices for domestically consumed Douglas-fir and hemlock sawlogs for the second straight quarter in the 3Q/14. Despite the price declines during the latter half of 2014, the average log prices for the year were among the highest over the past decade. In late 2014, log costs for the region's sawmills were almost double those that sawmills had to pay in 2009 just after the crash of the housing market in the US.

    The softwood sawlog prices in the US Southeast held steady in the 3Q/14, as a spate of dry weather helped sawmills attain normal inventory levels even as lumber production across the South rose. In the US South Central region, pine sawlog prices fell three percent from the previous quarter, as favorable access to the woods allowed sawmills to reach their targeted late fall log inventories. Sawlog prices in the Southern states have slowly trended upward for the past two years but are still below the 10-year average, according to the NAWFR (woodprices.com).

    Sawlog prices in both Coastal and Interior British Columbia continue to show volatility, seesawing up and down through the first three quarters of 2014. The average Coastal hemlock sawlog price rose six percent in the 3Q/14 as the wildfire season tightened harvest restrictions. Log prices in the interior of the province fell 10 percent in the 3Q/14 from the previous quarter, as lumber production fell and access to the forests was favorable.

    Sawlog prices in Eastern Canada continued their modest but multi-year slide with the softwood sawlog price in the 3Q/14 averaging about ten percent lower than in early 2013. The trend of lowering log prices over the past two years may soon come to an end with the region now witnessing announcements to restart idled sawmills with the expectation of exporting lumber into the growing US lumber market.

    Mar 02 4:59 PM | Link | Comment!
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