Tropical Timber Market Report

While the trade war between the US and China has yet to directly implicate the furniture market, China’s export of wood products have increased amidst concerns of potential tariffs in the future. At the same time, the Chinese domestic market is also facing challenges from cooling measures in the local property market. ITTO tells us more about the latest happenings around the world.

Malaysia

Reforestation grant

The domestic media (Star Newspaper) reports the Water, Land and Natural Resources, Dr Xavier Jayakumar the newly appointed Minister in the federal government, as saying a massive reforestation programme is to be undertaken. 

The minister reported that a grant from Norwegian government has been offered to a local NGO to undertake some reforestation.

Dr Xavier said that currently, 52 percent of Malaysia was under forest cover but if Sarawak and Sabah were excluded from the calculation the forest cover for Peninsular Malaysia alone would not extend to even 50 percent. In particular the three Peninsular Malaysia states—Kedah, Pahang and Kelantan have an urgent need for reforestation.

 

Sabah task force for a more sustainable domestic manufacturing base

Deputy Sabah Chief Minister, Wilfred Madius Tangau, called for the downstream and upstream timber industries to work together to release the potential for production of high value products as this would create jobs and boost State revenues.

The Sabah State government has established a task force to prepare a strategy for a more sustainable domestic manufacturing base. The task force would look at the temporary log ban to offer suggestions on restructuring the timber sector to better utilise State resources.

 

Mangroves forests declining

The Forest Research Institute of Malaysia recently updated date on mangroves in Malaysia.

Sabah has some 61 percent of the total area of mangroves in Malaysia which extend over around 630,000 ha. Sarawak has 22 percent of the total area with the balance being in Peninsular Malaysia.

Since 1990 a total of around 20,000 ha or about three percent of the mangrove forest was lost especially in the areas outside the permanent forest reserves or within state-land. The main reason for the loss in mangrove cover was conversion to other land uses. Other contributing factors such as coastal erosion and pollution also affected the mangroves.

 

Indonesia

Exporters urged to repatriate all export earnings

Rosan Roeslani, chairman of KADIN the Indonesian Chamber of Commerce and Industry, said that Chamber members understand the benefits to the country of repatriating all of their export earnings rather than holding some off-shore.

Mr Roeslani estimated that at the moment up to 20 percent of earnings are commonly held off-shore but he said it is best for the economy if all is exchanged into local currency. 

The debate on remittances was held between KADIN, entrepreneurs from various fields, various ministries, the Financial Services Authority and Bank Indonesia.

Mr Roeslani said KADIN would work towards ensuring a greater portion of export earnings are returned to Indonesia.

 

Import restrictions will be a positive for wood sector

The government plan to restrict imports of some items could bring advantages to local manufacturers of paper, plastic, wood products, palm oil and certain petrochemicals says a local analyst.

Muhammad Nafan Aji Gusta Utama, from the securities firm Binaartha Sekuritas, said the government plans to target around 500 commodities which, in the face of a weaker rupiah and global trade volatility, is an appropriate move.

In related news, the Ministry of Finance is preparing, in cooperation with the Taxation Directorate General, the Customs and Excise Directorate General and the Fiscal Policy Agency, a draft regulation to curb imports in response to rise in the country’s current account deficit.

 

State owned forestry enterprise sees profits rise

Perhutani, a state-owned enterprise in Indonesia which has the duty and authority to carry out planning, management, exploitation and protection of forests in its working area, recorded a positive financial performance in the first half of 2018.

The state-owned forestry company had a revenue of Rp1.8 trillion, a 26 percent increase from the same period last year out of which profit amounted to Rp469 billion, up 63 percent from 2017.

A spokesperson for Perhutani said the company is sure it can achieve revenues of around Rp3.8 trillion in 2018.

 

Major effort to help SMEs

The government continues with its efforts to boost wood product exports. One thrust of this is the support to SMEs in securing timber legality certification through the SVLK.

