Study suggests bleak outlook for furniture exports
Hong Leong Investment Bank (HLIB) Research is reported as saying the outlook for the Malaysian furniture market remains bleak as the sector's largest export destination, the US, continues to experience housing issues.
According to the research firm the US housing market began to cool following the start of the Federal Reserve's interest rate increases in 2022 as mortgage payments began to rise.
The HLIB commented that housing starts have stalled and existing homeowners are reluctant to sell as many have low interest rate mortgages which they could lose if they were to sell.
The Malaysian Timber Council reported that wooden furniture exports in the first four months of 2023 declined by almost 40 percent.
Singapore, Malaysia’s second largest export market for wooden furniture, increased imports in early 2023 helping to offset some of the decline in US imports.
Forest loss remained low in 2022
A report by the World Resources Institute and the University of Maryland’s Global Forest Watch noted that Malaysia had managed to keep its rate of primary forest loss to near-record low levels.
The WRI report says “In Malaysia, primary forest loss remained low in 2022 and has levelled off in recent years. Corporate and government action also appear to be contributing.
No Deforestation, No Peat and No Exploitation (NDPE) commitments now cover the majority of the palm oil sector and in 2018 the Roundtable on Sustainable Palm Oil (RSPO) strengthened its certification requirements.
In addition, the Malaysia Sustainable Palm Oil (MSPO) Board was formed in 2015 to certify sustainably grown palm oil.
In 2017 the government of Malaysia mandated MSPO certification starting in 2020. Positive government action has continued in more recent years, with a plantation area cap established in 2019 through 2023 and new forestry laws enacted in 2022 to stiffen penalties for illegal logging”.
In a statement the Natural Resources, Environment and Climate Change Ministry explained that achieving reduced deforestation was due to a number of initiatives including law enforcement, the adoption of certification in the palm oil industry, the Ecological Fiscal Transfers (EFTs) for Biodiversity Conservation initiative which is being promoted nationwide.
Trade surplus rose in May
According to the Ministry of Investment, Trade and Industry (MITI) Malaysia's trade surplus rose in May 2023 registering the 37th consecutive month of double-digit growth since May of 2020.
This was supported by higher exports in petroleum products, electrical and electronic products, machinery, equipment and parts as well as processed food.
Exports to major trading partners, notably China, the United States and Japan recorded expansion. On trade with China, which contributed 17 percent of Malaysia’s total trade, MITI said it declined slightly in May 2023.
MTCC - no new interpretation in C&I for SFM
The Malaysian Timber Certification Council (MTCC) has issued a statement addressing a misleading narrative circulating about the Malaysian Timber Certification Scheme (MTCS) that has caused confusion among stakeholders.
MTCC emphasised that there have been no new interpretations introduced regarding Criterion 6.11 of the MTCS ST 1002:2021 Malaysian Criteria and Indicators for Sustainable Forest Management.
Sabah forests for carbon trading
Sabah Deputy Chief Minister, Jeffrey Kitingan, has called on the Prime Minister to promote Sabah’s carbon trading opportunities. Kitingan said the state government has already set aside two million ha for carbon trading.
The Deputy Chief Minister recently held a meeting on carbon trading with the state’s steering committee and said the State is making progress with carbon trading and will start trading on a small scale soon.
In related news the Sarawak Forest Department Director has said Permanent Forest Estates (PFEs) in Sarawak have the potential to deliver carbon storage in addition to timber and environmental services. He reported that around four million ha of the State’s forest cover have been gazetted as PFEs.
The Director is reported as saying “We are making a great effort towards achieving our target of getting all our long-term forest timber licenses certified. To date, 20 Forest Management Units (FMU) and seven Forest Plantation management units (FPMU) with a total area of 1.78 million ha and 97,966 ha respectively have been certified under the Malaysian Timber Certification Scheme”.
Joint Malaysia and Indonesia trade mission to Belgium
Malaysia and Indonesia have urged the European Commission to recognise their work on the environment and deforestation with regard to palm oil production which, they say, is in line with the United Nations’ Sustainable Development Goals.
Malaysia and Indonesia mounted a joint trade mission to Belgium under the Council of Palm Oil Producing Countries. This was in response to the implementation of the European Union Deforestation Regulation (EUDR).
Malaysian Palm Oil Board chairman, Mohamad Helmy Othman Basha, is reported as saying “We have done a lot in the last 10 to 15 years in the area of environment and deforestation and we want the EU to recognise this fact. We have improved a lot, but we have not seen them reciprocate” he said.
