Who will benefit from the American timber tariff?

China announced a 25% tariff on U.S. imports, on a value of $16 billion from August 23rd. The taxed products include $1.83 billion of wood products and logs.

A large range of wood products are listed in the tariff list, including oak logs, birch logs, OSB, spruce, larch, teak, wooden window frames, shelves, furniture etc.

China is the biggest importer for American wood products. The United States exported 6.14 million m3 logs to China, accounting for 53.9% of U.S. logs, and 3.27 m3 lumber, accounting for 38% of U.S. sawn timber exports, according to the U.S Bureau of Statistics. The China market represents half of total U.S. log exports, and one third of its sawn timber exports.

The U.S. tariffs will increase the cost of U.S. wood imports, which will make America timber gradually lose its competitiveness and market position in China.

As forecasted by China Timber Website, Chinese buyers may turn to other countries such as Russia and Europe as the properties of timber from those countries are very similar to that of the U.S.

China Economic Update

China to Reduce Wood Import Tariffs November 1

2018 Q3 highlights:

  • China’s GDP hit the lowest growth in September (6.5%) since the first quarter of 2009 during the global financial crisis and missed market consensus of 6.6%.i
  • China Economic growth slowed down in the third quarter due to:
    • to a decrease in infrastructure investment
    • a negative spillover from financial deleveraging
    • the impact of previous economic reforms
    • a cooling housing market.
  • However, export growth continued to grow strongly in Q3 in spite of trade tension with the U.S.ii
  • A recent government announcement effective November 1st, 2018 states that China will cut import tariffs on more than 1,500 products to lower the average import tariff to around 7.8%. Import tariffs on wood and paper products will be decreased to 5.4% from 6.6% which will help wood-based panels and other related imports to grow in China.iii

PMI (Caixin) index in September (50.0) dropped to a 16-month low and missed market consensus of 50.5 which was also the lowest point of the continuously descending trend started from May (51.1).iv China Exports achieved a 14.5% gain year-on-year to USD 226.7 million in September which was the fastest growth in outbound shipments since this February and also beat market consensus of 8.9%.v

China Consumer Price Index (CPI) started to go up from May (101.8) to September (102.5) which achieved the second highest month only after February (102.9).vi Similar to Q2, USD/CNY had also been on the rise in Q3, increased from 6.62 (July 1st) to 6.81 (August 1st) to 6.83 on September 1st;vii CAD/CNY kept the similar upward trend, went from 5.04 (July 1st) to 5.23 (August 1st) and hit 5.24 on September 1st.viii

Building material prices

Cement price increased slightly from RMB 435.67 to RMB 456.00 per metric ton (up 4.67%) over September 2018.ix Rebar steel price also went up slightly by 2.63% from RMB 4,415.38 per metric ton on September 1st 2018 to RMB 4,531.54 per metric ton on September 30th 2018.x The log price index in September 2018 was 1,096.96 points which decreased 0.26% less than August 2019 and reduced 0.84% compared to the same period year-on-year; the lumber price index in September 2018 was 771.05 points which went up slightly by 0.02% month-on-month and increased 0.36% year-on-year.xi

China-US Trade Dispute Updatexii

The trade war between China and United States continues to impact markets.
During the first half of 2018 U.S. wood products made up:

  • 13% of China’s softwood log imports; was 54% in 2017
  • 2% of China’s softwood lumber imports; was 38% in 2017
  • 7% of China’s hardwood log imports;
  • 21% of China’s hardwood lumber imports.

China Wood Importsxiii

Russian softwood lumber imports have been rising steadily since this February when imports hit the highest in May (1,590,000 m3) and maintained at the level of 1,500,000 m3 in August; Canadian softwood lumber imports on the other hand maintained 350,000 m3 each month from June to August but decreased 29% in August to (327,000 m3) compared to the same month last year.