Specifically, the government has simplified SVLK certification and allows extension of the validity period. It also subsidises certification fees.

Coordinating Minister for Economic Affairs, Darmin Nasution, said the ultimate aim is to make SVLK certification free for SMEs.

The Ministry of Environment and Forestry has indicated that it will support SVLK certification for 346 industrial small and medium industries (SMEs) and certification for over 3,500 community forest units.

In related news, the Ministry of Environment and Forestry is encouraging SMEs to export directly rather than use the services of brokers as in this way profits will improve.

According to Rufi'ie, Director of Forest Products Processing and Marketing in the ministry, SMEs need to be encouraged to raise competitiveness in the international market so they are better able to survive market volatility.

 

US$8 billion wood product exports in first 8 months

Rufi'ie has announced that in the first eight months of this year Indonesia's wood product exports totalled US$8.06 billion.

In light of this performance, he expressed optimism that the export target of US$12 billion is achievable. The good performance was due, said Rufi'ie, to competitive pricing, good designs and products that are verified legal.

 

Myanmar

DFID set to realign its programme in Myanmar

Analysts in Myanmar report that the UK Department for International Development (DFID) has signalled its intention to suspend support for activities related to preparations for the VPA with the EU. DFID has said it intends to reshape its programme in Myanamr to focus on inclusion, social cohesion and equality.

This announcement came just as there was to be a transition from the Interim Task Force (ITF) to a Multi Stakeholders Group (MSG) which would lead to the negotiation phase of VPA Process in Myanmar.

Analysts write that this decision is a heavy blow to industry as it struggles to establish its national timber legality verification framework.

 

News round-up

•Parliament has approved the new Forest Law which will be on the statute books once signed by the President. The existing law dates back to 1902 and was revised 1992.

•The Myanmar Timber Enterprise plans to establish a Timber Industry Complex on land previously used as log depot for export logs. Forestry Minister, Ohn Win, recently inspected the site and indicated the ministry will carefully study the proposal.

•The Forest Department has issued the terms and conditions that investors in plantations must follow. A 30 year lease, extendable for 20 years, will be offered. The terms require that at least 50 trees per acre should be planted and that poles, posts and sawnwood from the plantation can be exported. There will be a 10% tax for payment for ecosystem services imposed.

•Over the past four months, 2,149 people were arrested for illegal activities in the natural forest. To combat the illegal logging informers are rewarded for information leading to arrests of suspects.

•According to the Ministry of Commerce, Myanmar’s overseas trade for the current financial year was over US$10 billion with a trade deficit of US$1.1 billion. In the first quarter fiscal 2018, (April to June 2018) trade in forest products is totalled US$47 million.

•Analysts write that timber exporters face two main challenges, first, the available volumes of teak and the log quality are declining but still prices for logs continue to rise and second, the pressure from the EU Competent Authorities for legality verification is getting tougher and tougher. According to some exporters they have been informed by German Importers that if the documents are not in order it is possible that shipments will be returned.

 

India

Industrial output at 5-month high in June

Industrial production was at a five-month high in June according to a press release from the Ministry of Statistics and Programme Implementation. All three major sectors, manufacturing, mining and electricity expanded output.

The cumulative growth in these three sectors during the April-June 2018 period over the corresponding period of 2017 has been 5.4 percent, 5.2 percent and 4.9 percent respectively.

Analysts suggest the GDP growth is expected to have topped 7.5 percent in the first quarter of the current financial year. Commenting on the performance of the sectoral growth trends, Chandrajit Banerjee, Director General, Confederation of Indian Industry, said this reflects steady progress in economic growth and is encouraging as there has been a perceptible increase in the share of sectors recording higher growth.

 

Better coordination between agencies needed to tackle illegal agarwood trade

In late July the Thane Division of the Maharashtra Forest Department seized 75kg of agar wood as attempts were made to smuggle the wood. Over the past seven months 10 people have been arrested for attempting to illegally export agar wood to the Middle East.

