China’s import of soft-wood lumber from British Columbia is down this year but demand should begin to accelerate by the end of 2013 as the world’s most populated country continues to build millions of homes to accommodate massive urbanization, an industry analyst said Wednesday.

B.C. exported 5.4 million cubic meters of softwood lumber during the first nine months of 2012, a drop of 1.5% from a year earlier, but less than the 5% decline in overall Chinese lumber imports.

Mark Kennedy of CIBC World Markets says the performance is positive in light of the recent slowing of the Chinese real-estate market and reflects the pullback in U.S. exports and recognition of the quality of Canadian wood.

Canadian lumber is used primarily in China for concrete forms in apartment-building construction, fur-ring strips used to attach drywall and flooring, and for trim, door and window frames. China imported 1.86 million cubic meters of lumber in November, up nearly 15% from the prior month and slightly below volumes shipped a year ago.

Kennedy says the growth of Chinese imports will depend on stimulus programs adopted by the new government and its support for social housing.

Imports could increase up to 20% between 2013 and 2015, supporting strong demand from Canada, which supplies more than 80% of North American lumber exports.

Increased Chinese demand, coupled with a slow recovery in U.S. home construction, should boost lumber prices and eliminate softwood-lumber duties as of January. The leading beneficiaries include West Fraser Timber and Canfor, Western-based producers that together paid nearly $100 million in duties last year. The long-term demand for lumber is huge as an estimated 10.75 million homes are expected to be built annually in the next 15 years, including 40% in the form of social housing targeted at low-income earners, Kennedy wrote in a report. China’s urban population is expected to hit one billion around 2027, prompting five million housing starts annually.

Replacements of demolished homes represent another two million homes, plus 3.75 million units to reduce housing shortages. In addition to lumber, Chinese demand is growing for pulp as the country expands its production of tissue and cardboard packaging.

China imported 1.4 million tons of pulp in November, up 2.2% from October, but 7.6% higher than November 2011. In the first 11 months of the year, imports grew 15% to 15.1 million tons.

Source: The Province (British Columbia) Dec 2012

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