Viewpoint

India - The next big log market?

By Bob Flynn Fri, Oct 08, 2010
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RISI will hold its secondIndian seminarin Chennai on December 1, 2010, and the focus will be (as it should) on India's dynamic pulp and paper sector. However, India's rapidly growing economy and vast army of low-cost labor indicates great potential for the wood products sector. In addition, forecasts of a rapid influx of rural workers into urban areas will likely mean, as it did in China, greatly increased demand for wood for housing construction and furnishings. Like China, India has a long-term shortage of wood supply, and although imports of wood and wood products into India are currently far behind China, all signs point to India as being the next big market for log and (perhaps) lumber imports.

RISI measures the impact of China's demand on global wood and timber resources by monitoring its imports of logs and the roundwood equivalent of its imports of primary products, including lumber, wood panels, woodchips and wood pulp. This "timber deficit" in China grew at a compound annual rate of more than 16% between 1997 and 2009, to 105 million m3of roundwood equivalent in the latter year -- roughly equal to Canada's reported total timber harvest that year. By comparison, India's timber deficit is quite small, only about one-twelfth the size of China's in 2009.

However, asThe Economistpoints out in its cover story on India's economy this week, economic reforms in India trailed those in China by about 13 years.The Economistcharts Indian and Chinese exports as a percent of GDP since the start of economic reforms, and the growth path for India is remarkably similar to China's. Indian log imports in 2009 were more than 50% higher than Chinese log imports were 13 years earlier in 1996. China is currently by far the world's largest import market for both softwood and hardwood logs, but if India's demand grows at even half the rate of China's over the past decade, then competition in the global log markets is going to become very intense in the future.

This is an excerpt from a full story that is available in RISI's Pulp & Paper News Service

 

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