The Deputy Conservator of Forests in Thane, Jitendra Ramgaokar, said there needs to be better coordination between agencies to tackle the illegal trade. 

“The only way out is creating awareness, capacity building and interdepartmental coordination among state governments, forest officials, Directorate of Revenue Intelligence, Customs and Central Reserve Police Force,” he said.

 

Japan

Extreme heat drives down consumer confidence

The latest Cabinet Office consumer confidence survey showed that sentiment weakened again in August, marking the lowest level over the past 12 months. 

The overall confidence index dropped to exactly the same low as 12 months earlier.

The index for income growth also declined as did the index for employment prospects which is unusual at a time when unemployment is at a very low level. Of concern to retailers and sellers of furniture and household goods was the decline in the index which measures the willingness of consumers to buy durable goods.

On reviewing the latest data, the Cabinet Office downgraded its assessment of prospects for consumer spending for the first time in four months. Analysts explain that behind the weakness was rising food prices due to the extremely hot weather which has affected farm output and to consumer concerns over the high energy bills they are facing due to the heatwave which has now extended over more than two months.

 

Risk to export growth holds down yen exchange rate

What a difference a year makes. Last year was one of the worst for the US dollar exchange rate with the dollar falling around 10 percent against most major currencies. 

Against this background, analysts forecast the weakness would continue into 2018.

But from the beginning of 2018 the dollar reversed direction and is currently at its highest in a year. Analysts point to the benefits from the tax cuts, increased government spending and improved private sector sentiment as support the firmer dollar.

The US dollar was trading at 111.3 to the yen at the end of August having risen slightly because Japan downgraded its assessment of export prospects as concerns grow that a trade war between the US and China will disrupt global trade.

 

July rise in housing starts disguises overall trend

July marked the third straight increase in housing starts but this disguises the fact that, year on year, July starts were down almost one percent. 

The decline in year on year July starts was slower than forecast, analysts had expected a four percent drop.

In addition to the housing starts numbers, the Ministry of Land, Infrastructure, Transport and Tourism also provides data in its survey on orders received by construction companies. The 50 biggest contractors reported a nine percent decline in orders during July.

Much of the discussion recently on the housing market has focused on zero-energy apartments as housing developers begin to introduce advanced building concepts, common in detached homes, into this new area.

The concept of a zero-energy home is one where the home is energy neutral through the use of solar panels and other renewable sources.

The government is promoting this concept and aims to have 50 percent of new homes to be zero-energy by 2020. According to recent research, households accounted for 16 percent of Japan's carbon emissions in fiscal 2016 so cutting back on emissions from homes could play a big part in Japan’s target under the 2015 Paris Agreement on climate change.

 

China

Rise in home sales

In the first seven months of this year investment in real estate in China expanded at a fast pace. 

According the latest press release from the National Bureau of Statistics (NBS) investment increased 10.2 percent year on year in the first seven months, compared to the 9.7 percent expansion in the January to June period.

Investment in residential real estate increased 14.2 percent in the first seven months, compared to 13.6 percent in the first half of the year.

In the same press release the NBS says the area of land purchased by real estate developers, was up by 11.3 percent year on year.

In response to what was deemed an overheated market the government and city authorities have acted to cool market growth. Administrators in major cities across China have introduced a raft of regulations, in some case over 200 up to July, an all-time record according to Centaline Property Agency one of the largest property agencies in Hong Kong.

In an effort to hold down house prices, there are now limits on the number of properties which can be owned, the minimum down-payment has been raised and there are limits on how quickly a recently purchased property can be put back on the market.

Working against efforts to cool house buying as an investment has been the recent sharp decline in interest rates making loans that much cheaper.

 

Southwest China to see investment in timber ports and processing zone

A cooperation and investment agreement was recently signed between China Forestry Group Corporation and the administration in Ba’nan district of Chongqing municipality. 