Policy shift could encourage more investment
The export value of furniture and parts from Sarawak was RM57.4 million in 2022, a 23 percent increase in five years but this is still small when compared to the multi-billion ringgit national exports.
Malaysian Furniture Council president said more could be done to expand the sector in both Sabah and Sarawak. The recent Federal government announcement allowing Sabah and Sarawak to approve development projects worth up to RM50 million will make it easier for investors in the furniture industry.
The Sarawak Furniture Industry Association president said the Association would continue to work closely with all government agencies in identifying sustainable alternative raw material for furniture such as acacia, bamboo and paulownia.
The Ministry of Science, Technology and Innovation (MOSTI), through the Malaysian Space Agency (MYSA), signed a memorandum of understanding with the Sabah Forestry Department to collaborate on the use of remote sensing for the management of forest resources.
A representative of MOSTI said the scope of the collaboration involves monitoring and mapping forest areas throughout Sabah using space technology which is a new approach to the management of forest resources and digitisation of forestry information.
Through this collaboration several application system packages have also been developed specifically to assist the Sabah Forestry Department in the management of forest resources, namely the iForSABAH application for forest cover management and monitoring and the e-PESISIR system which focuses on monitoring the country’s coastal areas.
EU and domestic regulations could weaken furniture exports
The combined impact of the EUDR and the Indonesian government's legality verification system (SVLK) could potentially hurt the domestic furniture industry and erode Indonesia's furniture export competitiveness according to Abdul Sobur, chairman of the Indonesian Furniture and Handicraft Industry Association (Himki).
When the EUDR is implemented this will add to production and delivery costs and if prices do not rise then eventually the regulations will weaken Indonesia's competitiveness, Abdul said.
He added, unnecessary costs must be eliminated as restrictive regulations could hamper the target to achieve US$5 billion in furniture exports.
In related news, the Director General of Agro-Industry at the Ministry of Industry (Kemenperin), Putu Juli Ardika, denied that the EUDR will negatively impact exports of products from Indonesia as, according to him, “the majority of exporters already have certificates meeting EU standards ensuring the manufacturing process for exported products does not damage the forest.
Coordinating Minister of Economic Affairs, Airlangga Hartarto, has said that Indonesia has 18 months remaining to act before the implementation of the EUDR adding that the regulation would label products as originating from high-risk, standard or low-risk countries.
He said Indonesian commodities potentially impacted by the EUDR include palm oil and derivatives, coffee, soya, cocoa, beef and wood products.
Deforestation rate in 2022, a steady decline
The Minister of Environment and Forestry, Siti Nurbaya, reported Indonesia's deforestation rate in recent years to the House of Representatives.
According to the Minister, Indonesia's deforestation rate continues to decline year by year. She revealed that in 2015 Indonesia's deforestation rate was recorded at 1.09 million ha but it had fallen to 460,000 ha in 2019.
The rate of deforestation fell again in 2021 to 110,000 ha. The Minister revealed that in 2022 deforestation extended over 107,000 ha.
She explained that, to monitor deforestation, the Directorate General of Forestry Planning and Environmental Management has developed a National Forestry Monitoring System (Simontana) that records the condition of Indonesia's forests.
Social forestry creating economic growth in villages
The Minister of Environment and Forestry has said that the concept of social forestry, which gives communities the right to manage forests in a sustainable manner, can create economic growth in villages.
Communities can secure social forestry management rights through five schemes: village forest management schemes, community forestry, community plantation forestry, customary forest and partnership schemes.
The Minister said that social forestry has also expanded to the downstream sector so that communities can now develop into productive communities.
Seek export opportunities from US-China trade dispute
Indonesia must optimise opportunities arising from the ongoing trade dispute between the United States and China according to the Coordinating Minister for Economic Affairs, Airlangga Hartarto.
He said that Indonesia has become a member of the first regional cooperation group to focus on supply chain issues namely the Indo-Pacific Economic Framework (IPEF).
The other IPEF members include Brunei, Fiji, Singapore, Thailand, Malaysia, Vietnam, Australia, India, Japan, New Zealand, South Korea, the Philippines and the US.
IPEF member countries have committed to realising economic cooperation involving the private sector as well as implementing technical assistance and capacity-building programmes.
Benchmark price information system
The Ministry of Environment and Forestry (Directorate of IPHH) is developing a Benchmark Price Information System (SIPATOK) for forest products to generate fair Non-Tax State Revenue (PNBP) for the State.
The SIPATOK is being tested in four provinces: Riau, as a representative for Sumatra, East Java (Java region), East Kalimantan (Kalimantan region) and South Sulawesi (East Indonesia region).