Logs and lumber inventory at Taicang, Wanfang and Meijing ports hit a new low in August (802,000 m3) which decreased consistently since this March, but winter and Chinese New Year inventory volume at all ports will be on the rise based on previous trends. Import volumes of total logs and lumber fluctuated at reasonable curves and achieved 8,814,000 m3 in August, the second highest month so far in 2018.

iTrading Economics (October 20th, 2018). China GDP Annual Growth Rate
iiFocus Economics (October 16th, 2018). China Economic Outlook
iiiWood Markets/FEA (October 2018). China Bulletin
ivTrading Economics (October 20th, 2018). China Caixin Manufacturing PMI
vTrading Economics (October 20th, 2018). China Exports
viTrading Economics (October 20th, 2018). China Consumer Price Index (CPI)
viiXE Currency Charts: USD to CNY
viiiXE Currency Charts: CAD to CNY
ixSunsirs (October 2018). Spot Price for Cement
xSunsirs (October 2018). Spot Price for Rebar Steel
xiBOABC (October 2018). China Wood and Its Products Market Monthly Report
xiiWood Markets/FEA (October 2018). China Bulletin
xiiiWood Markets/FEA (October 2018). China Bulletin

CanadaWood.cn Gets Facelift!

Canada Wood China is pleased to announce the official launch of its new website – www.canadawood.cn. We are certain the new website will provide the most relevant, informative and inspiring browsing experience for developers, architects, designers and builders. Besides containing the latest news and technical resources the website showcases popular and welcomed wood projects in China and throughout the world.

Market Research of Wood Frame Construction in 2018 Q2

To better understand the wood frame construction market in China, Canada Wood China has started a quarterly market survey in 2018, aiming to track wood construction project starts, project types and construction floor areas.

1. The building types of new projects
The ratio of resorts and buildings for transportation sustained steady growth in Q2 compared with the previous quarter. Resorts took the biggest share, accounting for 55.4% from all types. Residential building projects saw an increase of 10% quarter-on-quarter, while buildings for Science, Education, Cultural and Health (SECH) dropped 7.3%.

2. Construction areas of newly started projects
Wood frame constructions in provinces of Sichuan and Jiangsu popped up in Q2, with an area rise of 44.9% and 49.9% respectively from the previous quarter. A slight growth showed in Hubei and Shandong provinces.
Guangdong Province, replacing Jiangsu Province, has occupied the largest area of its newly-built projects among the target provinces, jumping 77.4% quarter-to-quarter.
The total area of newly started projects from six provinces had a decline of 6.9% quarter-to-quarter.

Canada Shares Best Practice with Chinese Net Zero Delegation

A group of 20 delegates led by China Academy of Building Science Research (CABR, the largest and most diverse research institution in China’s building industry) attended the Sino-Canadian symposium themed on “High Performance Energy-Efficient Construction” in Vancouver on September 13. The delegates are from 16-member organizations of China Zero Energy Committee, including CABR, China Construction Science & Technology Group, China Construction Southwest Design and Research Institute, Shanghai Research Institute of Building Science, Tianjin Architecture Design Institute, Beijing Cole Building Energy Conservation Technology Co., Ltd. etc.

On the one-day symposium, Canadian experts from NRCan, CanmetEnergy, Canadian Home Builders Association, design consultants and builders in net zero businesses gave an overview of Canada’s net zero energy policies, codes and developments; Canadian energy efficiency programs; design and construction practices of net zero buildings. Dr. Xu Wei, Director of Institute of Building Environment and Energy of CABR gave an introduction of Chinese net zero energy policies, standards, programs and demo projects.

The delegates then visited The Heights, the Harmony House, two high performance villas under construction, as well as CIRS green building, Westbrook Neighborhood, Brock Commons at UBC. The symposium and field site visits organized by Canada Wood, provided an opportunity for the Chinese pioneering firms and organizations to understand Canada’s development and best practices in net zero and net zero ready wood buildings. Collaboration opportunities such as the net zero building standard, simulation modelling, and demo projects etc. will be further discussed.