An investment of RMB23 billion will be used to build timber trade ports, a timber processing zone and a wood products demonstration and trading centre in Western China.

Currently in China the timber ports and industrial zones are mainly distributed in coastal areas and along the border areas and there is a gap in the southwestern regions of China.

The new infrastructure will result in large volumes of imported timber entering the southwestern regions and this will cut transportation costs for enterprises in the region and will also expand employment opportunities.

It is forecast that demand for timber would expand to 100 million cubic metres in the southwestern region including Yunnan, Sichuan, Guizhou, Guangxi provinces, Xizang Autonomous Region and Chongqing municipality.

Chongqing municipality is the distribution centre in southwestern China and the technology for timber processing mills is well established and production costs are very competitive, say analysts.

 

Surge in landed cost of North America logs

Traders in China are complaining that the landed cost of imported North American logs has jumped by around 30 percent as a result of the depreciation of RMB and the trade friction between China and the United States.

Although shippers in the US have been lowering log prices to maintain market share in China the higher costs continue to be a major challenge to Chinese importers. 

The reason behind this is that, even with price reductions, landed costs are still higher than previously which means competitiveness in the domestic market is weakened and traders are losing out to alternative timbers.

At present, the price for grade A processing general materials (2-4m) North America hemlock and fir in the Guangdong market is between RMB1680-1760 per cubic metre. The price for grade A processing general material (2-4m) southern pine is between RMB1580-1660 yuan per cubic metre.

 

Decline in plywood imports

In the first half of 2018 China’s imports of plywood fell nine percent to 79,400 cubic metres. Of the total, imports from Malaysia were the highest at—22 percent, from Indonesia and Russia imports fell 11 percent and 10 percent respectively.

The proportion of China’s plywood imports from Russia was the highest in the first half of 2018 at 27 percent (21,100 cubic metres) followed by Malaysia to 25 percent (19,850 cubic metres) and Indonesia to 19 percent (15,000 cubic metres).

 

Surge in timber imports from Japan

According to the data from China Customs, China’s log imports from Japan have increased from 311,600 cubic metres in 2014 to 750,600 cubic metres in 2017. 

2017 log imports from Japan were worth US$102.44 million and the average price for logs from Japan rose eight percent to US$136 per cubic metre.

In 2017 China’s sawnwood imports from Japan were 74, 600 cubic metres valued at US$18.44 million, up 39 percent in volume and 32 percent in value. The average price for sawnwood from Japan fell five percent to US$247 per cubic metre.

 

Wooden pallets demand for huge timber

Pallets are the essential in logistic operations and it has been estimated that at the end of 2017 the stock of pallets in China exceeded 1.263 billion pieces of which wooden pallet accounted for 73% with plastic pallets taking up most of the balance.

Wooden pallets are said to have a cost advantage. In China, the price for a wooden pallet is around RMB150 but for plastic pallet the price is over RMB250. The demand for wood for pallet manufacture is huge and manufacturers warn that pallet prices will rise as the landed cost of timber imports rise.

Logistics enterprises plan to address this by switching to pallets from alternative materials. Analysis shows that the annual cost of plastics pallets is lower than wooden pallets because of improved service life. Moreover, plastic pallets can be cleaned and used for transport of fresh food, medicines and other perishable goods.

 

Europe

Realising tropical timber’s marine use potential Tropical hardwood’s long-held status as the prime material for European fresh and seawater marine applications has been increasingly challenged by alternatives; steel, concrete, recycled plastics, wood-plastic composites, temperate timber species and increasingly, for sea defences, rock armour.

Some feel that sustainability concerns—the perceived linkage of marine-use tropical species with deforestation—and also the EU Timber Regulation have also increased trade, end-user and specifier risk aversion and helped drive further use of substitutes.

Despite this, according to comments from the EU trade, tropical timber is still holding its own in the market. It remains a material of choice for sea defences where aesthetics and use of the coast as a public amenity is a priority.

