Pakistan's timber import challenges: Inflation, restrictions and market dynamics

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Pakistan finds itself grappling with a range of pressing issues that are hampering its economic stability and creating political imbalances. These problems have contributed to a surge in inflation, with the country's local currency experiencing a staggering increase in inflation from 9.75% in 2022 to a current rate of 19.50%. The consequences of this inflationary pressure have extended to the scarcity of dollars in the market. However, there is a glimmer of hope on the horizon as the ban on timber imports was recently lifted, albeit with significant restrictions still in place. Notably, importers are now required to possess a Letter of Credit (LC) for a minimum period of six months.

Softwood imports:

Pakistan predominantly relies on imports of spruce and pine timber from Canada and Europe. The bulk of Kiln-Dried (KD) and S4S (surfaced four sides) materials are sourced from Canada, while Europe caters to the demand for Beams/Construction wood. Conversations with industry experts have revealed that European companies are prepared to sell KD Timber within the price range of $250-$280, while rough AD Timber Sawn Timber is priced between $220 and $250. Slovenian Stock lists offer rejected grades at approximately 220 euros.

Softwood logs:

The import of softwood logs, such as eastern white pine and southern yellow pine, occurs primarily from America. While the prices of these logs have somewhat declined, it is crucial to note that these cost reductions are contingent upon exporters complying with the import conditions set by the Pakistan State Bank. This includes the mandatory possession of an LC for a duration of six months.

Hardwood imports

Pakistan's hardwood imports primarily consist of ash, Sapelli/Mahogany, and Teak wood. White Ash is sourced from Canada, Sapelli/Mahogany from Africa, and Teak from Malaysia. However, the exorbitant prices of these hardwood varieties have curtailed demand from the retail market, leading to an accumulation of surplus stock with low sales figures.

Current market dynamics

Overall, the demand for timber remains sluggish, and importers appear content due to the substantial stockpiles amassed from the previous year. The retail market, however, is experiencing an unprecedented slump. In response, numerous large companies have embarked on trips to various European countries to negotiate LC settlements. Furthermore, some businesses are establishing offices in destinations such as Singapore, Malaysia, and Dubai.

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