One of the reasons for the development of SIPATOK is to optimise Non-Tax Revenue.
Based on data from the Directorate General of Sustainable Forest Management of the Ministry of Environment and Forestry (KLHK) over the last five years (2018-2022), Non-Tax Revenue from forest utilisation was IDR2.8-3.2 trillion per year.
This is very small when compared to the potential considering that production forests in Indonesia cover an area of 68.83 million ha.
A Ministerial Regulation regarding Benchmark Prices will serve as a guide in submitting data and information on forest product prices to ensure the fulfilment of fairness in setting prices reflecting the market prices for forest products.
SIPATOK will simplify the process of collecting data and information on prices of forest products and setting benchmark prices as well as providing access to business actors to directly convey the real selling prices of forest products based on sales documents/invoices and other sales documents.
Minister unwaveringly in rejection of trade discrimination
Indonesian Coordinating Minister for Economic Affairs, Airlangga Hartarto, recently met with President Joko Widodo to report the results of the Indo-Pacific Economic Framework (IPEF) meeting. Airlangga highlighted several regulations in other countries that are deemed detrimental to Indonesia.
Airlangga reported on trade facilitation which is still under discussion at IPEF which has not been completed, the supply chain discussion was completed as was discussion on the green economy fair economy.
Airlangga also informed the President on the European Union Deforestation Regulation (EUDR). He said “within 18 months forest commodities must be verified through due diligence statements and tagging.
Airlangga argued that the EUDR regulation is detrimental to Indonesia because the implementation does not provide time to adjust saying, “if within 18 months Indonesia does not comply with the EUDR then a large part of trade relations with Europe will be disrupted”.
Minister Hartarto appears unwaveringly in his rejection of discrimination by trading partner countries through the EUDR and Carbon Border Adjustment Mechanism (CBAM).
CBAM is a policy tool introduced by the EU that requires EU iron and steel importers to be subject to additional obligations to pay carbon tax rates in accordance with the amount of iron and steel imported.
The Minister seems to consider the EUDR policy will hurt and harm several plantation and forestry commodities in Indonesia and Malaysia. In addition, the EUDR undermines Indonesia's commitments to solve problems related to climate change issues and to protect biodiversity.
Plans to have the forestry sector offset carbon emissions
The Environment and Forestry Ministry plans to have the forestry sector offset carbon emissions produced by the energy sector with the target of reaching a net reduction of 140 million tonnes of carbon dioxide equivalent by 2030.
The ministry's Climate Change Control Director General, Laksmi Dhewanthi, stated that the energy sector's emissions are still projected to increase in order to meet the domestic energy demand. "Indonesia, in terms of energy consumption per capita, is still far below that of average middle-income countries," she noted in a statement on Tuesday.
If the energy sector still contributes to emissions in the future, then the forestry sector can already reduce emissions first to achieve a balance between various sectors in Indonesia, Dhewanthi noted.
Stimulating forestry sector green investment
Agus Justianto, Director General of Sustainable Forest Management, Ministry of Environment and Forestry said the Ministry (KLHK) supports growth in green investment in the forestry sector which promises profits for investors as well as positive impacts on environmental and social management.
He said "green investment is not only oriented to get financial returns but also produces social and environmental impacts in a sustainable manner".
One of the efforts to stimulate growth of green investment in the forestry sector is optimising the economic value of carbon (Carbon Pricing).
Carbon pricing arrangements in the work area of Forest Utilisation Permits (PBPH) are guided by Presidential Regulation Number 98 of 2021 and Minister of Environment and Forestry Regulation Number 21 of 2022.
Social forestry permits benefit 1.2 million families
Since it was implemented in 2016 the area of Social Forestry Permits as of May 2023 reached 5.5 million ha comprising over 8,000 units for approximately 1.2 millinon heads of families.
The Minister of Environment and Forestry, Siti Nurbaya, emphasised that the Social Forestry Programme is one of the national strategic programmes.
She added "By the end of 2025 we aim to have at least 70 percent of the target of 12.7 million ha achieved. It is an ideal target that must be completed."
Minister Siti said she would continue to innovate in strengthening the social forestry programme, especially on institutional/group aspects, including the application of a GIS shareholding concept which would reinforce the boundaries for each area.
Innovation and worker productivity key to growth
Goldman Sachs Research has produced long-term forecasts for India’s economy saying the country has made stunning progress in innovation and technology and while the country has demographics to drive growth that will not be the only driver.
According to Goldman Sachs “innovation and increasing worker productivity are going to be important for the world’s fifth-biggest economy. In technical terms, that means greater output for each unit of labour and capital in India’s economy”.
