Tropical Timber Market Report

Even though different countries have been reporting economic contractions and warning about further slowdowns, the wood and wood products sectors in Asia have performed surprisingly well given the circumstances. There would likely remain many challenges ahead, but there are signs of possible recovery. ITTO tells us more about the latest around the world.

Central and West Africa

Asian buyers slowly returning

It has been reported that buyers for the Chinese and other Asian markets are slowly returning. The current emphasis is on a few species such as ovangkol, okan and belli. There is a steady but low demand for okoume, iroko, sapelli movingui, dabeme and padauk.

Buyers for the Chinese market are looking for okoume, ovangkol, belli and sapelli, reportedly for the furniture sector. Producers say, despite the buyer interest, prices are stable which is seen as a good sign in these tough trading conditions.

Buyers in the Philippines concentrate on okoume and for this market there has been some welcome interest. Tali is the favourite of Vietnam but recently there has been interest in padauk,belli and dabema.

The South African market has not yet shown signs of recovery as the pandemic is taking its toll on manufacturing output in the country. The South African market for finger jointed okoume has weakened. The interest of South African importers in door fabrication in Gabon appears to be still alive and negotiations are ongoing.

Purchases for the Middle East markets are slow, say producers and demand is well below pre-pandemic levels. This market is very price conscious and there are reports that low priced timbers from Russia are gaining market share.

There is a good market for okoume and sapelli sawnwood in Egypt but the payment process for imports into the country is said to be complicated with all transactions having to secure Central Bank approval which causes delays.

 

Malaysia

Exports of furniture did well in early part of the year 

Furniture exports did surprisingly well over the first four months of the year despite the disruption of production and uncertainty in international markets. Exports of wooden and rattan furniture for January to April 2020 declined only slightly to RM2.62 billion from RM 2.65 billion in the same period in 2019.

Exports of wooden furniture to the US in the first four months of the year rose over 40 percent. In contrast, exports to Europe fell. Shipments to the UK were down 28 percent and to Greece by 23 percent.

Exports to the Netherlands fell 27 percent and to Germany by 30 percent. There was a similar trend in exports to France where there was a 43 percent decline. Exports to Poland dropped 47 percent and to Russia there was an almost 50 percent drop.

In East Asia, exports to Japan declined 24 percent year on year however, South Korea increased imports by around 10 percent in sharp contrast to the 44 percent decline in shipments to China and the 15 percent drop in shipments to India.

 

Shock announcement on hiring of foreign workers

An unexpected announcement from the Ministry of Human Resources limiting the hiring of foreign workers to only three sectors, construction, plantations and agriculture has been met with dismay in several sectors.

The EdgeProp.my website reports that the Federation of Malaysian Manufacturers (FMM) as criticising the announcement “as shocking, unacceptable and done without prior consultation with stakeholders”.

The issue is that this decision does not take account of the serious impact it will have on businesses especially under the current depressed business climate.

The FMM says this will put the manufacturing sector at a great disadvantage and could cripple much of the manufacturing sector in the country.

 

SMEs at risk if loan moratorium lifted too soon

Datuk Ooi Eng Hock, northern chapter chairman of the Federation of Malaysian Manufacturers, has warned that if the loan moratorium is not extended beyond September most SMEs in the country will not be able to meet the repayment schedules which would drive many to close.

He anticipates SMEs will need an additional six months to get their businesses running and be in a position to service loans. He urged banks to extend the loan moratorium for SMEs which contribute about 40 percent of Malaysia’s GDP.

Datuk Ooi’s comments came as the government announced a three-month extension of the loan repayment moratorium for individuals who lost their jobs and had to borrow money.

 

Indonesia

Indonesia’s trade emissaries promoting wood products

The Indonesian Ambassador to Germany, Arif Havas Oegroseno, has said that since the Indonesian Timber Legality Verification System (SVLK) was implemented in 2013 and recognised by the European Union in 2016, exports of Indonesian forest products to Europe increased sharply and reached US$1.1 billion in 2019 of which just US$156 million was the value of exports to Germany.

