China facing a pending log supply shortageThursday 5 Feb 2009 While Russia's move to an 80% log export tax has been delayed to late 2009, the projected reduction in Russian log production and exports in combination with higher log export costs (due to the current 25% tax with a minimum of euro 15/m3) is increasingly putting pressure on global log markets. China, Japan, Scandinavia and the Baltics have already incurred major negative fall-out as a result of the 25% log export tax - to the point where new wood supply strategies have been rapidly implemented.A new report produced by the WOOD MARKETS Group on the Russian Log Export Tax report highlights some key market reactions to the taxes: - The volume of Russian softwood log exports will plummet through to 2012 as a direct result of the log export tax schedule. Supply is expected to steadily decrease to Russia's seven largest softwood log export markets. - Global log trade disruptions from Russia will create new log export opportunities for major global softwood log exporters, especially in the key Asian markets of China, Japan, and South Korea. - It is now expected that new capital investment in the Russian wood products industry will be delayed or be minimal at best following the collapse of many smaller logging and wood product manufacturing companies in 2008. - Northern China has been the most negatively impacted by the current 25% and will be most affected by the proposed 80% log export tax. - China needs to source new log and lumber suppliers and also step up its own domestic timber harvests. - Wood demand in China continues to increase despite decreases in finished wood product exports as its own domestic wood product market continues to expand. The recent collapse in global currencies (relative to the U.S. dollar and Chinese RMB) - and especially the Russian ruble - could provide some short term relief for supply options. Vice president and co-author Gerry Van Leeuwen states that "The ripple effect from Russia's log export tax will continue to disrupt major log and lumber markets - especially China - and higher prices (or returns to exporters) are a given!" "This means that there are some potentially attractive opportunities for those log and lumber exporters that can create a competitive fit with China, especially during the global market downturn," commented company president Russell Taylor. The current market turbulence leaves China as the only destination that will likely require increased log and lumber imports in 2009 and this is the opportunity for strategic exporters . Source: International WOOD MARKETS Group Inc www.woodmarkets.com/p_russialogexptax.html |
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