China’s largest log supplier eyes another billion-dollar market

Summary

Low-capacity operation of New Zealand sawmills has led to a significant decline in timber stocks, raising concerns over supply shortages. Meanwhile, global uncertainties and geopolitical factors have dampened demand for New Zealand timber in traditional export markets of the US, Europe and Asia. From January to April 2025, China's log imports from New Zealand fell 4% year-on-year to 5.89 million cubic metres, with average prices down 5%, remaining below the same period last year for four consecutive months.

Despite A-grade log CFR prices holding around US$110, importers are still making losses, and the volume of logs shipped to China is expected to shrink further. New Zealand timber exporters are seeking to diversify, reducing reliance on the Chinese market and turning their attention to India. The New Zealand Timber Industry Federation (NZTIF) noted that India has huge and rapidly growing demand, proposing to position radiata pine as a 'versatile' timber, leveraging its ease of handling, processing and sustainable management to break into the Indian market.

Success in tapping this billion-dollar Indian market will depend on price competitiveness and depth of market development.

Commentary

Around 70% of New Zealand's log exports go to China, where radiata pine has long dominated the market thanks to zero tariffs and stable supply. However, in the first four months of 2025, both import volumes and prices into China declined; although A-grade log CFR prices held at US$110, importers are generally loss-making, and low-capacity operation of sawmills has already led to a notable reduction in stocks. For local small and medium-sized forestry enterprises, the risk of reliance on a single market is once again highlighted.

Looking at the industry landscape, India imports over 10 million cubic metres of timber annually, with traditional suppliers such as Malaysia and Germany holding a first-mover advantage. New Zealand's sawn timber exports to India over the past five years have been only about US$10 million, almost negligible. NZTIF's push to position radiata pine as a 'versatile' timber targets India's huge demand for easy-to-process and sustainable materials in construction, furniture and packaging industries.

This presents opportunities: small and medium enterprises could jointly participate in industry promotion, develop anti-corrosion treatment solutions for India's tropical climate, or seek tariff concessions under free trade agreements. But challenges are equally clear — Indian buyers are highly price-sensitive and already have established procurement networks; New Zealand needs to break through with more competitive landed prices and flexible payment terms. Local processors should also note that if log exports shift towards India, it could lift domestic log prices and squeeze sawn timber margins.

Success in capturing a share of the Indian market depends not only on costs but also on building a stable supply chain through collaboration.

Keywords: New Zealand timber, log exports, Chinese market, Indian market, radiata pine, supply shortage, diversification, import decline, NZTIF, billion-dollar market

Source: Zhihu