The price expectations of €220/m³ cfr China Mainland Port of Chinese customers in September were confirmed as contract prices in mid-October. However, this price only applies to sawlogs in the L5+ strength class with little or, ideally, no red heart. L4 sawlogs sell for less than €200/m³. For peeling logs, which are in weak demand throughout the year, only around €200/m³ are achieved – even for the L5+ strength class. The already low contract volumes for sawlogs and peeling logs also face competition from Eastern European beech logs, which are offered to Chinese buyers at prices that are €20 to €30/m³ lower.
Eastern Europe with a competitive edge
According to Central European trading companies, Eastern European exporters benefit from lower fumigation costs. This difference will increase even further starting in November, when the fumigation directive that was announced in July comes into force in Germany. Instead of the current €500 per 40-foot container, additional costs of €200, or €10/m³, will then be incurred. However, exporters are more concerned about potential shipping disruptions due to low temperatures than about higher costs.
Hesitancy in purchasing despite cheap freight rates
Freight rates to China remain cheap. Depending on the distance to the seaport, shipping costs under €1,000 per 40-foot container, including pre-freight, fumigation, and ancillary costs. As forecast in September, pressure on sales prices in delivery agreements until the end of the year has increased further. Now that the volumes stipulated in the “start-of-season” contracts have largely been delivered, Chinese buyers are again demanding discounts in follow-up contracts.
Central European exporters are hesitant when it comes to purchasing and are mostly only accepting volumes from regular suppliers. Preliminary contracts with forestry companies are still being concluded until the end of the year at best, a lot of them only until November. Further price reductions are forecast for the period after the Chinese New Year. Experienced log exporters, who have been shipping beech logs to China since the boom years in the second half of the 1990s, are increasingly skeptical of this development. While sawmill and, now, veneer capacities of other types of hardwood have shifted from China to Vietnam, beech remains out of the picture. Contrary to oak or ash, for example, beech log deliveries to Vietnam are not an option. Meanwhile, exporters can no longer rule out the possibility that the slowdown that has been evident since the beginning of the Chinese construction crisis in 2020 will intensify. Domestic demand for interior design and furniture consumption has, in fact, been too low for quite a while now.
