Manufacturers need to embrace automation and digitalisation
Looking ahead to the post-pandemic times many in the timber industry are seeking ways to ways to boost productivity.
According to Dr Mohd Khairuddin Aman Razali, the Minister for Plantation Industries and Commodities, the wood products manufacturing sector needs to embrace automation and digitalisation to secure its future.
He said the industry cannot continue to be dependent on foreign workers and must take the first steps in employing experienced engineers who could lead modernisation strategies.
The Education and Plantation Industries and Commodities Ministries have launched a Timber Industry Engineer Placement and Internship Programme in Kuala Lumpur involving the Malaysian Timber Council, six timber associations and eight universities.
Raw material supply and labour will be a challenge post-pandemic
The Sabah State timber industry experienced a decline in almost all sub-sectors in 2020 according to the Sabah Timber Industries Association (STIA) president, Tan Peng Juan.
He said the two main exports, plywood and sawnwood experienced a 44 percent decline in the volumes exported during the year.
Tan said he anticipates that many upstream and downstream companies will be faced with two key challenges when demand picks up—long term issues affecting raw material supply and a labour shortage.
The Sabah timber sector needs to address efficiency and competitiveness.
2020 timber industry performance
The Malaysian Timber Industry Board (MTIB) has reported last year’s performance of the timber sector.
Exports were RM22.02 billion (RM22.50 billion in 2019) while total imports were RM6.81 billion (RM5.95 billion in 2019).
Timber exports contributed 2.2 percent of the country’s overall exports of RM980.99 billion. The workforce in the forestry sector was estimated at 140,000 of which 55 percent are estimated to be foreign and 45 percent local.
Annual investment data are available only for 2019 showing domestic investments were RM 479.88 million and foreign investments RM 851.42 million.
Exports in the first quarter 2020 were badly impacted by measures to address the Covid-19 pandemic though timber companies were later allowed to operate with a 50 percent reduction in manpower.
The industry faces a shortage of raw materials both domestic and imported. Moreover, from July ocean freight rates for containers increased sharply and the situation was made worse by disruption in container availability.
The top five export destination in 2020 by value were:
USRM7.45 billion+ 49.9%
Japan RM2.73 billion- 21.1%
China RM2.25 billion+ 23.2%
Australia RM0.88 billion- 14.0%
Singapore RM0.83 billion- 24.3%
The top five countries supplying Malaysia in 2020 by value:
US RM320.6 million
The industry suffered from a shortage of and sustainable supply of raw materials. Marketing was made more challenging with the US Lacey Act, Australia’s Illegal Logging Prohibition Act, the EUTR and the California Anti Deforestation Act. Also, there was stiff competition in pricing and quality from neighbouring Indonesia and Vietnam.
E-commerce became more common during the Covid 19 pandemic and this was a challenge as not all products can be sold in e-markets. The heavy reliance on foreign labour is of concern though there seems to be no clear path to address this.
There is a severe lack of skilled workers as can be seen by the low productivity. The timber sector worker productivity is about RM47,000/worker/year while the national average is RM77,000/worker/year.
Overall, there seems to be a lack of innovation in wood products and original designs.
Shipping a major headache
The timber industry is experiencing a disruption of container flows.
Some shippers are keeping their containers longer than usual and an imbalance between exports and imports in some major trading countries has caused surpluses in some ports and shortages in others.
Westports Holdings managing director, Ruben Emir Gnanalingam, pointed out that, due to slow retail sales because of the lockdowns, many companies have stored packed containers and only when sales pick up can the containers be unstuffed and put back into circulation.
He said under normal circumstances the container shipping cycle averages about five to six shipments globally per annum. However, container shipments take much longer now and the cycle has dropped to between four and five because of the pandemic.
PEFC award for MTCC
The Malaysian Timber Certification Council (MTCC) has received an award ‘Certificate of Appreciation from the Programme for the Endorsement of Forest Certification Scheme ‘(PEFC) for the greatest increase in PEFCcertified forest area.
