Wood Industry Quarterly Update – 2020 Q1

By: Nancy Xie

Director, Government Relations, FII China

BC softwood lumber exports:

Softwood lumber exports from BC have declined in volume quarter on quarter since 19Q2. In 20Q1 the total exports further slipped by 9.7% over 19Q4, reaching 3,979K m3. The export volume of 20Q1 stands at 78.4% of 19Q1.

US markets continue to be the main destination for BC softwood lumber. They account for over 70% of all exports in 20Q1 and have shown a 4.4% increase compared with 19Q4.

China is the second-largest market, representing 15.1% of all the exports in this quarter. The exports to China have followed a downward trend since 19Q2. Exports to China are down by 2.7% in 20Q1 compared with 19Q4.

China imports:

  1. Total imports and inventory

The total logs and lumber imports by China experienced a fall of 19.6% in 20Q1 reporting 18,913K m3. Comparing year on year, the volume is over 10% less than 18Q1 and 19Q1.

The total trade volumes for both logs and lumber imported by China in 2019 remained nearly on par with 2018 levels. During that time, softwood lumber imports grew by 11.2% in 2019 over 2018, taking a larger share of total imports.

Up to this March, China has imported 11,938K m3 logs and 6,975K m3 lumber. Softwood lumber accounted for 74% of total lumber imports. The proportion of softwood lumber imports is the same as in 2019.

  1. Softwood lumber imports

The imports of fir and spruce lumber showed a spike in 19Q2 at 3,391K mand then slipped gradually in the following quarters. In 20Q1 China imported around 2,215K m3 fir and spruce lumber, down by 14.9% compared with 19Q4. The volume is also 12.9% less than 19Q1.

The imports of radiata pine and douglas-fir is far behind fir and spruce lumber. Radiata pine lumber imports reported 259K m3 in 20Q1, declining by 10.4% over 19Q4. The imports of douglas-fir lumber recorded 43K m3 in this quarter, nearly equivalent to 19Q4.

The unit price of imported radiata pine lumber and fir & spruce lumber went down gradually in 2019. The radiata pine lumber declined from CIF 237 USD/m2 in Q1 to CIF 203 USD/m2 in Q4, and the fir & spruce lumber fell from CIF 189 USD/m2 in Q1 to CIF 167 USD/m2 in Q4. In 20Q1 the unit price of these two types of lumber kept stable.

Douglas-fir lumber has fluctuated in its unit price in the past 3 years. It was the lowest at 145 USD/m2 in 19Q4 and then bounced back to 159 USD/m2 in 20Q1.

China imports much more softwood lumber from Russia than from Canada. The gap has increased year on year since 2016. In 20Q1 the imports from Canada reported 537K m3, equivalent to 17.7% of that from Russia.

In 2019 the total volume of softwood lumber imported by China increased by 11.2%, but the imports from Canada only grew by 5.2% to 4,391K m3. The imports from Europe enjoyed a high increase to 3,494K m3 in 2019 (+43.3% over 2018). Russia’s exports to China also saw a growth of 8.8% in 2019 over the last year.

Construction Market Overview:

Total investment in Chinese real estate development in 20Q1 was RMB2,196 trillion, a nominal decline of 7.7% year over year. The land area purchased by real estate enterprises was valued at 19.7 million m2 in 20Q1, down 22.6% year on year.

The total construction starts in China shrank to 828 million m2 in 20Q1 due to the pandemic, with a 23.8% decrease compared with 19Q1.

In tune with the total construction starts, the total construction completes in 20Q1 also slowed down caused by COVID-19. It showed a fall of 27.3% compared with 19Q1, while the total floor space under construction is almost the same as the last 19Q1.

Chinese furniture exports totalled RMB68.7 billion in 20Q1, dropping 18.7% compared with the same period of last year. Meanwhile, the sales value of “home centers” nationally was RMB93.5 billion, 53.5% less than 19Q1.

In March 2020, China’s manufacturing purchasing managers’ index (PMI) was 52%, an increase of 16.3% from February, indicating an improvement in the status of COVID-19 prevention and control in China, and showing that the resumption of work and production accelerated in March.