Many specifiers still acknowledge its unique technical performance benefits and its environmental profile is also being improved, albeit slowly, by growing understanding and market recognition of its carbon and life cycle credentials.

However, it is also accepted that the trade cannot be complacent. This is a product area that is already highly lucrative and potentially set to grow more significant if, as some predict, climate change affects water levels and creates more extreme weather patterns, but the consensus is that it is also likely to become ever more demanding in terms of specification requirements and increasingly competitive.

 

Industry is responding to market developments

There are signs that the industry is responding to market developments and challenges. In particular in the Netherlands, arguably Europe’s leading exponent of the use of wood in marine and broader civil engineering applications, an action plan has been launched to drive timber uptake.

There has also been growing activity to raise awareness in the marine market of the potential of lesser-used or lesser known tropical timber species (LKTS). The aim is to both relieve pressure on the most popular species, notably ekki/azobe and greenheart, and also to increase the palette of materials available to specifiers and potentially increase timber’s range of marine applications.

At the same time, say researchers, this area urgently requires significantly increased funding from the timber sector, both importers and suppliers, to generate the performance data needed if these lesser known varieties are to make progress and help combat the advance of rival materials in the timescale required. 

Trade feedback is that the European marine products market this year has actually been steady to slowly growing, reflecting wider economic growth and increased government spending on infrastructure projects generally.

It’s reported too that there has been a trend towards the private sector becoming the key marine timber buyer, although one Dutch importer/distributor said this ‘goes in phases’. “Currently a lot of public sector work is also tendered as a project, and as such marine timber is bought by the contractor,” they said.

A UK buyer also said some of the country’s public agencies have migrated away from tropical timber generally. “For instance, the Canal and Waterways Trust now specifies only oak for lock gates,” they said.

They also commented that the UK Environment Agency (EA), which has a large measure of control in public marine project materials specification, has a hierarchy of timber use, favouring recycled timber over virgin. 

“The EA applies this policy to its own purchases and encourages partner projects to do the same,” they said. They added that the EA also insists its personnel make an “exhaustive business case” for using tropical timber.

However, another importer maintained that the agency still regards it as one of the foremost materials for marine application, pointing to its guidelines for use of lesser known species to highlight the overall pragmatism of its approach.

“Ultimately,” it states, “the decision about [timber] use will depend on a mixture of technical, environmental and commercial considerations.”

The preference for European public projects, said suppliers, is overwhelmingly for third party certified timber, which in the marine market means FSC-certified due to the lack of appropriate PEFC varieties. But this is also currently tempered with practicality.

Other forms of proof of sustainability and legality are accepted where certified is not available in the quantity or time required. And interestingly, one importer/producer noted a change in this area since the introduction of the EUTR.

“We’ve actually seen a marginal decrease in certification requirements, with more contractors and local authorities accepting solely EUTR compliant, legally verified timber,” they said.

At the same time, another importer said FSC-certification could still act as a ‘passport’ into the European market, as demonstrated by increased interest in Guyanese greenheart since the Iwokrama Forest was certified last year.

“[Guyana supply] has not been entirely smooth, but there has been interest in its certified offering, especially in the UK public sector where lack of certification had impacted demand,” said a Dutch importer.

 

The EUTR has made marine-use tropical timber a more difficult sell

On other effects of the EUTR, one importer said it had made marine-use tropical timber a more difficult sell by ‘generally raising concern about its legality’. Others did not wholly agree, but several commented that it had narrowed the supply base.

“No single country has dropped out of the market due to EUTR, but individual suppliers in several countries have been unable or unwilling to meet European importers’ due diligence requirements,” one company said.

Whether related to the EUTR or not is unclear, but another importer also said there had been a decline in the number mills in Europe cutting tropical marine hardwoods. “You can now count them on one hand,” they said.

As for prices, the trend is reported to be strongly upwards. This, said importers, is in line with wood prices generally and largely the result of increasing global demand. Also implicated, however, are increased freight rates, logistical difficulties, including wood backlogs at the Cameroon port of Douala, and, said one company, “the burden of paperwork required [of suppliers] under both the EUTR and third party certification”.