MTCC is the National Governing Body that implements the Malaysian Timber Certification Scheme (MTCS) endorsed by PEFC since 2009.
The MTCC website says “recognition was given to MTCC for the marked increase of 957,583 ha of MTCS/PEFCcertified forest area from September 2019 to September 2020. The total certified forest area in 2019 was 4,315,151 hectares and increased to 5,272,734 hectares with the certification of 10 forest management units (FMUs) in Johor, Sabah and Sarawak.
This is in addition to the existing 20 FMUs, many of which have been maintaining their certification for over 10 years such as the FMU for the states of Negeri Sembilan, Pahang, Perak, Selangor and Terengganu, the Anap-Muput FMU in Sarawak and the Segaliud Lokan FMU in Sabah.
Despite the overall increase, a number of FMUs have had their certification suspended and withdrawn over the years due to non-conformity with the sustainable forest management standard.
In related, MTCC is conducting training on PEFC Trademarks for Forest Management Certificate (FMC) Holders. The training aims to provide the FMC holders a better understanding on the do’s and don’ts of PEFC trademarks and to emphasise the new requirement in Appendix B: Interpretation on Requirements for Communicating Claims from Certified Areas in the MC&I Sustainable Forest Management (MC&I SFM) standard which will come into force on 1 September 2021.
Five-point strategy to boost exports
The Director General of National Export Development in the Ministry of Trade, Kasan, has said exports are one of the components of GDP that can promote national economic recovery.
To realise this the Ministry of Trade has developed a five point export boosting strategy: maintaining export markets and the main products, prioritising export-oriented small and medium enterprises (SMEs), penetrating non-traditional markets, utilising trade agreements and conducting regulatory reforms particularly through the Job Creation Act.
Kasan believes emerging markets and non-traditional markets will play an even greater role in the future. He pointed out that emerging market countries will soon contribute around 70 percent to the world economy and about half of this will be from Asian countries.
Large potential for growth in US market
Demand for wood products in the US is projected to increase this year and two executives of major exporters said their companies are optimistic there will be a further rise in demand from the US.
The executives said Indonesia’s market share for furniture in the US is still small so there is a huge opportunity for export growth. A fibreboard exporter also plans a stronger focus on the US market this year.
Urgently expedite negotiations on international agreements
The Indonesian President, Joko Widodo, has urged the Ministry of Trade to quickly expedite negotiations on international agreements between Indonesia and partner nations.
The President said this will open up new markets such as the IA CEPA (Indonesia-Australia Comprehensive Economic Partnership Agreement) and deals with South Korea and the EU.
The Indonesia-Australia CEPA was signed on 4 March 2019 and took effect on 5 July 2020, after the ratification process spanning 10 months. Meanwhile, Indonesia and South Korea officially signed a Comprehensive Economic Partnership Agreement 18 December.
The Indonesia-European Union Comprehensive Economic Partnership Agreement (I-EU CEPA) negotiations are still on-going.
Plan to restore 1.2 million hectares of peat by 2024
Acting Director General of Forestry Planning and Environmental Management in the Ministry of Environment and Forestry (KLHK), Ruandha Agung Sugardiman said the ministry plans to restore 1.2 million hectares of peatland by 2024 in order to achieve Indonesia's international commitment to achieve carbon emission target.
In addition, the Ministry of Environment and Forestry will also carry out mangrove restoration in nine provinces. The total area to be restored is 600.000 hectares.
In related news, Indonesian’s Environment and Forestry Minister, Siti Nurbaya, has revealed a dramatic fall in the country’s deforestation rate during the 2019/2020 period.
The data suggest a 75 percent decline compared to deforestation in the 2018/2019 period.
Deforestation of 462,500 hectares was reported in the 2018/2019 period and this dropped to just 115,500 hectares in the 2019/2020 period. These figures refer to net deforestation.
Indonesia’s exports of wood products better than expected in 2020
Indonesia’s exports of forest and wood products to all destinations held up better than expected in 2020.
