In mid-March, log traders reported an increasing number of inquiries for sawlogs from their Chinese customers. Apparently, stock levels in the log yards of some Chinese companies are too low, and new orders need to be placed.
Chinese beech log prices under pressure
The development of prices does not indicate a significant recovery in demand. Based on cfr China Mainland Port, beech log prices remain under pressure. A month ago, it was difficult to obtain data due to the Chinese New Year. Now, a clear picture is emerging again. Sawlogs of diameter class L4 are fetching €180 to €190/m³. For L5+, prices of €200 to €210/m³ are reported. In January, prices still ranged from €210 to €215/m³. L4 peeling logs now only cost around €160/m³, and sellers receive €170 to €180/m³ for L5+ logs. Exporters who want to sell peelable beech logs with a high share of red heart are turning to India as an alternative market. There, L5+ logs fetch €210/m³ cfr without fumigation. In January, prices of €220 to €230/m³ were recorded cfr Indian Port.
Rising transport costs
For exporters, the pressure on sales prices in China, coupled with rising costs, means smaller margins. The issue of rising fumigation costs has been known since the new directive came into effect in November. The increased effort required at low temperatures became particularly evident this winter. Since the start of the Iran war on February 28, shipping companies have been levying so-called bunker surcharges of up to US-$200 per 40-foot container due to the increased price of oil. Truck transport to seaports has also become 10% more expensive as a result of higher diesel prices. Freight forwarders have announced further surcharges. Thus, for medium transport distances, sellers are faced with total costs of €1,800 to €1,900 per 40-foot container to China – which is substantially more than the €1,500 to €1,600 paid in January and February. The development of the Renminbi Yuan-Euro exchange rate provides some relief. The Chinese currency has strengthened since early February, which makes imports easier.
Industrial logs instead of sawlogs
As in China, more and more German sawmills are rejecting beech logs with a high share of red heart. Some forestry companies with large preliminary contracts for industrial beech logs are increasingly marketing sawlogs with red heart to the pulp industry. In recent weeks, efforts have been made to make sure that the logs can be marketed in fixed lengths or as industrial logs in respective lengths of 6 m.
Reduced beech harvesting
Contrary to exporters’ previous plans, deliveries and shipments are continuing. Purchases have been halted since the start of the year. In sea shipping, delays have been caused by the fact that the log wood was often not fumigated and shipped in January and February in an attempt to avoid the costs of heating the containers.
Now that the current hardwood season is coming to an end, reduced harvesting volumes can be observed with many forestry companies. Nevertheless, unsold quantities remain on the market. Buyers are becoming more selective. This development affects lower-grade timber and logs with red heart in particular.