India poised to sustain growth
The annual Economic Review for 2022-23, released by the Finance Ministry points out the country’s impressive growth experienced in 2022-23 when most of the world economy was experiencing inflation and restrained by monetary tightening.
The report says “Strong balance sheets and digital advancements could lead to better credit decisions allowing India’s financial cycle to sustain for longer periods before encountering the challenge of bad debts. Thus, India appears poised to sustain its growth in a more durable way than before.”
The Review said that inflation emerged as the major challenge in 2022-23 for India as it did for the rest of the world following the Russian invasion of Ukraine and the impact of climate change.
Indian furniture market drivers—two new reports
Two recent reports address furniture market trends in India.
The IMARC report suggests the construction industry and development of smart city projects represent one factor influencing the furniture market.
Also, the integration of advanced technologies, such as artificial intelligence, machine learning, internet of things, 3D printing, virtual reality and augmented reality in furniture manufacturing could transform production.
Rising standards of living and the associated demand for quality furniture will be another major factor along with expansion of the e-commerce sector.
A media release from Mordor Intelligence on its report “Furniture industry in India, size, share analysis—growth trends and forecasts (2023 - 2028)” says the India furniture market size in 2023 is estimated at US$15.79 billion and is expected to reach US$26.85 billion by 2028
Mordor points out that the Indian furniture market has changed, expanding beyond chairs and tables to include designed interiors.
The growing middle-class, rising disposable income and the growing number of urban homes contribute to the expansion of demand for furniture.
Demand for furniture is also driven by the tourism and hospitality industry and the corporate sector. The increasing number of hotels and business offices further spurs demand for furniture in the country.
The pandemic had a serious impacted due to restrictions and lockdowns and the manufacturing index drastically declined in early 2020, however, the furniture industry bounced back in later half of 2020.
Inflation trends down
The annual rate of inflation based on the India Wholesale Price Index (WPI) in May was minus 3.5 percent compared to minus 0.9 percent recorded in April 2023.
The decline in the rate of inflation in May was primarily due to a fall in prices of mineral oils, basic metals, food products, textiles, non-food articles, crude petroleum and natural gas and chemical products. Out of the 22 NIC two-digit groups for manufactured products, seven groups saw an increase in prices whereas 11 groups saw a decline.
The groups that have recorded major increase in prices were electrical equipment; pharmaceuticals, medicinal, chemical and botanical products; tobacco products; wood and products of wood and cork (except sawnwood); leather and related products and beverages. Some of the groups that say a decrease in prices were basic metals, food products and textiles.
State Forest Departments to report statistics directly to national database
The Ministry of Environment, Forest and Climate Change has released the “National Working Plan Code-2023 for forest management and this includes a new approach to data reporting. The new Code-2023 requires state forest departments to report data to a national centralised database.
This could result in forest data become available much faster than at present.
Code-2023 was announced by Shri. Chandra Prakash Goyal, Director General of Forests and Special Secretary, Ministry of Environment, Forest and Climate Change. The Code-2023 guides State Forest Departments in the preparation of working plan for forest across the country.
Wood and Wood product (W&WP) trade highlights
In June 2023 W&WP exports reached US$1.2 billion, up 14 percent compared to May 2023 but down 15 percent compared to June 2022. WP exports, alone accounted for US$868 million, up 14 percent compared to May 2023 but down seven percent compared to June 2022.
In the first six months of 2023, W&WP exports totalled US$6.2 billion, year-on-year down 27 percent. The export of WPs contributed US$4.2 billion, down 30 percent over the same period in 2022.
Vietnam's imports of logs and sawnwood in June 2023 amounted to 569,000 cubic metres worth US$199.2 million, up 25 percent in volume and 25 percent in value compared to May 2023. Compared to June 2022 imports were up three percent in volume but down 12 percent in value.
In the first six months of 2023, imports of logs and sawnwood are estimated at 2,177 million cubic metres, worth US$777.6 million, down 25 percent in volume and 31 percent in value over the same period in 2022.
Vietnam's exports of NTFPs (rattan, bamboo and other minor NTFPs) in May 2023 reached US$61,835 million, down 1.5 percent compared to April 2023 and down 12 percent over the same period in 2022. Over the first five months of 2023, Vietnam's NTFP exports totalled US$289.93 million, down 30 percent over the same period in 2022.
Domestic wood harvest and reforestation
In the first five months of 2023 the newly planted forest area is estimated at 97,900 ha, up 2.5 percent over the same period last year whilst the number of newly planted scattered trees reached 41.7 million stems, up 5%. The volume of wood harvested from concentrated commercial plantations is reported at 6.6 million cubic metres, up 3.3 percent.
