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Timber trade digest #50 from Euro-China group

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SCARY FACT: China imported 30% of its total volume of softwood logs from Europe in 2020 and 2021 and surpassed supply from Russia and North America. European softwood logs were practically non-existent at Chinese ports five years ago. (More details under the link in EUROPE section.)

As 2021 is approaching to the logical completion, industry news are getting more and more prophet like trying to predict market trends, moves and demand/offer on the most sensitive markets for the #timberindustry. What is going to happen with COVID19 and related restrictions? How do the congestions in world major ports develop? What would happen to consumers’ purchasing power with sharp raise of energy cost? How new tariffs and trade bans/restrictions affect product availability? We are going answers these questions during the next 12 months, but now let us try to summarize the Q4 2021 and put on the desk some food for our brains.    

EUROPE

A combination of a never-ending hunger for more wood in the country, reductions in shipments from previously significant trading partners, and an oversupply of timber in Europe have altered the log flow into China over the past four years.

New Zealand, Russia, and the US accounted for almost 75% of the total import volume to China in 2017. However, throughout 2020 and 2021, there were sharp declines in supply from Russia and the US, while shipments from Europe and Latin America rose. During the first nine months of 2021, almost 80% of all imported logs came from New Zealand, Europe, and Latin America.

The European entrance into the Chinese market has been dramatic, increasing from less than 500,000 m3 of softwood logs in 2017 to an estimated 14 million m3 for the entire year in 2021, according to the Wood Resource Quarterly. Europe’s share of the total import volume is currently 30%, with Germany being the second-largest supplier to China, following New Zealand.

German shipments have surged from about 200,000 m3 of logs in 2018 to 3.8 million m3 in 2019, and estimates indicate import volumes may reach over 10 million m3 in 2021. Log imports from the Czech Republic grew rapidly in 2019 but have since leveled off, with the estimated volumes in 2021 likely to be substantially lower than in the two previous years.

Shipments from Germany and the Czech Republic have accounted for the vast majority of the European logs entering China. Several other countries have increased their presence in the past three years, including Poland, France, and Slovakia.

Europe’s oversupply of logs is beginning to diminish, and domestic demand is increasing. Thus, while the rise of European exports to China has been dramatic, the trend is unlikely to continue, making the high of almost five million m3 exported in the 4Q/20 a likely peak.

SWEDEN. In October 2021 exports of Swedish lumber to the U.S. declined 39.2% yoy to 50.5K m3. The value of exports fell 49.2% to $18.0 mio. Average price of lumber decreased 16.4% to $356.6/m3.

FINLAND. The Natural Resources Institute (Luke) published statistics on commercial felling in October 2021. According to analysts, in the reporting month, 6.1mio m³ of roundwood was harvested in Finland for the needs of the timber industry. Increased by 11% compared to October 2020 and by 4% compared to the average for October of the last five years. Industrial sawlogs accounted for 3.1 mio m³, pulpwood – 3.1 million m³. Removal of industrial roundwood from forests in non-industrial private ownership amounted to 5 million m³. Timber companies and the state have harvested 1.1 million m³ of roundwood in their forests. 

For energy production in October 2021, 524K cbm of wood were harvested. Iin January-October 2021, 53.6mio cbm of roundwood were procured in the country for the needs of the timber industry. This is increased by 17% compared to the first ten months of the previous year and by 6% compared to the January-October average of the last five years.

GERMANY. In Q4, the demand for spruce logs in Germany was more subdued than in the summer. Long logs and fix lengths remain in great demand and achieve consistently high prices in some regions. For long logs B/C quality prices are 105 to 110€/m3, for B quality 74 to 100€/m3. Beetle wood is up to 25€/m3 below the average value. The fixed meter prices for beetle wood are specified as 65 to 75€ (B/C) and C/D is up to 75 €/fm.

Pine logs are seeing stable demand and pricing. B/C is offered for 65 to 70€/m3. Oak logs continue to enjoy great popularity, especially with B. The average cbm is €142. B4 has a range from 260 to 390€/m3 and B5/6 is between 273 and 520€/m3. C5 achieves an average of €152/m3. Beech logs are in constant demand and are marketed in B4 for 80 to 115€/m3 – 5/6 is a maximum of € 38/m3. For C4, the figures are between 65 and 90€/m3.