The export market potential for Indonesian timber industry in Germany is substantial and to capture a greater share of that market Indonesian producers need to address the concerns of German consumers and emphasise legality verification and the sustainability of Indonesia's forest resources.

In the first half of this year exports of Indonesian wood products to Germany were worth US$64 million, down 18 percent year-on-year.

Speaking to the press, Nils Olaf Petersen from the German Timber Trade Association said that Indonesian exporters should not be too worried about this short-term decline anticipating second half results will be much better.

Opportunities in Germany for Indonesian exporters include demand for wood chips for biomass energy and Albesia ‘Lightwood’. In addition, the Ambassador said timbers such as meranti, bangkirai and teak are of interest in Germany.

Much the same sentiment was expressed by Sulaiman Syarif, the Chargé d'Affaires of the Indonesian Embassy in Brussels, who reported the Embassy, in collaboration with the Forestry Community Communication Forum (FKPMI), held an Indonesia/Belgium Virtual Business Meeting on Wood Products and Furniture.

It was agreed that close cooperation between the Indonesian government and the private sector in the country is needed to develop markets in the EU.

Alexander de Groot, a representative from the Association of Belgian Wood and Furniture Industry Entrepreneurs said that Indonesia has a comparative advantage with the Forest Law Enforcement, Governance and Trade (FLEGT) certification for its wood products.

Commenting on exports to the EU, Indroyono Soesilo, General Chairman of the Association of Indonesian Forest Concessionaires (APHI), who is also the Chairman of the Indonesian Forestry Community Communication Forum (FKMPI) said exports of Indonesian wood products to Europe in 2019 reached US$1.1 billion of which US$106 million was from exports to Belgium, the fourth largest importer of Indonesian wood products in Europe after Britain, the Netherlands and Germany.

Robert Wijaya of the Indonesian Furniture and Handicraft Industry Association (Asmindo) said that the planned warehousing facilities for Indonesian products at Antwerp Port will be a great help and should be realised as soon as possible.

 

Boosts to furniture exports to Azerbaijan and Eastern Europe

The Ministry of Trade (Kemendag) is ready to increase exports of furniture products to Azerbaijan and Eastern Europe. This is expected to help maintain the trade balance amid the Covid-19 pandemic.

The Minister of Trade, Agus Suparmanto, has said his ministry continues to promote the export of Indonesian furniture in Azerbaijan and across Eastern Europe market in an effort to boost income and achieve a positive trade balance.

The Director General of National Export Development, Kasan, recently said several strategies were in play to boost Indonesian furniture exports in the global market notably the relaxing of export and import regulations for the export sectors, strengthening competitiveness and optimising e-commerce opportunities. Much of the emphasis recently has been on strengthening export-oriented SMEs through export assistance programmes.

 

Support for Indonesia's commitment to legal timber production

The United Nations Food and Agriculture Organisation (FAO) has launched several new projects to support the production and trade of legal timber in Indonesia.

These projects will enable Indonesian forestry sector stakeholders to achieve the legality goals set out in the EU-Indonesia Voluntary Partnership Agreement (VPA).

The projects will be implemented through the FAO-EU FLEGT Programme.

 

Timber sector may be seeing a recovery

Bambang Hendroyono, Secretary General in the Ministry of Environment and Forestry, has reported that wood product export figures for June are suggesting that the timber sector may be at the beginning of a recovery phase despite the impact of the global COVID-19 pandemic.

This view was supported by Indroyono Soesilo, Chairman of the Association of Indonesian Forest Concessionaires (APHI), who said looking at the trend there is optimism that a year on year increase in export earnings from the timber sector could be possible in the second half of the year.

A boost to the overall export performance came from an increase in exports to the US explained the Head of the Indonesian Trade Promotion Center in Los Angeles, Bayu Nugroho. 

The Ministry of Trade has reported that there was an increase in furniture exports to the US in the first five months of the year. When half year data becomes available the full picture will become clear.

Furniture exports from Indonesia to the US between January and May 2020 earned US$582 million well above the US$385 million in the same period in 2019.

Indonesia's furniture exports to the US in 2019 were recorded at US$1.04 billion, an increase of almost 30 percent compared to the US$809 million in 2018.

