Tight Supplies and Higher Prices for Softwood Lumber Has China Looking at Alternative Solutions

The latest statistics released by China Customs reveal that China’s import volume of softwood lumber decreased by approximately 10% in 2020. In the first two month of 2021, when compared to the same period of time in 2020, the decline has been 23%. China’s softwood lumber inventory was low at the end of 2020 and at the end of March 2021, it was at 700,000 m3, which is well below the normal average inventory of 800,000 – 1 million m3 in previous years. In terms of Canadian SPF, the inventory stayed at 90,000 m3 at the end of March, a dramatic decline from around 500,000 m3 back in 2019H1. The record price run of SPF in the US market has exerted upward on prices in China markets since last summer. Not only softwood lumber from Canada, but China’s softwood lumber imports from other main suppliers also showed rapid declines, especially for high-grade lumber supplied from Russia, Finland, Swedish, Chile, and New Zealand. However, the supplies from Ukraine and Belarus (mostly for low-end construction lumber application) had strong growth in 2020 and continued the upward trend in the first two months of this year. Currently, Ukraine was the largest softwood lumber supplier from Europe (excluding Russia) to China in 2020. While it is certain that the Chinese market is facing a tough challenge of tight supplies and extremely prices of softwood lumber, the situation has forced Chinese lumber distributors and wood products mills to look for substitution options. There are several solutions emerging in China, and one of the most practical options is using imported softwood logs to produce lumber products by Chinese domestic sawmills.