PF Olsen: Log Export Market Update

Wednesday 22 Jun 2022

 
(Wood Matters) China softwood log inventory has risen steadily to 5.6m - Considering significant parts of China have been in lockdown, log offtake is still a relatively healthy 70k per day. Activity this May is similar to the last two Mays, but not as high as pre-Covid times when daily log offtake at ports ranged between 85-100k. The CFR price for A grade logs has ranged between 155 and 165 USD per JASm3 during May.

The Chinese economy has been battered by Covid-19 lockdowns. The April Caixin China Manufacturing PMI fell to a 26- month low of 46.0. Both output and new orders fell at the second steepest pace since records began in 2004. Export orders were at the lowest level in two years.

However, there are signs of recovery as lockdowns ease. In Shanghai, Covid-19 test requirements for people entering public places will not be required from June 1. In the last week of May, Chinese investors have snapped up shares of companies that are positioned to benefit from the resumption of normal economic activity. Local Shanghai officials have said they will accelerate approvals for property projects. In addition to this, the State Council (China’s cabinet) has released a 140b yuan (21b USD) package of tax rebates and loans in an effort to stimulate the Chinese economy. This will increase log demand, although China is entering the hotter months when productivity usually slows down. There are promising signals for increased demand from August onwards.

India - About nine bulk shipments of logs are expected in Kandla port in June; five from Uruguay, three from Australia and one from the USA. Demand is still struggling in this area due to a lack of container shipping space for exports which in turn reduces the requirement for pallets. There are containers of USA SYP logs unsold and afloat to Mundra port. This will only increase the pressure on the price. Log buyers also fear demand will fall further in June with monsoon rains forecast to arrive.

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Source: PF Olsen





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