United Kingdom. Over 3.32 million m3 of timber and panel imports were imported in Q3 2021, as the market achieves greater balance between supply and demand after nearly a year of record imports. These import levels are more than 23% over Q3 2020 and, significantly, more than 10% higher than the last time Q3 volumes exceeded three million m3 – in 2007.

Softwood is being imported in larger amounts from a more diverse range of countries over the past quarter, with Latvia, Finland, and Germany growing to account for 61% (1.1 million m3) of the 1.8 million m3 of softwood imported in Q3 2021.

Other timber products, including hardwood, plywood, particleboard, OSB and MDF, have also seen clear increases in Q3 2021 as compared with the previous year. While some goods continue to be under pressure amidst buoyant demand, and logistics issues, the timber supply chain overall has proven resilient, with the timber industry in a strong position to meet demand in 2022.

After this record period the stock levels have returned back towards their pre-pandemic levels and the logistics supply chain is struggling to find sufficient space for further volume – so much so that in Sweden we are seeing some sawmills reduce their overall production volumes. However, while we can see stock levels returning, the UK market is clearly in a different place compared to where it was two years ago, with the likes of HGV driver shortages, port delays and Brexit changes likely to continue to impact the market in the coming months. With the tightest period of tension between supply and demand likely behind us, we can expect a return to more ‘regular’ activity in 2022.

Wood pellets import price increases 7.8% in October 2021. United Kingdom’s imports of wood pellets upped 47.9% yoy to 759.9K tons. The value of imports jumped 59.4% to $150.0mio. Average price of wood pellets increased 7.8% to $197.4/ton.

RUSSIA. Government has increased export duties for lumber with a MC of more than 22%, and a thickness and width of more than 10 cm. From January 2 to December 31, 2022, the export duty for softwood lumber are set at 200 euros per cbm, and for oak, beech, ash are set from 250 to 370 euros per cbm. Current rate for softwood and oak lumber is 10%, but not less than 13 and 15 euros per cbm, respectively, for beech and ash lumber is also 10%, but not less than 50 euros per cbm.

In October 2021 exports of lumber dipped 2.3% yoy to 2,409.9K m3. The value of exports soared 67.4% to $558.5 mio. Average price of lumber jumped 71.4% to $231.7/m3. Exports of wood pellets jumped 26.4% yoy to 232.8K tn. The value of exports soared 21.8% to $28mio. Average price of wood pellets dipped 3.7% to $121.4/ton. Exports of sawlog downed 1.1% yoy to 797.8K m3. The value of exports increased 16.3% to $71.0mio. Average price of sawlog upped 17.6% to $89.0/m3.

AMERICA

USA. Market players expect lumber prices to go higher. Fires, floods and supply chain disruptions affect U.S. lumber prices. Department of Commerce has doubled the duties on the imports of softwood lumber from Canada.

In October 2021, Exports of wood pellets fell 32.4% yoy to 422.1K tn. The value of exports declined 31.6% to $58.8 mio. Average price of wood pellets upped 1.2% to $139.4/ton. Exports of logs increased 16.8% yoy to 853.2K m3. Tthe value of exports upped 25.6% to $168.3mio. Average price of logs expanded 7.5% to $197.2/m3.Exports of lumber to India soared 57.5% yoy to 7.1K m3. The value of exports soared 89.9% to $2.3mio. Average price of lumber jumped 20.6% to $331.5/m3.

CANADA. In October 2021, exports of lumber dipped 3.6% yoy to 3,270.0K m3. The value of exports fell 10.8% to $862.2 mio. Average price of lumber decreased 7.5% to $263.7/m3. Canadian lumber production increased 4.5% from August to 4 641.5K cbm in September. Production was 10.1% lower than in September 2020. Canada’s sawmills shipped 4 709.9K cbm of lumber in September, up 6.0% from August and down 5.0% from September 2020.

BRAZIL. Brazil is a significant player on a world market. Besides the tropical wood, Brazil exports softwood and woodchips worldwide in huge quanities.Main trading partner is the US but other markets are also gaining in importance as opportunities for Brazilian furniture exports in different parts of the world expand. In the first nine months of 2021 there was a 59% increase in the value of furniture exports compared to 2020. All segments showed increased exports. The main importing countries of wooden furniture were the United States followed by Chile and the United Kingdom.

