China’s log and lumber markets expecting soft landing

The August issue of WOOD MARKETS’ China Bulletin for August shows a number of positive statistical trends about what is going on in parts of China’s economy as well as in the log and lumber markets in China. In fact, the bulk of the data suggests that China’s wood product sector is expanding after hitting bottom in the first quarter of 2012. This comes after a wave of doom and gloom predictions by many arm chair and hobby economists suggesting that China was heading for a hard landing.

Statistical trends that compare 2012/H1 with 2011/H1 show flat to slightly declining trends in many Chinese market segments. However, this is comparing a rising economic period in 2011/H1 with one in 2012/H1 that has essentially been coming out of an economic slowdown where high inventories needed to be reduced and purged before more buying could occur. That is where the quarterly data becomes important, as 2012/Q2 shows strong growth in most sectors as compared with 2012/Q1. It is starting to look like 2012/Q1 will be the low water mark in this log/lumber cycle.

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