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Log demand from China fuels boom

China's demand for logs is fuelling a forestry boom, in what is otherwise a subdued market.

The Situation and Outlook for New Zealand Agriculture and Forestry report for 2009 shows exports to China were up 63 percent . Log exports more than doubled and timber exports went up 79 percent.

Murray Sherwin, Ministry of Agriculture and Forestry director-general, says the situation is partly due to Russia putting an export tax on logs, resulting in China looking to alternative suppliers such as New Zealand for wood.

"Regardless of how it came about, however, the increased demand at a time when the construction and building industries in developed countries are still coping with the global downturn has been a blessing."

Mr Sherwin says criticism of an emphasis on logs exports, as opposed to ?value-added? products is misplaced in this instance.

"Value-added does not automatically equate to profit-added. It makes a lot more sense to ship logs at a profit than processed wood products at a loss."

Mr Sherwin says the forestry industry must now focus on developing high productivity processing, that is competitive and profitable on a global level.

The effect of China's increased interest means forestry-based exports for the year to 30 June 2010 are projected to be 18 percent higher in volume terms than for the previous year, despite key markets such as Australia and the US having only tentative growth in the construction sector.

Demand from China is expected to slow as 2010 progresses, with South Korea (currently the second largest importer) and India (the third largest importer) having the potential to cushion any downward pressure on prices arising from slower growth in Chinese demand.

Made by woodenhouse 2010-7-5 source: view: (99) coomment: (0)

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