It’s against this background that a group of leading hardwood companies in the Netherlands, all members of the VVNH timber trade association and in association with timber market development and research organisation Centrum Hout, decided last year to launch their promotion and educational campaign—their core aim, to increase uptake of tropical timber in marine/hydraulic and wider civil engineering applications.

The inspiration for ‘Wood in GWW’ (Grond Weg in Waterbouw) initiative was partly the result of earlier environmental impact and LCA evaluation of tropical species.

The research was led by VVNH and backed by the European Sustainable Tropical Timber Coalition, which is dedicated to increasing sustainably sourced material’s market share. 

LCA work was done by Ernst & Young Climate Change and Sustainability Services and independently verified by Stichting Houtresearch.

The project compared sustainability ratings of waterway pile planking in azobe, okan and angelim. It also measured their environmental impacts relative to planking in steel and plastic. 

The results came out strongly in favour of wood and the report recommended ‘more extensive third party verified LCA to endorse timber pile planking’s environmental benefits’. Hence the 12 Dutch businesses decided to take this work forward and develop a wider promotional and marketing initiative.

Among Wood in GWW activities to date have been presentations to leading civil engineering and contractor businesses. These are reported to have generated positive responses and increased consultation with the timber trade on materials specification for projects such as plank piling and bridge construction.

“The campaign has also increased interest in use of wood for civil works at the Dutch Ministry of Infrastructure & Water Management,” said Centrum Hout’s Eric de Munck.

“One of its responsibilities is implementation of a circular economic model in the Netherlands, with a very ambitious agenda to develop the bio-economy and cut emissions. This now includes several projects to see how wood (and other bio-based products) can help reduce CO2 emissions in government infrastructure projects and to find ways to give them privileged status in open public procurement and tenders.”

As part of this, he added, the ministry has commissioned further LCA studies for a range of infrastructural projects, including in tropical timber.

Wood in the GWW has its own website and has published a range of literature. It has developed a carbon calculator too, predominantly for tropical species, which has now been launched in English, German and French versions.

Having assessed the campaign’s impact to date, its members have now decided to take it forward for another two years, “Wood in the GWW 2.0”. 

Plans include increased targeting of local and central government specifiers, ‘development of circular [economy] business models’ and further LCAs on timber pile planking. The latter are particularly focused on helping combat the growing threat from the subsidised recycled plastic manufacturing sector.

“Sheet piling is an easy, low-knowledge product which can absorb large volumes of waste, and plastic producers are targeting seven percent increase in market share in coming years,” said Mr de Munck.

In summary, he concluded, Wood in the GWW supporters had decided that “it is necessary to increase communication of the climate, environmental and technical benefits of wood, especially sustainably sourced tropical hardwood, as the competition increases”.

 

Efforts to increase use of lesser-known species

Meanwhile efforts to increase uptake of lesser known species have come not just from the industry, but also from NGOs and the FSC, notably FSC Denmark and Netherlands.

One importer acknowledged that ekki and greenheart’s all round durability and technical characteristics, notably their resistance to abrasion and marine borers and promise of service life up to 60 years in salt and fresh water, made them difficult to beat. 

However, said an importer, often these species are specified through tradition or for convenience in associated works alongside ekki and greenheart projects where their properties are not needed.

“Specifying timber more in ‘fit-for-purpose’ terms, with mixed species allowed, would lead to development of a more diverse timber trade, in turn supporting sustainable forestry, improving prices and fully utilising sawmills’ capacity in producer countries,” said a company spokesperson.

Among species importers said they were highlighting for marine construction included basralocus, opepe, okan, eveuss and massaranduba.

Since launching its STTC-backed lesser-known timber species website in 2016, FSC Denmark also reports increased visitor traffic. Prominent on the site are case studies of marine applications of such varieties as bilinga, massaranduba and basralocus.

