The monster surge in sales of B.C. lumber into China will start to tail off, forest industry observers are warning.
As of the end of September, $835,233 million worth had been shipped into China, a nearly 110-per-cent increase over the year-to-date figure for 2010, according to B.C. Stats numbers released this week.
But Russ Taylor, president of International WOOD Markets Group, said exports into China have been almost doubling every year since 2007 and the days of that kind of “unsustainable” growth will be over by early next year.
“The pace of increase is slowing fast because there’s a huge inventory of wood now in China,” Taylor said. “The building’s been slow, the government’s trying to curb inflation, they’ve restricted the amount of money available for the real estate sector, they’ve restricted mortgages to individuals to having only one additional property and that’s cooled the housing market.”
That said, the long-term growth for lumber demand into China will be about 20 per cent a year.
“That’s still a good growth rate but everyone seems to be unhappy if it’s not 100 per cent growth rate,” Taylor said. “It was never sustainable, that was always our comment.”
Keta Kosman of Madison’s Lumber Reporter had a similar position, saying the Chinese government has clamped down on the availability of credit.
“The government building is going forward - the community housing and the re-roofing and the demand for the trusses is going to stay - but the private building of apartment blocks for private sales is definitely slowing down in China right now,” Kosman said.
In September, $103.9 million worth of softwood lumber was sold into China from B.C., a 53.7 per cent leap over the same month last year. However, that’s down from a peak of $130 million in June.
Exports into the U.S. for September added up to $137.1 million, a 13.2 per cent jump over the same month last year, but both Taylor and Kosman predict that burst will be short-lived and are anticipating extended shutdowns for sawmills over the Christmas break.
“The whole of the U.S. housing market fundamentals are sick, just sick,” Taylor said. “And until we get through these mortgage foreclosures and getting the housing prices to bottom out and inventories back into balance, we’re not going to get there.”
The year-to-date figure for the U.S. now stands at $1.2 billion, 16 per cent lower than the third-quarter total in for 2010.
Sales of raw logs into China amounted to $29.2 million, raising the year-to-date total to $232 million, a 189-per-cent increase over last year. However, Taylor and Kosman said sales of raw logs from Washington State and Oregon are much higher.
Total exports of softwood lumber to all countries added up to $336.9 million in September, a 13.6 per cent increase over the same month last year, raising the year-to-date total to $2.9 billion, an 8.7-per-cent rise.