According to a statement in January 2021 by Bambang Hendroyono, the Secretary General in the Indonesian Ministry of Environment and Forestry, Indonesia’s 2020 export target for forest and wood products was projected to be exceeded despite the impact of the corona pandemic on production and trade.
Early in 2020 the export target was lowered from US$10 billion to US$7 billion to take account of the anticipated disruption of business. However, export earnings in 2020 are expected to exceed US$11 billion, even more than the original target and only five percent below that of 2019.
The Secretary General emphasised that Indonesian Government incentives and relaxation of regulations helped achieve this success.
With growth in January 2021 of 6.3 percent compared to January 2020 prospects for the year look positive. The strongest growth in terms of export value was by the furniture sector.
Reacting to the positive growth level attained by forestry exports in January the Association of Indonesian Forest Entrepreneurs (APHI) Chairman, Indroyono Soesilo, said he anticipates 2021 export earnings by the forestry sector will be US$2 billion.
Finland an appreciative market for teak products
According to a press release from the Indonesian Embassy in Helsinki, Ambassador Ratu Silvy Gayatri has seen that teak furniture made in Solo and Yogyakarta has found a market in Finland.
A furniture store operator in Finland said "Indonesian furniture is known for using high quality wood and unique designs, which the Finnish people appreciate."
The Ambassador has been promoting furniture products made by Indonesian micro, small and medium enterprises to support improve the export performance.
International trade agreements will help drive economic recovery
The Indonesian economy contracted two percent year-on-year in 2020. This was at a slower pace than projected by the government (1.7 to 2.2%) according to Suhariyanto Chief of the Central Statistics Agency (BPS).
In related news, the Minister of Trade, Muhammad Lutfi, said International trade agreements will drive the economic recovery and he highlighted the efforts to raise non-oil and gas exports to help Indonesia's battered economy.
Existing international trade agreements include the Regional Comprehensive Economic Partnership (RCEP), Indonesia-Korea Comprehensive Economic Partnership Agreement (IKCEPA), Indonesia-Pakistan Preferential Trade Agreement (IP-PTA) and Indonesia-Australia Comprehensive Partnership Economic Agreement (IACEPA).
Indonesia's trade balance in 2020 posted a surplus of US$21.7 billion, the highest since 2012. However, the large surplus was because of a sharp decline in imports. In 2020 exports fell 2.6 percent year-on-year while imports plunged over 17 percent.
The Minister said to increase exports it will be necessary to strengthen bilateral ties with the US and China as they are strategic partners for Indonesia.
Between January and November 2020 Indonesia's exports to the US rose 3.6 percent compared to the same period in the previous year. Exports were dominated by garments (19.4%), electronics (10%) and rubber products (8%).
The Minister noted that during the pandemic Indonesia received many orders for electrical products as well as furniture from the United State such that furniture exports grew almost 12 percent to US$2.3 billion.
Indonesia's trade and investment cooperation with China is strong because of the ASEAN-China Free Trade Agreement (ACFTA) and the Regional Comprehensive Economic Partnership (RCEP) schemes.
Between January and November 2020 Indonesia's exports to China increased by almost 11 percent year-on-year and were dominated by iron and steel (24%), minerals (21%) and palm oil (11%).
Development of industrial plantations for bioenergy
The Minister of Environment and Forestry (LHK, Siti Nurbaya, has explained details of Indonesia's agreed Nationally Determined Contribution (NDC) and the agreed target for greenhouse gas (GHG) emissions.
To achieve the targets the Ministry will encourage Industrial Plantation Forests (HTI) for Bioenergy purposes, utilisation of micro-hydro technology, utilisation of waste for power-gen and utilisation of geothermal resources.
Another aspect of support from the Ministry will be the implementation of policies for the development of energy plantation forests.
India's Manufacturing PMI
The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) showed a decline in India’s manufacturing activity in February 2021.
The manufacturing sector activity rose to an almost eight-year high in January.
Expand timber trade with Russia
According to the Indian Foreign Secretary, Harsh Vardhan Shringla, India and Russia should diversify their trade beyond the traditional sectors and mention was made of opportunities for expanded trade in wood products.