While overall the export performance was solid, APHI Executive Director, Purwadi Soeprihanto, has expressed concern that exports of Indonesian wood products to the EU have not grown as much as anticipated. In trying to explain this he said markets in the EU are very sensitive to environmental considerations and product standards are demanding.

He added that although Indonesia and the European Union have concluded the Forest Law Enforcement, Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA) and Indonesia enforces its Timber Legality Verification System (SVLK) Indonesian products have a hard time competing with FSC labelled products. To examine this he said that a joint audit was being conducted between the SVLK and FSC certification schemes.

 

Furniture association reorientation to domestic market

The Indonesian Furniture and Crafts Industry Association (HIMKI) is optimistic that the challenges faced by the furniture industry will ease during the second half of the year. Behind this view is the assumption that the Chinese economy will improve which will lift demand for wood products.

Looking to the future, HIMKI Secretary General, Abdul Sobur, has indicated the second half of the year will witness a transition period for the furniture sector.

He said the association plans to stimulate a change in the orientation of the national furniture sector industry away from a concentration on exports to one where the domestic market is the main target to guard against any further shocks to external demand.

 

Myanmar

Assurances of transparency from MTE

The Myanmar Timber Enterprise (MTE) has issued a letter in which it assures the transparency of the timber supply chain in the country and its support for production and sale of legal and sustainable timber. The letter also clarifies the role of MTE as a state-owned enterprise under the State-Owned Economic Enterprise Law.

The letter was released at a time when EU importers are struggling to meet the requirements of the EUTR, particularly when it comes to Myanmar teak as the country is considered a high-risk source of timber.

 

Economic rebound very possible

A July report by the Oxford Business Group (OBG) has suggested Myanmar’s economy could recover faster than many regional countries as it is able to benefit most from China’s recovery. The report even suggests that, because of government actions to deal with the impact of the pandemic, the country may avoid negative growth in 2020.

The government action has reduced the burden on households and for businesses through changes in the export/import licensing system and through reduced taxes and interest rates. The government also established a fund to support businesses.

 

Large industrial Zone for Mon State

Union Minister for Investment and Foreign Economic Relations, Thaung Tun, has said Myanmar will construct Special Economic Zones (SEZ) in the Mon State and West Yangon. The Mon State Zone will be the largest in Myanmar.

Regarding location, Deputy Minister Set Aung said the new SEZs will be located in an area that can connect to the Greater Mekong Sub-Region East-West Economic Corridor and in an area that where a deep-water sea port can be constructed.

 

India

Migrant workers slowly returning to their city jobs

Migrant laborers who had left for their rural homes after corona virus lockdowns are either returning themselves or being brought back by their employers to project sites in cities.

Since the country has already entered ‘Unlock 2.0’, projects that were stalled due to the lockdown have resumed work, though with just half of their capacity as most of the labourers are yet to return. According to recent data from the Mumbai Metropolitan Region Development Authority, thousands of workers have been brought back to work so projects can restart.

Some real estate developers are sponsoring the return of migrant workers and also facilitating their quarantine.

 

Import wood to help supply furniture manufacturers

The Minister of Commerce and Industry has said furniture should be made in India as there are skilled people here who can make good furniture. To facilitate this, it will be necessary to identify affordable wood raw materials. He mooted the idea of duty-free imports of raw materials as India does not have sufficient forests to supply industry’s needs.

The Minister said he is not against imports as India cannot manufacture everything it needs adding, the pandemic has alerted the country to the need to be more self-reliant.

 

Export order books improving but labour shortage an issue

The Federation of Indian Export Organisations (FIEO) Director General, Ajay Saha and the Export Promotion Council for Handicrafts (EPCH) Executive Director, Rakesh Kumar, have reported that export order books at manufacturers are expanding but the immediate problem is the labour shortage.

Orders are coming mainly from the US and European countries.

The Apparel Export Promotion Council (AEPC) Chairman, A Sakthivel, said orders are now arriving so it will be possible to increase exports.

