US log exports plunge as Chinese demand stalls

China's reduced demand has negatively affected the market for North America

US softwood log exports to offshore destinations that surged through the pandemic have plunged in 2022. Plummeting demand in China has largely driven this year’s downward trend.

Shipments overseas through August fell to 2.76 million cubic meters, down 34% from the 4.17 million cubic meters shipped through the first eight months of 2021. US roundwood exports had posted strong gains the previous two years, during the height of the pandemic’s impact on softwood markets worldwide.

In 2019, US log deliveries offshore fell to 5.31 million cubic meters, down 29% from the 2018 volume. Exports posted two consecutive annual hikes from the 2019 trough, reaching roughly 6.0 million cubic meters in 2021.

Sales to China have set the tone in total US log exports in recent years. That market absorbed 60% of total US overseas exports last year. Shipments to China in 2022 plunged 64% through August.

The impact of new regulations

The Chinese market for US softwood logs got off to a brisk start in 2022. But in February, the Chinese government imposed new regulations restricting Pine log and lumber imports to specified ports. The regulations were in response to customs agents finding pine beetle infestations in some shipments.

Those regulations, and issues surrounding the beetle infestation, derailed Southern Pine log shipments to China. SYP log exports to China soared to 1.9 million cubic meters last year, jumping 85% from the 2019 total. This year’s plunge represents a stark reversal from the previous sharp hikes.

Southern Pine roundwood accounted for 54% of total US log exports to China last year. So far in 2022, SYP log deliveries to that destination have all but stalled, plummeting 98% from 1.48 million cubic meters through August 2021 to trace volumes this year.

Navigating risk

Some Southern Pine log exporters note that trying to ship to China quickly became expensive and risky. A few larger SYP log exporters previously debarked most of the roundwood they shipped to China to avoid the cost of fumigation.

However, Chinese regulations now require all Pine logs to be fumigated, and absorbing the extra expense has been cost prohibitive in most cases.

Further, the risk of having logs rejected if an inspector finds a Pine nematode in the shipment is a significant deterrent because the ensuing potential expense is substantial, traders note.

Douglas Fir and Western Hemlock log exports to China have declined 7% and 35%, respectively, this year. Shipments of “other coniferous” logs to China have more than tripled this year.

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