India-Russia trade amounted to US$10.11 billion in 2019- 2020 but they have agreed a bilateral trade target of US$30 billion by 2025.
To achieve this consideration is being given to cooperation on transport and logistics, ship building, pharmaceuticals, agro-industry products and timber among others.
Strong demand for bigger homes
Demand for homes in India is said to be at an all-time high thanks to low interest rates, changes buyer preferences and some tax cuts in various States.
Home buyers have shifted preferences to bigger homes to make ‘work-from-home’ more convenient. Niranjan Hiranandani, President, National Real Estate Development Council (NAREDCO) has expressed appreciation of the government initiatives that have led to a boost in home demand.
Economy gets boost from budget
The Indian economy experienced a sharper contraction in growth than most Western economies and where these countries cushioned the shock to their economies with quick and massive financial stimulus, India’s stimulus was slow and smaller.
As a result, India has seen a sharp contraction in growth over the past 12 months but the economic policies implicit in the country’s 2021–22 central government budget now focuses on boosting public infrastructure and capital expenditure whose share in GDP has increased from 1.5 percent in 2017–18 to 2.5 percent in the 2021–22 estimates.
The Organisation for Economic Co-operation and Development (OECD) has projected that the Indian economy will grow at 12.6 percent in Fiscal 22, the highest among G20 countries driven by the recent stimulus proposals.
For the timber manufacturing sector, the budget is expected to boost demand and drive production higher.
US$14.5 billion from forestry exports in 2021
Forest product exports are expected to rise to US$14.5 billion this year, up 12 percent against 2020. This was announced by the Deputy Minister of Agriculture and Rural Development, Ha Cong Tuan, in an interview with the Lao Dong newspaper.
Exports are likely to reach US$20 billion 2025. Over the next five years efforts will be made to sustain the forest cover at 42 percent, expand markets, develop long-term trade partnerships and promptly address trade issues for mutual benefits in line with international commitments.
The minister mentioned that despite COVID-19 the timber industry had a good year. Vietnam exported forest products worth over US$13.22 billion, up 16.9 percent year-on-year almost six percent higher than targeted.
Vietnam ranks fifth globally, second in Asia, and first in Southeast Asia in terms of forestry exports.
He pointed out that the US, Japan, China, the EU and Korea are the top five importers of Vietnam’s timber and the combined value exceeded US$11 billion or about 90 percent total forestry exports last year.
Vietnam has more than 5,500 companies operating in wood and forest product processing, which generate millions of jobs.
Revenue from forest environmental services to top US$121 million
The Vietnam Administration of Forestry (VNFOREST) aims to collect VND2.8 trillion (US$121.7 million) from forest environmental services this year.
Under this policy, forest service users such as tourism businesses or hydropower plants will have to pay according to their use of forest resources to forest owners which could be individuals, households, organizations or communities.
According to VNFOREST Deputy Director, Phạm Văn Diển, forest carbon sequestration and emission reduction services, a new feature of 2021, will add between VND300 to 500 billion to the sector’s annual income from environmental services. Last year the revenue from those services stood at VND 2.56 trillion, meeting 91 percent of the yearly target.
The revenues from forest environment services supported 226 forest management boards and 138,000 forest owners, while creating income for 81 forestry companies and livelihoods for more than 172,000 families in mountainous areas, helping lift their living standards.
Revenues from forest environmental services have become a sustainable source of finance that helps to increase the value of the forestry sector as well as contributes to GDP growth, according to VNFOREST.
Plan to plant 1 billion trees
The Ministry of Agriculture and Rural Development has submitted a plan to the Prime Minister to plant one billion trees between the 2021-2025.
In 2021 alone, Vietnam will plant about 182 million trees and between 2022 and 2025 the country will plant over 200 million trees each year.
According to the Ministry, in recent years, although the forest coverage in Vietnam has increased the quality of natural forests has not improved, the function of protection forests has not been fully promoted and the density of trees to people in urban and rural areas is still low compared to that of many other countries.