 

Economy improved in June

Measures adapted to slow the spread of the virus resulted in severe disruption of industrial production and consumer spending during April and May, but the IHS Markit Purchasing Managers' survey for India illustrates that the economy improved in June as restrictions were eased.

Looking ahead the survey forecasts the Indian economy could rebound in the second half of this year.

India imposed a total lockdown in March and restrictions were gradually eased from May. There was a sharp decline in GDP in the second quarter of this year driving a recession in the 2020-21 financial year.

Despite the short-term shock to the economy, foreign investment into India remained buoyant.

Despite the overall dim prospects there is some encouraging news. Analysts write “the monsoon has set well and the Festival of trees is in full swing. Day by day more people and also those in government are realising the importance of green cover and ambitious projects have been launched.”

 

After 25 years Public Works Department reverses ban on timber in construction of buildings

The Indian Public Works Department under the Union Housing and Urban Affairs Ministry, the government's construction agency which undertakes major construction projects on behalf of the Central Government as well as the state governments, has changed its stance on the use of timber in construction.

After 25 years the Public Works Department has reversed the ban on use of timber in construction of buildings and housing projects. This decision came about as the Ministry of Environment, Forest and Climate Change pushed for the change because this will increase demand for wood-based products that would encourage investment and create jobs.

The Ministry of Environment stated that as India has committed to contributing to a carbon sink of 2.5-3 billion MT through additional forest and tree cover by 2030, raising the demand for forest products will give a boost to efforts to expand forest cover.

 

Plans to expand domestic furniture production and reduce imports

In the inaugural address at the India Global Week 2020, a virtual conference organised in the UK with the theme of Aatmanirbhar Bharat (translated to: self-reliant India) the Indian Prime Minister stressed that the government’s policy of self-reliance was key to protecting the country from future economic shocks while remaining integrated with the rest of the world.

As a follow-up the government has identified 20 sectors where India can satisfy more of its domestic demand through import substitution. One target for this approach will be furniture.

Speaking at a Federation of Indian Chambers of Commerce & Industry webinar the Minister of Commerce and Industry highlighted the focus on expanding domestic furniture production and reducing imports.

The Minister said the government has identified sectors where India can not only meet its domestic needs but also become globally competitive and become a global leader by supplying to the world.

Reports suggest the government is considering restrictions on imports of 371 items ranging from toys and plastic goods to sports gear and furniture.

 

Vietnam

EVFTA to boosts exports to EU

The EU is one of the top five markets for wood and wood products (W&WP) exported from Vietnam. In 2019 the W&WP exports to the EU (then including the UK) was reported at US$865 million.

With the European Union-Vietnam Free Trade Agreement (EVFTA), which entered into force on 1 August 2020, Vietnam’s W&WP export to EU are expected to penetrate new markets rather than just France, Germany, Netherlands, Belgium, Denmark and Spain as was the case prior to the EVFTA.

The EVFTA tax reduction/exemption applicable to W&WP imported from Vietnam into EU are as follows:

 

W&WPs enjoying 0% import tax immediately upon EVFTA becoming effective

W&WPs under HS group 4401- 4409, previously subject to taxation between 2-4 percent, now enjoy zero percent tax entering EU markets. These W&WPs accounted for one percent of Vietnams exports to the EU in 2019.

W&WPs under HS 4414/15/18/20/21 previously subject to 2.5-4 percent import tax will enter EU markets with zero percent tax. The value of these W&WPs shares 13 percent of total exports to EU.

Wooden furniture under HS 9403.40-HS 9403.90 previously taxable between 2.7-5.6 percent will enjoy zero percent tax. These W&WPs accounted for seven percent of the export earnings in 2019.

 

W&WPs to benefit from 0% tax in 4-6 years

Before the conclusion of EVFTA, W&WPs under HS 4410-4412 attracted a 6-10 percent of import tax. These products will benefit from zero percent tax in the coming 4-6 years. Currently, these products accounted for 1.3 percent of 2019 earnings.