In this period, 886.7 ha of forests have been destroyed, up 78 percent over the same period last year. Of this, the area of forests damaged by illegal cutting and clearing accounted for 444.5 ha, down 1.4 percent, while the area of burnt forests is 422.2 ha, 11.7 times higher year-on-year.
Vietnam’s wood raw material suppliers
In the first five months of 2023, the volume of logs and sawnwood imported from major sources such as EU, Cambodia, China, Thailand, Laos, Chile, Brazil, New Zealand dropped against the same period in 2022, whilst imports from other markets, including the US, Malaysia, Angola, Indonesia, Canada, Namibia increased.
Imports from the EU accounted for 15 percent of total imports reaching 264,700 cubic metres, worth US$81 million, down 14 percent in volume and 20 percent in value over the same period in 2022.
Imports of logs and sawnwood from Cameroon decreased by 2.5 percent in volume but were up three percent in value over the same period in 2022, reaching 225,500 cubic metres, worth US$99.4 million, accounting for 13 percent of total imports.
Imports from China decreased by 38 percent in volume and 45 percent in value over the same period in 2022 reaching 203,000 cubic metres, worth US$98.0 million and accounted for 11 percent of total log and sawnwood imports.
Imports of logs and sawnwood from some suppliers decreased against the same period in 2022 (from Thailand 10%; Laos by 19%; Chile by 30%; Brazil by 54%; New Zealand by 24% and Congo by 32%).
However, imports of logs and sawnwood from the US market increased by 2.4 percent in volume but down nine percent in value over the same period in 2022 reaching 216,300 cubic metres, worth US$93.0 million and accounted for 12 percent of total imports.
Increased imports in the first five months of 2023 came from Malaysia (34% up); Angola (15% up); Indonesia (64% up); Canada (6%); Namibia (49%).
Vietnam's exports of wood and wood products in the first six months of this year plummeted by 279 percent over the same period in 2022, with the total export value falling to US$6.2 billion.
The reasons behind the worsened situation of Vietnam’s W&WP trade is attributed to the downturn of the global economy, the impacts of inflation and rising interest rate in major markets for wooden furniture from Vietnam.
Trade protection countermeasures (antidumping/subsidy and countervailing investigations and possible duties imposed on W&WP exported from Vietnam) has accelerated the hardship of Vietnamese entrepreneurs.
Due to the shortage of customer orders many Vietnamese wood operators have to reduce production and reduced the workforce.
There are, however, signals of improvement. The growth rate of W&WP export earnings from the US market in June is minus 18 percent instead of the minus 27 percent over the first six months of 2023.
The drop of W&WP exports seems to have reached the bottom and Vietnamese wood businesses are expecting more orders in the second half and into the beginning of next year.
Accelerated market promotion through trade fairs, technology innovation to upgrade business efficiency, improved business governance, building capacity to reduce trade protection risks, better utilisation of FTAs and a radical shift towards green trade and green growth, are seen as key remedies to overcome the current problems associated with global market weakness.
Business sentiment improved for the first time in seven quarters
Japanese business sentiment improved in the second quarter as raw material costs stopped rising and increased consumer consumption, as pandemic curbs were removed, drove up factory output.
The Bank of Japan's latest Tankan survey shows business sentiment among large manufacturers has improved for the first time in seven quarters.
The survey suggested companies expect to increase capital expenditure and consider inflation will stay above the Bank of Japan’s (BoJ) two percent target for the next five years. This could fuel sentiment that conditions for phasing out the BoJ massive monetary easing policy may be emerging especially if the momentum of wage increases can be maintained.
In related news, a report from Rengo the umbrella trade union group, confirmed that wage growth was more widespread than many had thought.
Wages observed within Rengo affiliated groups across Japan rose by an average of 3.5 percent at the beginning of the year. More importantly, signs of broader wage pressures have been observed in small and medium enterprises (SMEs) which saw their wage bill rise 3.2 percent.
Manufacturing output rising
Industrial production in Japan declined in May but the economic outlook remains positive, however, cost push inflation and tightening labour conditions are driving up prices across the board. Manufacturing output declined 1.6 percent month-on-month in May but year on year there was an improvement in the first five months of 2023.
The outlook forecast for manufacturing activity in June anticipates a rise.
Purchases of durable goods deline
According to the Ministry of Internal Affairs household spending in Japan fell in May for the third month in a row, dropping four percent year-on-year.