Meanwhile, the impact of climate change and natural disasters has become increasingly complex affecting all aspects of socio-economic life and environment and threatening the country’s sustainable development.
Planting and protecting forests and developing trees for environmental protection are of vital significance.
Wood and wood product exports 2020
In 2020, in spite of the pandemic, exports of wood and wood products (W&WP) amounted to US$12.371 billion, a year-on-year growth of 16 percent.
Of this, WP export were valued at US$9.535 billion, 22.5 percent up compared to 2019 and accounted for 77 percent of total W&WP exports.
With this growth rate W&WP steadily remain amongst top six export commodity groups in Vietnam.
The US continued as the top destination for of Vietnam’s W&WP exports. In 2020, W&WP export to the US reached US$7.166 billion, 34 percent higher than in 2019 and accounted for 58 percent of the total W&WP exports.
With the current momentum, in 2021 W&WP export growth is forecast to expand 15 percent generating US$14 billion provided no major export market uncertainties occur.
W&WP export by foreign enterprises
In 2020, exports of W&WP by foreign enterprises were valued at US$6.15 billion, 30 percent higher than in 2019 and accounted for around half of all W&WP exports by the entire industry (in 2019, this indicator was 42%).
Exports by foreign companies of WP reached US$5.661 billion, 318 percent up compared to 2019 and accounted for 93 percent of the total value of W&WP exported by foreign enterprises.
The US continued as the top market, followed by Japan consuming 11 percent of total W&WP exports. W&WP exports to Canada and Australia also experience high growth rate with the year-on-year growth of 14 percent each compared to 2019.
China and South Korea remain important buyers of Vietnam’s W&WP but growth of exports was not significant. In contrast, exports to the UK and France declined by 27 percent and 19 percent respectively.
In 2020, W&WPs imported into Vietnam were valued at US$2.558 billion showing a minor year-on-year growth of 0.6 percent.
W&WP imports by foreign enterprises
In 2020 the value of W&WP imported by foreign enterprises reached US$1.045 billion, 35 percent up compared to 2019 and accounted for 41 percent of the total W&WP imports.
In 2020, China continued as the largest W&WP supplier for Vietnam accounting for US$862 million and a share of 34 percent of total imports.
Imports of W&WP from Thailand and Russia increased by 15 percent and 88 percent respectively compared to 2019. Conversely, imports of W&WP from the US, Chile, Brazil, and France declined compared to 2019.
W&WP exports by key products, 2020
The top W&WP exported in 2020 included wood chips, wood-based panels, wood pellets, chairs and wooden furniture. Of these, peeled veneer grew at the highest rate, increasing by 94 percent in volume and 51 percent in value, followed by chairs with a growth of 32 percent in export value and wooden furniture of 22 percent compared to 2019.
•Wood pellet: Export volume 3.2 million tonnes, valued at: US$352.03 million, 15 percent up in quantity and 13 percent up in value against 2019.
•Fibreboard: Export volume 111,200 cubic metres, value US$45.78 million, 28 percent down in volume and one percent in value against 2019
•Peeled veneer: Export volume 694,230 cubic metres, value US$81.69 million, 94 percent up in volume and 51 percent up in value against 2019
•Particleboard: Export volume 39,700 tonnes, value US$9.5 million, 16 percent down against 2019
•Plywood: Export volume 2.09 million cubic metres, value US$719.41 million, 0.2 percent down against 2019
•Woodchips: Export volume 11.6 million tonnes, value US$1.48 billion, three percent down in volume and 12 percent down in value against 2019
•Chairs: Export value US$2.67 billion, 32 percent up against 2019
•Wooden furniture: Export value US$5.87 billion, 22% up against 2019
W&WP imports by key products, 2020
Key imported W&WP included logs, sawnwood, fibreboard, and plywood.
In 2020, imports of logs and sawnwood declined while the imports of wood-based panels increased.