 

W&WPs which are not affected by EVFTA

The current zero percent tax will continue for HS 4413/17/16/19, Seats (other than those of heading 94.02), whether or not convertible into beds and parts thereof (HS 9401); Wooden furniture of a kind used in offices (HS 940330); Wooden furniture of a kind used in the bedroom (HS 940350), Other wooden furniture (HS 9403.60). The export value of these W&WPs accounted for 78.2 percent of 2019 exports to the EU.

According to Ngo Sy Hoai, Vice President and Secretary General, VIFOREST, with the EVFTA tax structures and the FLEGT licenses set to be issued next year exports to the EU should double over the next 5-7 years (from US$865 million in 2019 to US$1.5 – 1.6 billion in 2025).

 

Exports beat expectations

Vietnam’s W&WP exports in the first seven months of this year amounted to just over US$6 billion, up six percent against the same period last year according to the Vietnam Administration of Forestry (VNFOREST).

In July alone, the country earned nearly US$1.1 billion from W&WP exports, surging 21 percent year-on-year.

However, export prospect in the coming months are not positive given the complex developments of the pandemic in Vietnam’s key markets.

Between January and July this year Vietnam spent over US$1.3 billion to import W&WP, a decline of 9.5 percent year-on-year.

 

Vietnamese importers warned on legality of timber imports

Annual imports of wood raw materials from Russia and Ukraine used to be quite modest at around US$20 million, mainly sawnwood and plywood and accounted for less than one percent of the total imports from some 100 sources.

However, imports of raw material from Russia increased sharply in 2018 and 2019. In the first five months of this year wood imports from Russia were 85 percent above that in 2019. 

Vietnamese importers are now aware that legality is an issue with timber from Russia and that they may face problems of legality assurance when exporting products manufactured from Russian raw materials.

Vietnamese importers have also been alerted to the risks in importing wood raw materials from Ukraine.

Facing these risks, Le XuanQuan, Chairman of the Dong Nai Association of Timber and Handicrafts (DOWA), said that the local industries need to review their trade procedures and report any suspicious shipments that arrive in the country.

Do Xuan Lap, Chairman of Viforest, said that it is necessary to form and promote horizontal and vertical links between plywood enterprises and furniture manufacturers to secure the supply chain from illegal timber.

 

Design and branding can lift industry earnings

To enhance the value of production Vietnamese wood processing enterprises are looking to pay more attention to the intangible added value earned from design and branding. The Government has set an export goal of US$20 billion by 2025 nearly double that achieved in 2019.

To achieve this, the timber industry cannot rely solely on expanded output but will need to become more imaginative especially as the days of cheap labour and land are fading fast.

The economist Pham Phu Ngoc Trai has identified that among the five core values in the wood processing sector; product range, technology, design, brand and sustainability, Vietnam has an advantage in product range, technology and sustainability but misses out in terms of design and brands. Addressing these two values will be key for businesses to reach a higher level.

 

‘Pandemic fatigue’ setting in

A second wave of corona virus cases in Japan’s major cities is a threat to the initial signs of economic recovery but the government is hesitating to request businesses to again suspend operations hoping the regular news on infections would encourage residents to continue with their efforts to reign in the spread.

The problem is that now there is a growing ‘pandemic fatigue’ setting in especially among the younger generation who make up most of the new cases of infections.

The Ministry of Finance has painted an optimistic picture for all regions in the country saying consumer spending and production appears to be bottoming-out. The ministry also revised its overall assessment of the Japanese economy saying that there are signs of recovery in some areas.

Lending support to the suggestion that the economic downturn is bottoming-out an index reflecting the current state of the Japanese economy improved in June for the first time in five months. 

The Cabinet Office preliminary data for business conditions in June showed an uptick. But, the Cabinet Office maintained its assessment that the Japanese economy is ‘worsening’, using the most pessimistic expression for the 11th straight month.

 

Pace of decline in spending slows

Data from the Ministry of Internal Affairs is suggesting that June household spending, while still dipping down, fell at a much slower pace than in May when spending dropped over 16 percent.

The one percent decline in June marks the ninth consecutive decline. The Ministry data shows spending on tours and theater admissions were down more than 90 percent. 

 

In contrast, purchases of household furniture and electrical goods

almost doubled compared to May. A ministry spokesperson said the government's 100,000 yen payout to all residents helped slow the decline in spending.