Purchases of household durable goods such as furniture fell 13 percent, expenditure on communications declined nine percent and spending on supplementary education such as cram-school tuition dropped by 15 percent.
In contrast, consumers spent more on rail tickets, air fares travel and hotels a reaction to the lifting of coronavirus restrictions.
Duties on China's hardwood plywood and engineered wood flooring continue
According to a recent announcement from the US Decorative Hardwood Association, the US International Trade Commission decided that the existing duties on Chinese hardwood plywood will remain in place for the next five years.
This decision follows the country's review process on whether to remove the tariffs after five years as required by the Uruguay Round Agreement Act and follows a similar ruling by the Commerce Department.
The Commission stated that removing existing anti-dumping and countervailing duties on hardwood plywood from China would cause substantial harm to the US wood flooring industry.
The US International Trade Commission also ruled that the existing duties on Chinese engineered wood flooring will remain in place for the next five years. This is a critical development for the industry which has been fighting to have this overturned.
First ‘carbon neutral’ industrial park for Fujian
It has been reported that Fujian Three Gorges Offshore Wind Power International Industrial Park obtained a carbon neutral certificate issued by the Beijing Green Exchange lifting the industrial park to take the lead in achieving carbon neutrality and thus became the first industrial park in China to achieve carbon neutral status.
A ‘carbon neutral’ wood pallet industry has been created in the Guolin wood industrial zone in Fujian Province. Pallets are generally divided into three categories metal, plastic and wood with wooden pallets being most widely used because of their lower cost, strength and their carbon fixation.
In related news, the China Forestry Group Corporation focuses on realising the recycling and sharing of wooden pallets and promotes the development of green and low-carbon industries to build wooden pallets to sequester carbon.
It has been estimated that one cubic metre of wood can produce 18 wood pallets. Based on the annual output of 10 million pallets about 5-600,000 cubic metres of wood will be used per year and about 530,000 tonnes of carbon will be sequestered per year.
According to the State Forestry and Grassland Administration wood and wood products are efficient and inexpensive carbon sequesters. The wood industry not only has low energy consumption in processing, but the waste and waste produced in the production process can be used as biomass fuel which reduces the use of fossil energy while improving the utilisation rate of wood.
China's new wood industry base in Rizhao city
Taking advantages of timber imports a timber industry cluster has been rapidly developing in Lanshan District, Rizhao City in Shandong Province. There are around 400 timber trade and processing enterprises established there.
More than 360 wood processing enterprises have an annual wood processing capacity of seven million cubic metres and an annual output value of more than RMB10 billion and support more than 20,000 direct employees.
At present there are nine special timber handling berths at Lanshan Port with an annual handling capacity of 10 million cubic metres of timber and its business involves more than 30 countries such as Russia, New Zealand, the US, Canada, Brazil, Uruguay, Germany and Poland.
Lanshan Port has the only national import wood quarantine and pest control area in Shandong port. There are 400 drying kilns with an annual capacity of 800,000 cubic metres and the timber storage capacity of five large special timber yards is about 1.2 million cubic metres.
A total of 9.15 million cubic metres of logs were imported through Lanshan Port in 2022 a year-on-year increase of 14 percent and accounted for just over 21 percent of the national total. Timber imports through Lanshan Port reached 5.18 million cubic metres in the first half of 2023, an increase of seven percent year-on-year.
Rizhao city has unique geographical advantages, or the fan-shape origin of sea and land, can gather global resources, and then sell to the world. Building a factory in Rizhao can take advantage of these advantages and reduce production costs.
Lanshan District aims to build a low-carbon integrated national imported wood trade and processing demonstration zone in the next few years.
China timber index
In June this year, after experiencing consecutive slowdowns in April and May, the economy in China began to stabilise. The weakness in market demand slowed but enterprises still feel weakened demand, especially in international markets.
On 29 June, the Standing Committee of State Council reviewed and approved "Measures to Stimulate Home furnishing Consumption". It was pointed out that home furnishing consumption has the characteristics of long upstream and downstream supply chains.
The Chinese government will adopt measures to boost furnishing consumption through policy coordination and synergistic efforts between promoting home furnishing consumption, renovation of old residential areas, reconstructing housing for the elderly, constructing convenient living circles and improving recycling to generate a concerted effort to promote consumption.
In addition, on 28 June, the Third Session of the Standing Committee of the 14th National People's Congress voted and decided to establish 15 August as National Ecological Day to promote an understanding for the entire nation and generate conscious actions by all industries.
In June, production and output in the timber and timber products industry gradually slowed due to the holiday season and because of the slow recovery of demand.