In the UK, there is also a 25-year public/private partnership project, the Pevensey Bay Sea Defence scheme, to evaluate a range of tropical species, including purpleheart and eveuss, alongside plastic composite.

Specialist in the field, Dr John Williams, principal consultant (materials and structures) at international environmental consultancy RSK, believes there is considerably more scope for developing the range of tropical hardwoods used in marine applications to the benefit of the timber industry and the forest.

“As the STTC concluded in its report on Suriname and the potential of its lesser used species, if we can use more of this material, responsibly sourced, it adds to the value of the forest and will provide an incentive for sustainable management,” he said.

What is needed to achieve this, however, is more testing and performance data, especially strength testing of timber for sea defences. 

Dr Williams has worked with Portsmouth University on accelerated trials for marine timber abrasion and shipworm resistance. He is also involved in research in developing alternative proofs, to the European standard D class system for timber structural strength, with a paper set for industry consultation once complete.

Research requires funding, however, and Dr Williams suggested that more should come from the timber industry.

He also maintained that now is the time to act, particularly, due to growing concerns about marine plastic pollution, with one competitor potentially disadvantaged.

“The industry has to provide the data to make it straightforward for specifiers, such as local government, to choose timber for this work. If it isn’t and given the level of competition in the market, there may come a point where they lose patience with wood and, for instance, order Norwegian granite for rock armour instead,” he said.

“Timber has a huge opportunity here, but it needs a joined up, collective effort to be realised.”

 

North America

Tropical plywood suppliers gain market share

Hardwood plywood imports were slightly down in June from the previous month, but overall the monthly import volume is not much lower than in previous years, before the US anti-dumping and countervailing duties were put in place for plywood from China.

Higher imports from all tropical suppliers made up in part for lower imports from China. Year-to-date plywood imports from Indonesia were up 84 percent compared to June 2017.

The value of plywood imports was almost unchanged from May because of higher prices of plywood from China (excluding duties), Indonesia and Malaysia.

 

Higher moulding and flooring imports

Hardwood flooring imports were worth over US$6 million in June, up 40 percent year-to-date compared to June 2017. 

China remains the largest source of imports, but imports from Malaysia and Brazil doubled year-to-date.

Imports for assembled flooring panels (laminate, engineered) declined in June. While China and Canada dominate US imports, Thailand and Vietnam have become significant new sources of assembled flooring. In the first half of 2018, Thailand and Vietnam each accounted for four percent of total US imports of assembled flooring.

Hardwood moulding imports were down in June from the previous month, with the exception of imports from Malaysia. Imports from Malaysia grew 24 percent year-to-date compared to June 2017.

 

Higher US furniture imports from China

Wooden furniture imports grew two percent in June to US$1.71 billion. Imports in the first half of 2018 were six percent higher than during the same time period in 2017.

The month-over-month growth was entirely in furniture imports from China, while imports from most other countries fell. The increase in furniture imports from China could be in response to potential tariffs. 

While tariffs specifically on furniture had not been announced at that time, by end of July the Trump Administration confirmed it would raise tariffs from 10 percent to 25 percent on US$200 billion worth of products from China.

Imports of upholstered, kitchen and office furniture grew in June, while wooden seating and bedroom furniture declined.

 

US wood product manufacturing slows

Retail sales at furniture and home furnishing stores grew five percent year-to-date in July, compared to July 2017 (US Census Bureau, Advance Monthly Retail Trade Survey).

Retail sales did not change much in July from sales in June and May.

The Kitchen Cabinet Manufacturers Association reported a one percent growth in year-to-date cabinet sales in June compared to last year.

The wood products and furniture industries reported growth in July, but at a lower rate than most other manufacturing industries, according to the Institute for Supply Management’s Manufacturing (ISM) Business Survey. 

One of the survey’s respondents in the wood products sector commented that the trade war and lower demand from export markets like China has affected business.

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