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OCTOBER 2018
China's Changing Wood Supply Chain
Deep-dive study on the complex flow of logs and lumber within China reveals that considerable volumes are being ‘re-exported’ to other regions from the first port of entry
One of the main themes observed from the extensive field work carried out all over China is the increased and expanding role of Russian lumber in China. Significant and ongoing investments in a combination of modern sawmills, kilns and planers at Russian mills in Russia, Chinese mills in Russia, and Chinese mills on the Chinese side of the border have increased the value of lumber where it can be transported further in China.
A growing number of Chinese distributors and processing companies are tapping into the expanding supply chain from Russia to access Russian spruce and red pine lumber. This is becoming more evident in the furniture sector as production improvements are made (at the expense of other exporters) to the quality and competitiveness of Russian spruce and pine lumber. As well, various Chinese government policies tend to favor Russian exporters over other suppliers to China.
China’s supply chain involves large (and often massive) distribution centers (land, ocean and river ports) near both major cities and emerging consuming regions (located mainly in inland China). The logs and lumber that enter China via ports take various traditional supply routes to be handled for consumption, processing or redistribution. A deep-dive was conducted on where all the logs and lumber go in China – both into traditional ports for consumption and onward to other processing locations, including the growing demand in inland regions of China.
Softwood logs and lumber in China have many diverse applications and tend to exhibit fluidity (based on prevailing demand and prices) across a variety of end-use segments. The flow of logs and lumber within China is therefore rather complex, resulting in some clear region-specific applications.
The detailed survey conducted reveals that considerable log and lumber volumes are still being re-exported to other regions from the first port of entry. A complication of the lumber trade in China is the huge volume of imported logs being processed into lumber at small local sawmills, where domestic sawn lumber (from imported logs) competes with imported lumber. In the report, the various end uses for logs and lumber are broken out by port/consuming region in such a way as to account for the main end uses.
Over the forecast period, offshore lumber imports are forecast to continue expanding to offset the much slower growth expected in log imports and potential reductions in China’s sawmill capacity. Lumber imports from Russia via the One Belt & One Road are expected to expand to inland China while log and lumber imports from traditional supplying countries via ocean ports are expected to be more muted. (Cont'd on Page 28.)