The China Market

China has become an increasing important player in international timber market as its rapid growth continues to create a demand for wood and wood products well beyond its own capability to produce.  While millions of hectares have been planted to trees within China, any significant harvesting from these plantations are at least 20 years in the future.

As recently as 4 years ago, most of the wood imported to China can from Russia in the form of logs.  Russia then imposed a 25% tarif on its logs in an effort to promote more internal processing, and had announced at that time that the tarif would rise to 85% in 2009.  The result of the tarif was to open opportunities for other timber producing areas to increase sales into China.  Log and lumber imports have grown significantly from all parts of the world.

Recently, the Chinese government announced plans to build 45 million housing units in the next 5 years.  This is enormous.  Over the last 2 years in the United States, housing starts have been closer to 500,000 units.  Wood is not used at near the same level in China as in the US, but more in the concrete forms needed.  None the less, this adds to the need for imported wood.

Looking ahead, on the other side of the picture, Russia can be expected to again increase it presence.  It did not move forward from raising tarifs beyond the 25% level, and sales are already reported to be sharply higher in the first quarter of this year over last year.  At the same time, as a part of negotiations for it be become a member of the World Trade Organization (WTO), it is believed that Russia have to further reduce these tarifs, possibly to the range of 5 to 10% at most.