 

China

China-ASEAN Timber Industry Zone in Teng County

A signing ceremony launching work on the China-ASEAN International Timber Industry Zone project was recently held in Teng County, Wuzhou City, Guangxi Province.

This will involve an investment of about RMB20 billion. Construction is expected to take five years and will be done in three phases. The construction of the zone will start this year and the main infrastructure will be completed and operational within two years.

The overall construction of the project is expected to be completed by December 2025. When fully operational it is anticipated that the Zone will have an annual turnover of around RMB50 billion and will provide 30,000 jobs. Timber will be imported through Qinzhou Port.

There will be more than 25 primary processing enterprises with an annual capacity of two million cubic metres in addition there will be around 10 downstream processing enterprises in the Zone which will extend over area of more than five million hectares. The Zone is expected to become a major regional forest products processing Zone.

 

First trading Centre for forest rights

It has been reported that a forest rights trading centre had been established in Qintang District, Guigang City, Guangxi Zhuang Autonomous Region.

Guigang City and the Guangxi Forest Rights Trading Center will operate the trading centre which is expected to inject new life into the wood processing industries in Guigang City.

Wood processing has become one of the leading industries in Guigang City and enterprises in the City are important in the distribution plywood and veneer production.

Guigang City is called the wood panel capital of Southern China.

There are more than 3,500 wood processing enterprises in Guigang City with more than 150,000 employees. Despite the pandemic the output of wood processing industries in Guigang City increased around 10% over the same period of 2019. The production of wood-based panels reached 7.5 million cubic metres.

 

Drop in first half GDP

The State Council Information Office has reported that GDP in the first half of 2020 declined 1.6 percent year-on-year, GDP fell 6.8 percent in the first quarter and expanded 3.2 percent in the second quarter.

In the first half of 2020 investment in fixed assets (excluding that by farmers) fell 3.1 percent to RMB28.1603 trillion, down 3.2 percent between January and May and down 13 percent compared to the first half of 2019.

In the first 5 months investment in infrastructure fell 2.7 percent, investment in manufacturing fell 11.7 percent which on a year-on-year basis translates to a 17 percent and 13.5 percent decline respectively. In contrast, investment in real estate development grew almost two percent but was still down around eight percent year-on-year.

Northwest International Timber Trading Center established

It has been reported that a Northwest International Timber Trading Center has been established in the Zhongchuan North Station Logistics Zone in the Lanzhou New Area. 

This is a national level logistics hub.

The completion of the trading centre has created a new service platform and industrial supply chain for imported wood products integrating warehousing, distribution, sales and processing, which has injected new strength into the promotion of the ‘hub economy’ and spurred the development of further investment in wood processing in the Lanzhou New Area.

 

Zhuangzhai the national wood-based panel production base

Zhuangzhai Town, Cao County, Heze City in Shandong Province is one of the important wood-based panel production bases in the country and the largest candlenut (Aleurites moluccanus or moluccana) processing, trading and distribution centre for candlenut wood products.

Wood processing is the leading industry in Zhuangzhai Town. There are more than 600 enterprises and 37 industrial enterprises with annual main business income of RMB20 million. It is estimated that around 60,000 direct and indirect jobs have been created employees. The annual wood processing capacity is said to be three million cubic metres.

Almost all the enterprises in Zhuangzhai Town started as sawmills and gradually moved to added value processing. Today they are leading the industry in the manufacturing of candlenut coffins, children's furniture and toys and shutters. Products are marketed in Europe, America and Australia along with around 40 other countries.

 

Europe

EU wood furniture production sliding even before pandemic

Newly released Eurostat data indicates that the value of EU27+UK wood furniture production was €42.5 billion in 2019, 1.4 percent less than the previous year.

In retrospect, it looks as if the rebound in EU wood furniture production following the 2008 economic crises peaked as early as 2017, as 2019 was the second straight year of decline and the COVID-19 pandemic has damaged market prospects in 2020. Last year, EU wood furniture production was still 20 percent down, in real terms adjusted for inflation, compared to the years just prior to the 2008 crises.

