The following is excerpted from the ERA Timber Prices Quarterly, published to ERA clients on December 2, 2014.
CHINA: Log prices have stabilized in China following a sharp downward adjustment (~20%) from peak levels at the start of the year. Imported log inventories at Chinese ports have declined by one million m3 to 3.5 million m3 in just four months, but remain above pre-surge levels of 2.3 million m3 . At a depletion rate of 0.3 million m3 per month, it may be late Q1 2015 before prices begin to recover; however, as supply has begun to adjust, much of the downside to prices is likely past. Foreign exchange rates will favour non-U.S. suppliers, with Russia to benefit from a much weaker ruble.
While its housing market is contracting, Chinese construction has not completely stopped (unlike anecdotal reports in 2012). Residential starts in China are down 9.8% ytd through October, but completions are still positive. As a form of stimulus, the PBOC recently cut interest rates and the central gov’t has eased rules on mortgages for second homes.
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