Impacts of the oil price change on the softwood roundwood import quantities in Korea

Abstract

This study estimated the impacts of the oil price change on the softwood roundwood import quantities from New Zealand and the USA in Korea. The objectives were to analyze whether the change in the oil price has impacts on the changes in the softwood roundwood import quantities using a bivariate vector autoregressive model, and to evaluate the dynamics of the impacts using impulse response analysis. The results showed that the change in the oil price caused changes in the softwood roundwood import quantities from New Zealand and the USA, and the time lag of the impacts was 2 months. On the other hand, the impact of a shock to the oil price was significantly negative through 12months and longer on the softwood roundwood import quantities fromtheUSA. One possible explanation for such a resultmay be that the increase in oil price influences sea freight cost, and the sea freight cost causes the increase in import price. The impact on the import from New Zealand was smaller than that from the USA. This is because Korean softwood roundwood importers have advance contracts with the exporters ofNewZealand in the short term, andmost of the softwood roundwood consumed in Korea is imported from New Zealand in the long term. This situation may decrease the profitability of the industries using imported softwood roundwood as a raw material. © 2012 Korean Forest Society.