•Logs: Import volume 2.02 million cubic metres, value US$563 million
•Fibreboard: Import volume 744,670 cubic metres, eight percent up in volume and two percent up in value against 2019
•Sawnwood: Import volume 2.54 million cubic metres, value US$ 42.06 million, nine percent down in volume and one percent down in value against 2019
•Particleboard: Import volume 434,720 cubic metres, value US$84.69 million, 16 percent up in volume and seven percent up in value against 2019
•Plywood: Imports 604,280 cubic metres, 16 percent up in volume and six percent up in value against 2019
•Veneer: Imports 275,980 cubic metres, value US$208.13 million, 27 percent up in volume and nine percent up in value against 2019
•Chairs: Import value (HS 9401) US$ 163 million, 28 percent up against 2019
•Wooden furniture: Import value (HS 9403) US$ 187.95 million, 51 percent up against 2019
Particleboard and fibreboard production capacity trends
The National Planning and Design Academy for the Forest Products Industry under the State Administration of Forestry and Grassland and the China National Forest Products Industry Association has released an analysis of China’s particleboard and fibreboard industry.
The report says an additional 16 particleboard production lines with a production capacity of 3.09 million cubic metres per year were in operation nationwide in 2020.
There were 329 particleboard production enterprises and 348 particleboard production lines distributed in 24 provinces, municipalities and autonomous regions in China by the end of 2020 with a total production capacity of 36.91 million cubic metres per year, down 3.5 percent from the end of 2019.
The average single-line production capacity further increased to 106,000 cubic metres per year.
The top 10 provinces in terms of particleboard production capacity are Shandong (7.41 million cubic metres per year),Guangdong, Hebei, Guangxi (3.25 million cubic metres per year) and Jiangsu, Anhui, Henan, Hubei, Sichuan and Fujian provinces.
The total production capacity of particleboard in China experienced rapid growth for four years in a row and then decreased slightly as the number of enterprises fell.
About 92 particleboard production lines nationwide were closed or suspended production in 2020 eliminating some 5.8 million cubic metres of production capacity.
By the end of 2020, a total of 1,123 particleboard production lines had been shut down, dismantled or stopped production and some 27.72 million cubic metres of production capacity had been eliminated.
China had in production three new production lines for oriented particleboard in 2020 with an additional production capacity of 850,000 cubic metres per year.
By the end of 2020, China had 26 oriented particleboard production lines with a total production capacity of 4.16 million cubic metres per year, an increase of 18 percent from the end of 2019.
These mills are distributed in seven provinces and regions, including Shandong, Hubei, Guangxi, Anhui, Jiangsu, Guizhou and Yunnan provinces.
25 particleboard production lines were being built in early 2021 with total production capacity of 6.75 million cubic metres per year. There are particleboard production lines under construction in the seven main regions (east China, south China, central region, southwest, north China, northeast and northwest regions), including 18 continuous flatpressed production lines with the total production capacity of 5.72 million cubic metres per year, accounting for 84 percent of the particle board production capacity under construction.
The particleboard production lines under construction will be put into operation from 2021 to 2022 and it is estimated the national particleboard production capacity could exceed 40 million cubic metres per year by the end of 2021.
China’s fibreboard sector is characterized as follows: 15 fibreboard production lines were built in 2020 adding 2.76 million cubic metres per year of capacity.
There were 392 fibreboard manufacture enterprises, 454 production lines in China distributed across 25 provinces, cities and regions by the end of 2020. Total production capacity was 51.76 million cubic metres, down 1.3 percent from the end of 2019. The capacity per production line rose to 114,000 cubic metres per year.
The top 10 provinces in terms of fibreboard production capacity are Shandong (7.98 million cubic metres per year), Hebei (5.66 million cubic metres per year), Guangxi (5.35 million cubic metres per year), Jiangsu, Guangdong, Anhui, Henan, Hubei, Sichuan and Yunnan provinces.
The total production capacity of fibreboard in China declined slightly after two consecutive years of growth showing a general trend of the number of enterprises, the number of production lines.