Last year, there was a sharp downturn in wood furniture production in Italy (-8% to €9.1 billion), and a more moderate decline in Germany (-3% to €7.2 billion), France (-2% to €2.1 billion), Romania (-3% to €1.8 billion), and Sweden (-1% to €1.0 billion). 

These declines were only partly offset by rising production in Poland (+1% to €6.7 billion), UK (+5% to €3.4 billion), Spain (+4% to €2.5 billion), Lithuania (+10% to €1.7 billion), Denmark (+2% to €0.8 billion) and the Netherlands (+1% to €0.7 billion). 

Production was stable in Portugal during the year, at €1.1 billion.

European wood furniture manufacturers lost internal EU market share to overseas producers in 2019, although they remained very dominant overall. In 2019, 86.4 percent of all wood furniture sales in the EU27+UK market comprised products manufactured within the EU27+UK, a marginally lower percentage than the previous year (87.6%).

EU27+UK wood furniture consumption was €40.4 billion in 2019, a gain of 0.6% compared to 2018. In 2019, consumption increased in the UK (+6% to €6.7 billion), France (+2% to €4.5 billion), Spain (+8% to €2.6 billion), Netherlands (+8% to €1.7 billion), Romania (+3% to €1.2 billion), Austria (+7% to €0.9 billion), and Belgium (+2%to €0.9 billion). 

However, consumption fell 11 percent to €5.2 billion in Sweden, three percent to €1.5 billion in Poland, and seven percent to €1.0 billion in Sweden.

 

Uptick in EU27+UK wood furniture imports in 2019

EU27+UK imports of wood furniture from non-EU countries increased nearly 10 percent to €6.7 billion in 2019 after falling one percent in 2018. Imports from China, by far the largest external supplier, increased 11 percent to €3.34 billion in 2019, while imports from other non-tropical countries increased seven percent to €1.50 billion.

Imports from tropical countries increased 11 percent overall to €1.87 billion.

Total EU27+UK import tonnage increased 10 percent in 2019, to 2.37 million metric tonnes (MT). Import tonnage increased by nine percent from China to 1.18 million MT, by 15 percent from other non-tropical countries to 620,000 tonnes, and by six percent from tropical countries to 570,000 MT.

Continuing the trend of recent years, in 2019 there was a particularly large increase in import tonnage of wood furniture from several countries bordering the EU, including Ukraine (+32% to 104,000 MT), Belarus (+32% to 95,000 MT), Turkey (+20% to 95,000 MT), and Serbia (+13% to 60,000 MT).

Vietnam was by far the largest tropical supplier of wood furniture to the EU27+UK in 2019, with imports from the country rising one percent to 232,000 MT. However, the largest gain by a tropical country in the EU wood furniture import tonnage in 2020, was by Malaysia with a rise of 20 percent to 119,000 MT.

There was also a nine percent rise in import tonnage from India, to 30,000 tonnes. Import tonnage from Indonesia increased three percent to 100,000 MT in 2019. Import tonnage from Thailand was stable at 18,000 MT in 2019.

 

First indications of post-lockdown rebound in EU wood furniture imports

The development of the EU27+UK wood furniture market this year will be strongly dependent on the effects of the COVID-19 pandemic, as it is having a profound impact on both supply and demand. Data indicating the likely scale and duration of these impacts is only just becoming available and is still fragmentary.

Import data for the whole of the EU27+UK region is currently available to the end of April 2020 and captures only the earliest stages of the lockdown which began in mid-March in most European countries.

Given lead times typically of five weeks or longer to deliver Asian furniture to the European market, this data provides only limited insight into the effects of the pandemic.

In total, the EU27+UK imported 720,000 tonnes of wood furniture in the first four months of this year, eight percent less than the same period in 2019. Imports fell by 10 percent from China, to 330,000 MT, by seven percent from other non-tropical countries, to 180,000 MT, and by six percent from tropical countries, to 200,000 MT.

The biggest decline in EU27+UK imports of wood furniture from tropical countries in the first four months of 2020 was from Malaysia, down 12 percent to 35,000 MT.

