Global & China Market Outlooks

Beware:  There are various “reporting” discrepancies and falsehoods out there!

In my ongoing analysis of global information, there appears to be various reports coming out on China, its log and lumber suppliers, and some US and global forecasts that are, simply, opinions or unsupported facts. Some of the themes or conclusions in these reports look to be either inaccurate and/or use unreliable assumptions. Most of these erroneous articles and outlooks are so-called “data reports” – these tend to rely on statistics and/or statistical analysis with little or no confirmation with the actual reality on what is currently happening on the ground.

As one of the few remaining “global consultants” out there, I can see how office-bound analysts and economists can churn out reports without cross-referencing to what is really happening up to the moment in the trade, industry or market as compared to data that is at least two to three months old. It can be easy to analyze historical (but lagging) data; but it is more difficult – and expensive – to get out in the field to obtain insights from original and grounded research.

A few excerpts from various erroneous reports (without identifying all the details of the topic, and to protect any errant authors) include the following:

• “Export prices have been almost halved since early 2022 {and this has} taken a toll on one of its most significant export industries.”

COMMENT: From near an all-time high in early 2022, a 50% price drop needs to be assessed relative to trend market prices, mill costs, exchange rates and logistical costs.

• “China drives {Russian} timber production through Siberia and the Far East.”

COMMENT: Western Russia is a key lumber producing region (almost the same scale as in Siberia) and has really ramped up output and exports (mainly by ocean containers) to China since mid-2023 and is now the low-cost supplier.

• “… total Chinese softwood log inventory for {2023-Q3} stood at just 2.7 million cubic metres and a few months later are down to 2.4 million>, well below the 4 million cubic metres ‘price trigger’.”

COMMENT: Declining demand and economic uncertainty results is different buyer behaviour as compared to markets with growing demand. An incorrect data analysis of lumber inventories caused some lumber exporters to increase furniture grade prices in October. This increase partially went through, but this could negatively impact some Chinese furniture manufacturers’ future production as this lumber price increase could not be passed on to customers.

• “…a freefall in Chinese demand…”

COMMENT: Chinese demand has slowly and steadily declined, but it certainly not ‘freefalling.’

• “Canada’s lumber production will increase by almost 1% in 2023.”

COMMENT: Through September, Canada’s output is down 9.1% – anyone in Canada (and especially BC) has known that falling output was inevitable in 2023 with no increase ever possible.

• Global timber demand – outlook forecast discrepancies (nominal terms):
  • ACTUAL Growth = 24% from 2000 to 2020 = 1.1% per year
  • Will grow by 54% from 2010 to 2050           = 1.4% per year
  • Will grow by 170% from 2020 to 2050         = 5.7% per year
  • Will grow by 300% from 2020 to 2050         = 10.0% per year

And my favourite:

• US Lumber (Futures) Price Forecasts: for 2×4 W-SPF FOB (BC) Mill for 2023-Q4 – forecasts made 12 months earlier in 2022-Q4 (and note decimal points!):
  • YTD 2023-Q4 Price:   US$ 395/Mbf
  • Forecast #1:               US$ 577.51/Mbf
  • Forecast #2:               US$ 989.60/Mbf

I think you get the message here. Some headlines, take away messages and outlooks are simply inaccurate and too sensational to be taken seriously – some of this gets close to being ‘fake news’.

TWO STRATEGIC OFFERINGS In 2024 – to get the right global information and outlook:

1. CHINA FOREST, LOG & LUMBER OUTLOOK REPORT

That is why global industry consultants at Margules Groome (New Zealand and Australia) and RUSS TAYLOR GLOBAL (Canada) have conducted field work in China for their upcoming report, CHINA FOREST, LOG & LUMBER OUTLOOK: Supply, Demand & Prices to 2030/2035. This includes in-the-field meetings with key industry and market sources in China as well as discussion with key suppliers to China to determine what is happening on the ground.

Report details and a downloadable brochure can be found here: https://russtaylorglobal.com/report-china-log-lumber-outlook-to-2035/

The global consultants have assessed the current situation and are predicting what happens when China’s demand starts to normalize and/or accelerate again as well as incorporating significant supply-side dynamics and changes. All these factors could eventually lead to very favourable prices for softwood log and lumber exporters, and especially hardwood woodchips.

Early Bird prices are in effect until December 31. Available February 2024. Further details: www.russtaylorglobal.com   and www.margulesgroome.com  Or feel free to contact me directly.

AND… Our second strategic offering is to allow companies to obtain up-to-date information on the key trends, issues and dynamics that are occurring throughout the global wood business and trade.

2. GLOBAL WOOD SUMMIT, an international conference with a focus on Timber, Forest Products & Trade – October 29 to 30, 2024, Vancouver BC Canada

RUSS TAYLOR GLOBAL and ERA-Forest Products Research have combined forces to host the GLOBAL WOOD SUMMIT, an international conference with a focus on Timber, Forest Products & Trade. This strategic conference will be held in Vancouver BC from October 29 to 30, 2024.

Our conference team has access to key industry, market and trading personnel around the world and we will assemble a cross-section of experts in their fields for the Summit. This will include company executives that have hands-on knowledge and experience in exporting and importing, in conjunction with strategic analysts and consultants.

More details and a brochure are available at https://russtaylorglobal.com/global-wood-summit-vancouver-bc/ 

To be placed on our Early Bird list, please send me an email with the Subject Line: Please add to me your Global Wood Summit Early Bird list.

Russ Taylor, President
RUSS TAYLOR GLOBAL
Tel: +1-604-897-5666
Email: russtaylor@russtaylorglobal.com
Website: www.russtaylorglobal.com