US-China trade war hits Australian woodchips

Friday 11 Oct 2019

 
Australia's AU$1.4-billion plantation woodchip industry has been dragged into the US-China trade war, with a number of shipments to the Asian economic powerhouse cancelled in the fallout from the dispute.

Amid fading hopes of a speedy breakthrough in the trade war, timber exporters have been hit by falling demand for woodchips from Chinese paper mills, which have become the industry's biggest customers.

Since July, at least three ships that were supposed to take Australian woodchips to China have been cancelled or deferred, and there are fears further consignments could be affected.

While shipments from Albany on Western Australia's south coast have been hit hardest, it's believed other woodchip export hubs in South Australia and Victoria have also been disrupted.

The setbacks have put the brakes on an industry that had been enjoying sustained growth since a wave of turmoil brought on by the failure of the managed investment scheme scene a decade ago.

Earlier this year, prices for bluegum woodchips reached a record high of more than $US180 ($265) a tonne, fuelled by soaring demand from Chinese paper mills, which have overtaken their Japanese counterparts as the biggest buyers of the commodity.

Forest Industries Federation of WA president Ian Telfer said the decision by the US to slap tariffs on Chinese paper products was hurting the profitability of mills, which was crimping demand for Australian woodchips.

Making matters worse, he said, was anticompetitive trade conduct by South American countries, which were dumping big volumes of cheap pulp on to Asian markets including China's in a bid to clear a supply glut.

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Source: ABC



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