Imports also declined sharply from Indonesia, by nine percent to 34,000 MT, and Thailand, by 25 percent to 4,400 MT. Imports were down only two percent to 92,000 tonnes from Vietnam.

Closer analysis of monthly import and export data gives more insight into the effects of the pandemic and the pace of the rebound. The available data on EU27+UK imports of wood furniture from China shows a very sharp dip in March and April this year.

This is partly cyclical since EU27+UK imports from China tend to decline in the spring months after a rush at the turn of the year to despatch products before the Chinese New Year holiday season.

However, the dip in EU arrivals this year started early in March, due to supply side problems in China, and deepened into April.

The supply side problems in China early in 2020 are more obvious from export data. China’s exports of wood furniture to the EU27+UK fell more steeply than usual in February this year and remained at unusually low levels in March and April. However, there was a strong recovery in China’s exports to the EU27+UK in May and June, strongly suggesting that the direct effects of the COVID-19 lockdown on EU27+UK imports of wood furniture from China will be short lived.

Signs of the market impact of COVID-19 are also becoming clearer for tropical suppliers. EU27+UK imports of wood furniture from Vietnam were strengthening in April.

However, this is certain to be followed by a significant decline in May through to July. Again, this is indicated both by cyclical changes—EU27+UK imports of wood furniture from Vietnam typically fall in the second quarter of the year—and by Vietnamese export data.

Latest data from www.goviet.org.vn shows that the total value of all Vietnamese wood and wood products exports to the EU27+UK—which is dominated by wood furniture—fell 41 percent from US$213.7 billion in the first quarter to US$125.6 million in the second quarter.

EU27+UK imports from Indonesia were quite strong in the first quarter of 2020 and weakened only slightly in April. Export data reveals a downturn in Indonesian despatches to the EU27+UK in April and May this year, but not out of line with trends in previous years.

Indonesia’s furniture exports to the EU are dominated by outdoor products, particularly due to relatively abundant plantation teak supplies. It maybe that Indonesia is benefitting from the continuing relative strength of European demand for outdoor furniture during lockdown.

Social distancing measures meant more people meeting outside and restaurants and bars only serving to customers outside. A run of good weather has also encouraged people confined to their homes to install garden decking and sheds.

The impact of the COVID-19 pandemic on EU27+UK imports of wood furniture from India, which mainly supplies a niche market for handcrafted interior furniture, appears to have been much more severe.

Export data indicates an extremely sharp (96%) fall in India’s exports of wood furniture to the EU27+UK in April this year – a trend confirmed by import data for those few European countries that have already published trade statistics to the end of May, including the UK, France and Spain.

Malaysian trade data shows a severe decline in wood furniture exports to the EU27+UK between January and April this year, but trade began to rebound and make up some ground in May.

The Eurostat furniture production index for EU countries is another indicator of the scale of the downturn and rate of recovery in the European furniture sector during lockdown period.

For most EU countries, the monthly index was broadly stable throughout the whole period from January 2015 through to February 2020—the only exceptions being Poland and Lithuania, both of which outperformed all other EU countries by recording a significant rise in production.

The picture changes dramatically in March, with nearly all leading EU furniture manufacturing countries recording a precipitous and unprecedented fall in production as the continent went into the lockdown.

The downturn deepened in April but was followed by recovery in May and June for all countries. While the overall trend was the same, the depth of decline and rate of recovery varied widely between countries.

Compared to other EU countries, Germany, Sweden and Denmark all suffered less dramatic declines in production in April and March and production was close to normal levels by June. In Poland and Lithuania the furniture production index fell steeply in March and April, to around 50 percent of previous (quite buoyant) levels, and then recovered very strongly in May and June.

In Italy, Spain and France, there was a very large fall in production in March and April—down 85 percent on normal levels in the case of France and Italy. 

Although still down 20 percent on normal levels in June, the rebound In France, Italy and Spain was quite robust. In the UK, the decline in March and April was large, down 65 percent on usual production levels, and the recovery slower and weaker than elsewhere in Europe. In June UK production was still down by around 50 percent.

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