The cost of lumber on world markets increased by 3–5%
Reduced lumber inventories and lower imports are driving up prices for these products in China, a key market for Russian exporters. Since July, quotes have increased by 3–5%; price increases are also recorded in Japan, which is increasing supplies from the Russian Federation. But in the future, market participants believe, the dynamics of the cost of lumber will be restrained by low demand in the construction sector.
Lumber prices in China, the main market for Russian exporters of timber products, are rising, according to a review by the consulting company Strategy Partners. At the Taicang wholesale market in a large port hub in Jiangsu province, spruce lumber (SF grade, unsorted) rose in price by 3-5% at the end of August, to 1.9-2 thousand yuan ($270-291) per cubic meter. Northern spruce lumber was supplied at $245 per cubic meter. The cost of products from the Russian Federation increased by 3%, to $235–245 per cubic meter compared to the end of July.
Pavel Bilibin, partner in the LPK Strategy Partners practice, says that the company assesses price dynamics in the Chinese market as moderately positive, upward, with a slight reduction in supplies. The analyst lists the factors influencing the dynamics of quotes as a reduction in volumes in warehouses in the port of Taicang and an increase in supplies of Russian lumber to other markets - South Korea, Japan, the Middle East, where prices are also rising. Kommersant's interlocutors in the industry say that prices are also supported by supply restrictions from small companies leaving the market, whose business is becoming unprofitable.
According to Strategy Partners, sawn softwood inventories at Taicang Port and surrounding areas were estimated at 1.15 million cubic meters at the end of August, down 8% from the previous month. Experts indicate that the trend towards a reduction in warehouse balances has been observed for the fifth month in a row. Average daily sales volume increased by almost a third, to 21.5 cubic meters.
Previously, China had been reducing imports of softwood lumber. In July, imports decreased by 6.8% compared to the same period in 2023, to 1.4 million cubic meters (supplies from Russia decreased by 3.4%). At the end of seven months, China purchased 10.3 million cubic meters, which is 6% less than a year earlier. Imports from the Russian Federation decreased by 3%, to 3.8 million cubic meters.
Rising prices for lumber are also observed in other large foreign markets. In the USA, quotes in August compared to July increased by 17%, in Japan - by 6%. In recent months, the Russian Federation has been actively increasing supplies to the Japanese market. In the first half of the year, exports grew by 12% year-on-year, to 266 thousand cubic meters. South Korea increased imports from the Russian Federation by 76%, to 59 thousand cubic meters.
But in the future, Kommersant’s interlocutors with Russian lumber producers do not count on a significant increase in prices for their products on the global market. As the companies note, demand in China and other countries is not increasing due to a slowing economy and a slowdown in housing construction.
In Russia, on the contrary, sawn timber consumption may increase due to the stimulation of wooden construction. As Strategy Partners reminds, according to estimates by the Wooden House Construction Association, consumption of standardized laminated laminated structures in the Russian Federation in the coming years may increase by no less than 1.8 million cubic meters per year. The average conversion factor of lumber to produce laminated veneer lumber is about 1.3. Thus, the potential for growth in lumber consumption exceeds 2.3 million cubic meters per year.