Orders and production of GTI-China enterprises decreased compared to the previous month, reduction of inventory of raw materials and finished products was in progress as market prices remained in a downward trend.
In June, the GTI-China index recorded 48.2 percent, an increase compared to that of the previous month but has been below the critical value (50%) for two consecutive months, indicating that the prosperity of the enterprises represented by the GTI-China index shrank further from last month however, the pace of contraction eased.
International wood trading centre in Dalian
At the recent International Forest Products Summit Forum held in Dalian the Dalian International Forest Products Trading Center was officially launched. The trading centre offers spot trading of forest products such as bulk imported timber, wood products and forest food and will also form a joint futures and spot trading system within the Dalian Commodity Exchange.
This will provide a convenient and efficient platform for the international trade in Dalian forest products.
The trading centre signed a cooperation framework agreement with Zhuanghe Xingang Terminal on warehousing, delivery, supervision and an offline supply chain system. The two sides will also jointly stock imported wood products and promote these to the domestic wood trade and processing enterprises.
In related news, the first China (Dalian) International Forest Products Import and Export Expo recently opened in the Dalian Free Trade Zone International Convention and Exhibition Center.
The Expo include Japanese and South Korean booths, Southeast Asian exhibition booths, European booths, Russia, Canada and Australia booths and an industrial cluster area attracting well-known forest products companies and professional exhibitors from all over the world.
The exhibition covered a wide range of products, including logs, sawnwood, wood panels, semi-finished products and finished products, furniture and custom furniture and bamboo products.
Dalian functions as a major international shipping centre, international logistics centre and international trade centre. The official launch of the trading centre boosted the message from the International Forest Products Summit and the opening of the International Forest Products Import and Export Expo.
National programme on green building materials for rural areas
During a ‘Green Building Materials Industry Development Forum’ held in Suqian City, Jiangsu Province a ceremony launching the 2023 project on national green building materials for rural areas was held.
In March this year, the government decided to further promote green building materials for consumption in rural areas and Jiangsu was a pilot area.
At the same Forum 70 Jiangsu enterprises were awarded the title of "Green Building Materials Promotion Enterprise" and 24 enterprises signed agreements for projects.
The Jiangsu Provincial government will focus on the "Jiangsu Year" activities which will included a green building materials tour of the province, special events and online trading and public welfare.
A green building materials development exchange promotion conference and a 2023 energy saving Expo and other large-scale exhibition for a low carbon life are planned.
Beihai Port provides convenient access to Southeast Asia
The cross-border industrial chain developed in Beihai involves assembly in Vietnam and sales to international markets and this has increased the annual output of enterprises in the region.
Beihai Port's location provides convenient sea access to Southeast Asia being close to rich local forest resources it has attracted a number of wood processing enterprises, and a concentration of processing activities.
Hepu Wujia Town Industrial Park became the first forest industry demonstration zone in Guangxi Zhuang Autonomous Region in December 2021 with an output value of RMB3.092 billion in 2022.
At present, it has more than 20 wood processing enterprises mainly targeting overseas markets for plywood and advanced wood panels.
The aim is to achieve a Guangxi's RMB 1 trillion forest. Beihai Customs has formulated "one industry, one enterprise, one policy" assistance measures and problem-solving mechanism. It also conducts studies on wood processing enterprises and provides a full range of Customs services.
Anti-dumping and countervailing duties to remain
As a result of the determinations by the US Department of Commerce and, the US International Trade Commission in their five-year sunset reviews that revocation of the anti-dumping duty and countervailing duty orders on certain hardwood plywood products from China would likely lead to the continuation or recurrence of dumping and subsidies creating material injury to industries in the US.
As a result of the ITC's decision existing tariffs on imports of hardwood plywood from China will remain in effect. The move falls under the five-year (sunset) review process required in the Uruguay Round Agreements Act. US Customs and Border Protection will continue to collect AD and CVD cash deposits at the rates in effect at the time of entry for all imports of subject merchandise.
The effective date of the continuation of the Orders was May 25, 2023. Pursuant to section 751(c)(2) of the Act and 19 CFR 351.218(c)(2) Commerce intends to initiate the next five-year reviews of the Orders not later than 30 days prior to the fifth anniversary of the effective date of continuation.
The current tariffs on plywood from China, many of which exceed 200 percent, will remain in place for at least another five years.
US to impose a tax on plywood from Vietnam containing Chinese core panels
According to the Trade Remedy Bureau of the Ministry of Industry and Trade of Vietnam, the US Department of Commerce (DOC) continues to extend the time for the final conclusion of the anti-tax evasion and anti-dumping investigation on plywood using hardwood material imported from Vietnam.