China shut down, dismantle or stopped production in about 118 fibreboard production lines in 2020 eliminating about 7.88 million cubic metres of production capacity per year.
A total of 781 fibreboard production lines had been shut down, dismantled or stopped production by the end of 2020 eliminating 33.16 million cubic metres of production capacity per year.
There were 136 continuous flat-pressed fibreboard production lines in China by the end of 2020 with a total production capacity of 26.92 million cubic metres per year, accounting for 52 percent of the national total fibreboard production capacity.
Mills are distributed in 19 provinces (regions). The top seven are Shandong, Guangxi, Hebei, Hubei, Anhui, Guangdong and Henan.
22 national fibreboard production lines were being built in early 2021 with the total production capacity of 4.86 million cubic metres per year, fibreboard production lines are under construction in the East China, south China, central China, northwest, north China and Northeast regions except southwest region.
The fibreboard production lines under construction will be put into operation from 2021 to 2022 and it is expected that the national total fibreboard production capacity will reach 55 million cubic metres per year by the end of 2021.
Changsha City—the main border crossing for Russian timber
Construction of the Container Center at the Central and Southern Land Port to serve the China-Europe Railway Express (Changsha) is being accelerated in Changsha City of Hunan province.
The construction will provide the foundation for expansion of the China-Europe Railway Express (Changsha) to meet the international logistics needs of the large number of small and medium-sized enterprises in the region.
Statistics show that the China-Europe Railway Express (Changsha) saw an explosive growth in 2020with a total of 530 trains shipped exceeding the total number during a four-year period from 2014. The value of cargo
transported was US$2.06 billion, a year-on-year growth of 99 percent.
At present, Trains from Changsha City have gone to Russia, Minsk, Malaszewicze, Budapest, and Central Asia and returned from Hamburg, Budapest, Central Asia and Russia. 9 to 12 trains operate weekly in Changsha City serving 27 cities in 12 countries.
A large volume of Russian timber has been shipped to Changsha City via the China-Europe Railway Express (Changsha) and distributed across the country. Changsha City is the main entry point for Russian timber at present.
Analysis of current timber market prices fluctuations
Many members of China’s timber associations have reported increases in timber prices are of concern as they impact production costs. The most serious price fluctuations have been for softwood logs, At present prices for hardwood logs are relatively stable.
The secretariat of the China Wood Protection Industry Association (CWPIA) undertook an analysis and this is summarised below.
The first cause of price increases is the pandemic. Demand for wood products in the US, Canada and parts of Europe has increased. Raw material suppliers to China see an opportunity to raise prices on the back of growing demand.
Second is the impact of land and sea freight. The pandemic has had a significant impact on international trade. Port inspections and quarantine have become stricter and the flow of containers has been disrupted and shipping companies have raised container shipping costs.
The third is the impact of supply and demand. In 2020, China's timber imports totalled 108.02 million cubic metres, down about five percent year-on-year.
The main suppliers of timber such as Russia, New Zealand and Canada saw demand fall.
Stocks in supply countries and in China have fallen leading to a temporary imbalance between the supply and demand of timber which has pushed up prices.
The Association suggests that eventually the pandemic will gradually be controlled and production and exports will gradually recover in the main timber production countries.
Canadian decision on China’s plywood
In January 2021 the Canada Border Services Agency (CBSA) terminated the dumping and subsidy investigation in respect of certain decorative and non-structural plywood originating in or exported from China.
The statement from the CBSA is provided below and the source of the full determination is shown.
On 21 January 2021, pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Canada Border Services Agency terminated the dumping investigation in respect of certain decorative and other non-structural plywood originating in or exported from China by:
Celtic Co., Ltd.
Linyi Evergreen Wood Co. Ltd.
Linyi Huasheng Yongbin Wood Co., Ltd.
Pingyi Jinniu Wood Co., Ltd.
Pizhou Jiangshan Wood Co., Ltd.
Shandong Good Wood Imp. and Exp. Co., Ltd.
Xuzhou Shengping Imp and Exp Co., Ltd.
