Big Opportunities for European Wood Suppliers and Wood Product Buyers in China
China's total aggregate trade surplus in the first half of 2013 was up 83% to hit US $112.5 billion. As regularly reported in WOOD MARKETS - The Monthly International Report, export growth in wood products has also been spectacular - January to May 2013 trade statistics indicated that:
€ Plywood exports expanded by 50% over the same period in 2012 to reach US $1.34 billion,
€ Fiberboard exports were up an astounding 151% to reach US $527 million, and
€ Wooden door exports rose 28% to reach US $217 million.
Despite remarkable success over the past several years, there are indications that a crunch time may be coming for the Chinese wood products industry. Up until now, a fiercely competitive domestic Chinese market, supported by government policy and ruled by low cost production, capital and labour, has provided China with a significant competitive advantage in domestic and export markets. However, some looming issues may put a squeeze on the Chinese wood products industry:
€ International trade actions are escalating; the issues of illegal wood and certified wood are no longer toothless dogs;
€ Chinese export rebates, a historic incentive for exporters, are being dramatically slashed;
€ Ocean freight rates continue to rise;
€ Labour costs are escalating;
€ The Chinese government's grip on the undervalued Yuan is starting to slip; and
€ Perhaps most importantly, the cost of raw materials in China is simply skyrocketing.
Raw materials are increasingly becoming China's Achilles' heel - industry analysts are projecting a timber supply gap in China of 90€"130 million m3 by 2010. China has quickly become the world's leading importer of wood pulp and waste paper, softwood, hardwood and tropical logs, and hardwood and tropical lumber. In fact, the situation for some in the Chinese wood products industry is looking dire, with substantial Russian log export taxes looming and trade statistics in the first five months of 2013 indicating that log imports into China were up 19% in volume but 45% in value. Many Chinese manufacturers are looking for alternative raw material suppliers.
What are Chinese companies doing to address these issues? A number of innovative strategies are being implemented: new products are being developed; the quality of Chinese made wood products is improving rapidly; markets for exports are rapidly diversifying into Europe, the Middle East and SE Asia; and price increases are being pushed and are starting to stick.
In addition, Chinese government officials appear confident that they can alleviate the future domestic timber supply gap. One key initiative to address China's timber shortfall is to significantly increase output from domestic forest plantations by 2015. The plan involves bringing online an incremental 13 million hectares of fast growing plantations, resulting in 133.4 million m3 of timber per year, which can support 13.9 million tons of pulp production, 21.5 million m3 of wood-based panel production and 15.8 million m3 of large-size logs.
But key questions loom in China's future:
€ How successful will China be in accomplishing their ambitious plantation goals and how far will this go towards China becoming self-sufficient in timber?
€ With increasing export taxes on Russian logs, what opportunities are there for other suppliers to capitalize on the raw material supply gap in China?
€ Which Chinese wood products exports, in the coming years, will be the winners or losers under these fast changing conditions?
These questions and others will be addressed at the upcoming 4th China International Wood Products Summit Conference, in Qingdao, China - Sept 22-24, 2013, hosted by Vancouver-based International WOOD MARKETS Group Inc.
The conference will include high profile international speakers, local industry tours, table top product displays from a variety of export-ready Chinese producers, and ample time for networking with leading overseas manufacturers, importers, exporters and Chinese wood products manufacturers. Professionally organized and hosted in a first-class, five-star venue, the China International Wood Products Summit will be the China event in 2013 you will not want to miss!
€ Plywood exports expanded by 50% over the same period in 2012 to reach US $1.34 billion,
€ Fiberboard exports were up an astounding 151% to reach US $527 million, and
€ Wooden door exports rose 28% to reach US $217 million.
Despite remarkable success over the past several years, there are indications that a crunch time may be coming for the Chinese wood products industry. Up until now, a fiercely competitive domestic Chinese market, supported by government policy and ruled by low cost production, capital and labour, has provided China with a significant competitive advantage in domestic and export markets. However, some looming issues may put a squeeze on the Chinese wood products industry:
€ International trade actions are escalating; the issues of illegal wood and certified wood are no longer toothless dogs;
€ Chinese export rebates, a historic incentive for exporters, are being dramatically slashed;
€ Ocean freight rates continue to rise;
€ Labour costs are escalating;
€ The Chinese government's grip on the undervalued Yuan is starting to slip; and
€ Perhaps most importantly, the cost of raw materials in China is simply skyrocketing.
Raw materials are increasingly becoming China's Achilles' heel - industry analysts are projecting a timber supply gap in China of 90€"130 million m3 by 2010. China has quickly become the world's leading importer of wood pulp and waste paper, softwood, hardwood and tropical logs, and hardwood and tropical lumber. In fact, the situation for some in the Chinese wood products industry is looking dire, with substantial Russian log export taxes looming and trade statistics in the first five months of 2013 indicating that log imports into China were up 19% in volume but 45% in value. Many Chinese manufacturers are looking for alternative raw material suppliers.
What are Chinese companies doing to address these issues? A number of innovative strategies are being implemented: new products are being developed; the quality of Chinese made wood products is improving rapidly; markets for exports are rapidly diversifying into Europe, the Middle East and SE Asia; and price increases are being pushed and are starting to stick.
In addition, Chinese government officials appear confident that they can alleviate the future domestic timber supply gap. One key initiative to address China's timber shortfall is to significantly increase output from domestic forest plantations by 2015. The plan involves bringing online an incremental 13 million hectares of fast growing plantations, resulting in 133.4 million m3 of timber per year, which can support 13.9 million tons of pulp production, 21.5 million m3 of wood-based panel production and 15.8 million m3 of large-size logs.
But key questions loom in China's future:
€ How successful will China be in accomplishing their ambitious plantation goals and how far will this go towards China becoming self-sufficient in timber?
€ With increasing export taxes on Russian logs, what opportunities are there for other suppliers to capitalize on the raw material supply gap in China?
€ Which Chinese wood products exports, in the coming years, will be the winners or losers under these fast changing conditions?
These questions and others will be addressed at the upcoming 4th China International Wood Products Summit Conference, in Qingdao, China - Sept 22-24, 2013, hosted by Vancouver-based International WOOD MARKETS Group Inc.
The conference will include high profile international speakers, local industry tours, table top product displays from a variety of export-ready Chinese producers, and ample time for networking with leading overseas manufacturers, importers, exporters and Chinese wood products manufacturers. Professionally organized and hosted in a first-class, five-star venue, the China International Wood Products Summit will be the China event in 2013 you will not want to miss!
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