The US Department of Commerce will issue its final conclusions on 14 July 2023. This is the eighth time the Commerce Department has delayed issuing its final conclusion.
Previously, the US Department of Commerce announced the preliminary conclusion of the case in July 2022, saying that if the wood panel inside the Vietnamese hardwood plywood was imported from China it will impose anti-dumping and countervailing duties on the plywood.
According to the Trade Remedy Administration of Vietnam the temporary tax rate could be as high as 378.26 percent. However, the US Commerce Department allowed Vietnamese companies cooperating with the investigation to self-certify that they do not use Chinese materials to avoid being subject to the measures.
Statistics show that the exports of enterprises participating in self-certification accounted for about 80 percent of Vietnam's exports during the survey period.
Resumption of imports of Australian timber
It has been reported that China has resumed imports of Australian timber. Australia's timber trade with China was halted in late 2020 after China said it had found pests in timber coming from several Australian ports.
Data show that in 2022 Australia's timber exports to China were worth RMB42.32 million compared with RMB4.13 billion in 2019 before the ban was implemented.
In an effort to get back into the Chinese market Australian officials petitioned China to resume trade and presented evidence of pesticide spraying on logs to Chinese Customs authorities. But China did not respond. The ban showed no sign of easing until 2023.
In March 2023 Chinese Customs sent Australian agriculture officials a list of technical rules that must be met to resume timber imports. In May, the Australian Trade Minister, Stephen Farrel, arrived in Beijing for a three-day visit.
During the talks the two sides agreed to restart economic and trade dialogue mechanisms such as the Joint Committee on Free Trade Agreement and the High-level Trade Remedy Dialogue. In May, China announced the resumption of timber imports from Australia.
National standards on wood products officially implemented
Seven national standards on wood products have been formally implemented since 1 May 2023. All release dates for seven national standards are on 12 October 2022.
These standards are as below.
Standard numberStandard name
1 GB/T41715-2022 OSB
2 GB/T26899-2022 Structural glued laminated timber
3GB/T24312-2022 Cement-bonded particleboard
4 GB/T23825-2022 Determination of formaldehyde
release for wood-based panels and
finishing products—Gas analysis
5 GB/T8146-2022 Test methods for rosin
6 GB/T20446-2022 Wood mouldings
7 GB/T41713-2022 Wood dust or scrap and wood
EU Regulation on deforestation-free products enters into force
On 29 June 2023, the EU Regulation on deforestation-free products entered into force (EUDR).
Under the Regulation any operator or trader that places regulated commodities on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation.
The regulated commodities include wood products alongside soy, beef, palm oil, cocoa, coffee and rubber. The EUDR repeals the EU Timber Regulation.
As of 29 June 2023, operators and traders have 18 months to implement the new rules. Operators classified as small or micro enterprises (SMEs) which have up to 250 employees and annual turnover of up to €50 million have 24 months to comply.
In addition to providing this guidance, the ATIBT report that intensive work will be undertaken during the next 18 months by the European Commission, in consultation with Member States and other stakeholders, to prepare for its implementation.
This will include the following activities:
Definition and development of guidelines and tools to comply with the requirements of the EUDR: the European Commission has decided to establish two working groups (including at least one representative of the timber sector): "Traceability" group (including due diligence requirements) "Smallholder Inclusion" group.
These groups will assist the “multi-stakeholder platform” in gathering information and elements that can be used to interpret the requirements and facilitate the implementation of the regulation. Participants in these groups will be members of the platform. (Note that members of the platform comprise the Commission, Member States Authorities and “stakeholders”, all the latter being identified as “European” or “European/International” trade and business associations and NGOs. Third Country (i.e. non EU) government representatives are also invited to attend sessions of the platform involving stakeholder input. However, trade associations and civil society organisations without specific European representation are not invited to these sessions.)
Country risk benchmarking: the European Commission will classify countries, or certain regions, as low, standard or high risk within 18 months of the regulation coming into force. Products from “low risk” countries will be subject to a simplified due diligence procedure. Controls on operators will vary according to the risk level assigned to the source country of regulated commodities.
The development and operationalization of the information system (Register) to allow operators to submit their due diligence declarations for each consignment of regulated commodities placed or exported from the EU market and to verify declarations that are already registered.
This register will be interconnected with the customs, and accessible to the Member State competent authorities to establish their controls.
Preferred by Nature (formerly NEPCon), an NGO and certification organisation, has been organising a series of events, both online and in-person, to dive deeper into the EUDR requirements and how companies can comply with them.