U.S. exports of logs and lumber via ocean container declined year-over-year in January for the fourth consecutive month, partly because of declining demand from China and unfavorable exchange rates. After growing 9 percent in 2014, the trade outlook for logs and lumber for 2015 looks disappointing as the housing market restriction measures undertaken by top market China markedly cooled down the housing market in the second half of 2014.
Housing sales in China declined 7.6 percent in 2014, partly because of high base effects. Some local governments have begun to relax restrictions on housing purchases, but the impact has been limited. It appears the housing market downturn, combined with overall weakness in the economy, will likely weaken housing construction in China this year, effectively dampening demand for logs and lumber, and other construction inputs.
As measured by ocean container volume, China is the largest export market for U.S. logs and lumber, holding 54.9 percent of the market in 2014, up remarkably by 12 percentage points from 2012. Despite the weaker demand from China in the second half of 2014, total U.S. exports of logs and lumber managed to expand 17 percent in all of 2014 to that market, following a jump of 36 percent in 2013. Exports to Vietnam and Japan declined 1 and 25 percent, respectively, in 2014, while exports to India jumped 80 percent. India’s strengthening construction sector has had positive implications on its demand for logs and lumber. The Indian market moved up from sixth place in 2013 to the third place in 2014 in the U.S. export market share for logs and lumber.
By dollar value, India’s imports of logs and lumber were up remarkably by 43 percent in 2014, with Papua New Guinea supplying a great share of the growth, according to GTIS data. In dollar value, Papua New Guinea exported 87 percent more logs and lumber to India last year — 4 percent of all India’s imports of logs and lumber, up from 2 percent in 2013.