By the end of August, the inventory of softwood logs at major Chinese ports had reached 3.58 million m³, a 7.83% increase compared to late July. This included 2.87 million m³ of Radiata pine, 340,000 m³ of North American species, and 140,000 m³ of spruce. Inventory levels saw slight increases at key timber industry ports such as Lanshan, Taicang, and Jiangdu. A continued decline in imports was not enough to stop inventory accumulation.
New Zealand, in particular, shipped more logs than the Chinese market needed. The country had to boost exports due to sluggish domestic demand for new residential housing, low outdoor product sales caused by wet weather, and rising electricity costs that forced some timber processing mills to shut down or reduce output.
In August 2024, daily log offtake in China was estimated at 47,000 to 50,000 m³, slightly down from July. Many mills reported weak order volumes and operated at limited capacity.
As demand from the construction sector continued to shrink, some Chinese producers began installing equipment to make furniture-grade lumber and boards, as well as glued components, mouldings, and doors.
The combination of rising inventories and negative market sentiment placed downward pressure on lumber prices. While prices remained relatively stable across many Chinese provinces in August, there were still declines of 10-30 yuan/m³, particularly for Radiata pine and white pine in coastal regions.
As of August 30, the national average price for 3m white pine construction lumber (used in formwork and scaffolding) was 1720.4 yuan/m³, while 3m Radiata pine was priced at 1400 yuan/m³, compared to 1731.8 yuan/m³ and 1419 yuan/m³ a month ago.
However, early signs of a potential demand recovery emerged toward the end of August, with log offtake increasing at major ports in Jiangsu province. In early September, prices for Radiata and white pine lumber around the Shanghai area rebounded by 10-20 yuan/m³.
Real estate data also indicated a possible stabilization at the market’s bottom. Following a series of government measures, second-hand housing is becoming an increasingly important driver. For example, from August 19 to 25, the total transaction area of newly built residential housing (excluding state-subsidized flats) in 10 key cities amounted to 1.87 million m², a week-on-week increase of 17.4%, but still a 13.8% decrease year-on-year. In the same period, the transaction area of second-hand housing in these cities reached 1.58 million m², +4.8% week-on-week and +15.9% year-on-year.
From January to July, China’s real estate investment fell by 10.2%, though infrastructure investment partially offset this decline with a 4.9% year-on-year increase. Public bids for construction timber procurement in August reflected a similar trend, with most orders coming from the infrastructure, industrial, and medical facilities.
Macroeconomic experts are urging the Chinese government to introduce broader, structural reforms to stimulate domestic consumer spending. Otherwise, China could face a prolonged economic stagnation similar to Japan’s "lost decade", as put by economist Desmond Lachman.