Similarly, on the same date, pursuant to paragraph 41(1)(a) of the Special Import Measures Act the Canada Border Services Agency terminated the subsidy investigation in respect of certain decorative and other non-structural plywood originating in or exported from China by Celtic Co., Ltd., Linyi Evergreen Wood Co., Ltd., Linyi Huasheng Yongbin Wood Co., Ltd., Linyi Jiahe Wood Industry Co., Ltd., Pingyi Jinniu Wood Co., Ltd., Pizhou Jiangshan Wood Co., Ltd., Shandong Good Wood Imp. and Exp. Co. Ltd., and Xuzhou Shengping Imp and Exp Co., Ltd.
On the same date, pursuant to paragraph 41(1)(b) of the Special Import Measures Act, the Canada Border Services Agency made final determinations respecting the dumping and subsiding of certain decorative and other non-structural plywood originating in or exported from China, with respect to exporters for which the investigations have not been terminated.
New national standard for Veneer
The national standard, GB/T 13010-2020, for wood veneers has been released by the National Technical Committee for Standardisation of wooden panels and this will come into force on 1st June 2021.
This new standard is an integration and revision of two previous standards for sliced veneer (GB/T 13010-2006) and rotary veneer (LY/T 1599-2011).
The implementation of this new standard for veneer will effectively regulate product quality, enterprise production and marketing of wood veneer in China and is a significant step towards higher technological capacity in the sector.
Rise in sales of flooring products in 2020
According to data from the China Forest Products Industry Association, annual sales of flooring products rose 1.35 percent to 903 million sqm in 2020.
Of the total sales of wood and bamboo flooring was about 412 million sqm, stone-wood-plastic-ploymer composite flooring sales were 4.17 sqm and wood plastic flooring sales were 74 million sqm.
However, sales of wooden and bamboo flooring fell three percent to 411.7 sqm in 2020. Sales of laminated wooden flooring were 199 million sqm, a year-on-year decline of eight percent, wooden composite floors, 138 million sqm, year-on-year up nine percent, solid wood floors, 41 million sqm, year-on-year down 12 percent, bamboo floors, 28.6 million sqm, year-on-year down five percent and other floors, 5.1 million sqm, year-on-year up 11 percent.
Annual sales of stone-wood-plastic-polymer floors rose five percent to 417 million sqm in 2020 with around 95 percent being exported.
Annual sales of wood and plastic flooring increased about six percent to 74 million sqm in 2020. 60 percent are exported and 95 percent are for outdoor flooring.
Zero tariffs on New Zealand wood products
According to the Ministry of Commerce the 12-year old free trade agreement (FTA) between China and New Zealand has been updated and signed. Under the China-New Zealand FTA the two countries have further liberalized their trade.
In the updated FTA, wood and paper products from New Zealand will be duty free. China’s imports include fibreboard, napkins, writing paper, brown paper, adhesive paper, paper board and paper labels. This FTA will help expand China's access to raw materials, save domestic timber resources and promote the transformation and upgrading of relevant domestic industries.
MOU signed by CNFA and Canada Wood Group
The China National Furniture Association and the Canada Wood Group successfully held an online signing of a MOU covering a wide range of activities. The ceremony was led by President Xu Xiangnan of CNFA and President Bruce St. John of CWG and witnessed by Rachael Bedlington of the Canadian Embassy in Beijing.
China has become the second largest market for Canadian wood exports after the US and suppliers in Canada believe that China will continue to expand its timber imports.
China has been moving towards higher quality and ecofriendly/green materials for furniture production which has created opportunities for cooperation.
The MOU will help Canadian industry gain a deeper understanding of the Chinese furniture market and improve the use of Canadian wood in furniture production.
The Canada Wood Group has offered to support international publicity and expert exchange and bilateral visits.
In order to further strengthen the cooperation between the Chinese furniture industry and the Canadian timber industry and to have more extensive exchanges in trade, standards and technology, the two sides agreed to establish an information exchange mechanism, carry out various industrial activities and organise technical training.