Overall timber exports are on the rise. In the first six months of the year exports were 86% of the full year 2020 totalling 1.18 billion. Lumber export price soars 335.5% in November 2021. Exports of lumber declined 67.7% yoy to 284.1K m3. The value of exports soared 40.5% to $88.2 mio. Average price of lumber jumped 335.5% to $310.5/m3. Exports of wood-based products (except pulp and paper) increased 26.5% in value, from US$293.9mio to US$372.0mio.

CHILE. In November 2021, exports of lumber expanded 8.1% yoy to 498.5K m3. The value of exports jumped 54.3% to $99.1mio. Average price of lumber soared 42.7% to $198.7/ m3.

PERU. Wood product exports for the Q3 of this year totaled US$86mio or 35% more than the same period in 2020. It is still far from the more than US$100 million in 2019. However this year’s timber exports may exceed pre-pandemic levels. However, this does not mean a sign of recovery in general but more evidence of the declining trend in export earnings since the US$230 million in 2008.

ASIA

JAPAN.  In October 2021, imports of softwood lumber increased 13.3% yoy to 383.5K m3. The value of imports soared 125.9% to $250.5 mio. Average price of softwood lumber jumped 99.5% to $653.2/m3. Imports of wood chips jumped 21.0% yoy to 990.9K tons. The value of imports soared 23.7% to $178.6 mio. Average price of wood chips upped 2.2% to $180.3/MT. Imports of wood pellets jumped 63.2% yoy to 275.2K tn. The value of imports soared 70.8% to $49.3 mio. Average price of wood pellets rose 4.7% to $179.2/tn.

VIETNAM. In 11 months of 2021, the export value of wood and wood products is estimated at 13.2 billion USD. The confidence that the export of wood and wood products will reach 14.5 billion USD in 2021 has quickly returned as soon as the COVID-19 pandemic has been basically controlled.

In November and December 2021, it is estimated that the wood industry will achieve an export turnover of about 1.3 billion USD per month (In November reached US$1.15 billion). Businesses also forecast that the demand for wooden furniture will increase sharply in the world market. The US will remain the largest export market for Vietnam’s wooden furniture. Currently, 60% of furniture manufacturers under contracts in Vietnam are US partners. Besides furniture exported to the US and Europe, currently, Vietnam is the second largest wooden furniture supplier to Japan with impressive growth.

In the top 5 products with the highest export value of the wood industry, Vietnam is the second largest exporter of pellets in the world and it is forecasted that this item will continue to grow. Although Vietnam is the second largest exporter of wooden furniture in the world, it still accounts for a small proportion and has a lot of room to increase market share. In addition, in the 11 months of 2021, exports of products such as wood, boards and flooring, wood chips, and mirror frames have a high growth rate.

CHINA. Log imports from Australia plunged to 62,855 cbm in the Q3 of 2021 This is down 99% from the same period of 2020. Log imports plunged because of a ban imposed by China. This was because the quarantine service in China detected pests in a log shipment. Since the beginning of 2020 Chinese Customs has repeatedly detected live pests in logs imported from Australia.

AFRICA

GHANA. Timber Industry Development Division for the first nine months of 2021 showed that wood product exports registered 41% and 27% yoy growth in volume and value respectively. The cumulative volume of the fifteen product categories exported for the period January to September 2021 was 224,599 cbm, compared to 159,432 cbm for the same period in 2020. Products that recorded significant export volume growth are plywood, billets, sliced veneer, air-dried sawnwood and kiln-dried sawnwood. The export of air and kiln-dried boules dropped.

The main species processed were teak, ceiba, wawa, denya, mahogany, essa, ceiba, otie, wawabim and ohaa. The main markets were India, USA, Germany, Belgium and United Arab Emirates. Ghana earned Eur103.29 million from wood products in the first 9 months of 2021 compared to Eur 81.39 million in 2020. Exports of primary products, mainly billets, earned the country Eur12.83mio from the export of 36,151cbm between January to September this year.

Secondary wood products – lumber, plywood, veneer, boules and briquettes formed the bulk of the country’s wood export. These generated Eur84.72mio from a volume of 180,366cbm for the first three quarters of 2021. Exports of tertiary wood products, mainly mouldings, contributed Eur 5.74mio (5.56%) from a volume of 8,082cbm for 2021.

This is all for today. Provided that you really touched the bottom of this read and you have something to say or ask, please send your email to [email protected]

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