Overview of Current Market Conditions

The Chinese timber market, traditionally experiencing its peak season during this time of year, is facing continued sluggishness, with pine timber—a key species in the industry—showing persistent price stagnation. Despite its large trading volume, pine timber prices remain low, signaling deeper systemic issues in the market.

According to recent data, prices for radiata pine logs have experienced ongoing declines. Medium A-grade radiata pine logs of 3.9 meters have fallen to €105-110 per cubic meter, down from around €110 previously. Similarly, 5.9-meter logs of the same grade now range between €115-120 per cubic meter, a drop from previous levels of €120 per cubic meter.

Factors Driving Weak Demand

Industry experts attribute the lackluster pine market performance largely to weak downstream demand, driven by two primary factors: the downturn in the real estate market and reduced infrastructure investment. Together, these two sectors form the backbone of the pine market, accounting for over 80% of its overall demand.

With China’s property market facing prolonged challenges and infrastructure projects slowing, demand has failed to recover. One expert remarked, “Demand for pine from the real estate and infrastructure sectors accounts for more than 80% of the entire pine market. With both of these key drivers now stagnating, the pine market can’t perform well either.”

Rising Inventories and Supply-Demand Imbalance

In addition to weak demand, October saw a significant increase in pine imports, which has further exacerbated supply and demand imbalances in the domestic market. Surging inventories have contributed to a lack of price support, resulting in continued price corrections. With a glut of pine supply flooding the market, traders have fewer avenues for profit, compounding industry-wide challenges.

The Impact of Rising Import Costs

While domestic pine prices remain under pressure, the cost of importing pine timber is steadily increasing. The recent depreciation of the RMB against the USD, with the exchange rate dropping to 1:7.2, has significantly raised import costs. Traders have reported an increase of several euros per cubic meter in import expenses, which has directly squeezed profit margins and added to operational pressures.

This currency fluctuation only deepens the challenges for an industry already navigating slowing demand and oversupply. The higher import costs leave businesses with difficult choices, such as whether to pass on these additional expenses to consumers or absorb the costs themselves in an already weak market environment.

Outlook for the Pine Market

The current outlook for China’s pine timber market remains uncertain. With macroeconomic factors like sluggish real estate demand and reduced infrastructure spending continuing to loom large, recovery in demand is unlikely in the short term. Furthermore, increasing operational costs could dissuade traders from participating in new imports, which may help stabilize domestic inventories over time.

However, unless stronger policy measures are implemented to reignite growth in real estate and infrastructure projects, or unless domestic consumption patterns shift meaningfully, the current challenges in the pine market are likely to persist.