Zhu Guangqian

In the first half of 2020, the total value of timber and wood products imports and exports in China reached US$23.025 billion, a year-on-year decrease of 18%. The imports amounted at US$9.828 billion, dropped by 17.9%, and exports valued at US$13.197 billion, decreased by 18%.

1. Timber imports

In the first half of 2020, China imported 47,827,600 m³ of logs and sawn timber (log volume), a year-on-year decrease of 15.1%; the imports valued at US$7.218 billion, decreased by 24.3% compared from the previous year. The average unit price was 151 US$/ m³, a decrease of 10.9%.

The main changes in the regional proportions include: the proportion of North America has decreased by 3%, that of New Zealand has decreased by 2.7%, and an increase of 5.1% for Europe.

I. Coniferous timber

Coniferous logs: In the first half of 2020, the total volume coniferous logs imported by China reached 17.6411 million m³, worth US$ 2.019 billion, and the average unit price was 114 US$/m³, a decrease of 16.2%, 28.9% and 15% respectively; from the perspective of supplying regions, only imports from European increased sharply, while other regions fell significantly.

Main supplying countries of Coniferous logs imported by China:

Due to coniferous forest pests in Europe, a large amount of logging is required. In the first half of the year, Europe’s exports of coniferous logs to China was 4.8077 million m³, a year-on-year increase of 121%, and the port unit price reached 110 US$/m³, a year-on-year decrease of 11.6%. Among them, the largest volume was from Germany, totaled 2.828 million m³, a year-on-year increase of 205.4%, accounting for 58.8% of European coniferous log exports. Due to the large volume and low price of European coniferous logs, the share of Russia, North America and New Zealand coniferous logs in China’s import market has been impacted. China’s imports of Russian coniferous logs in the first half of the year decreased by 32.2%, Canadian coniferous logs dropped by 55.3%, and American coniferous logs fell by 48.3%, and a decrease of 26.9% for New Zealand.

Coniferous sawn timber: In the first half of the year, China imported 12.4788 million m³ of coniferous sawn timber, worth US$ 2.16 billion, and the unit price was 173 US$/m³, decreased by 11.6%, 16.1% and 5.1% respectively.

Main supplying countries of coniferous sawn timber imported by China:

Russia and Canada, two main source countries of China imported coniferous sawn timber, both dropped sharply in the first half of the year, a year-on-year decrease of 12% and 45.6% respectively; China’s imports of European coniferous sawn timber increased by 35.4%, of which Belarus showed the largest increase of 147.9 %, mainly due to the increase in coniferous sawn timber production in Europe due to forest pests and diseases.

Finnish and Swedish coniferous sawn timber in Northern Europe were forced to lower prices due to decreased price in other European countries, and their unit prices fell sharply, by 17.1% and 20.3% respectively. China’s imports of Finnish coniferous sawn timber fell by 16.7% in the first half of the year, while imports from Sweden increased significantly, by 50.1%. The volume is close to its imports from Finland.

II. Broadleaf timber

Broadleaf logs: In the first half of the year, a total of 6.6108 million m³ broadleaf logs were imported by China, valued at US$1.539 billion, with an average unit price of 233 US$/m³, decreased by 22.3%, 32% and 12.5% respectively from previous year. Among them, tropical logs took up 4.135 million m³, a decrease of 25.6%, and tropical logs accounted for 62.5% of the total broadleaf logs. The imports of temperate broadleaf logs reached 2.4758 million m³, accounting for 37.5%. Temperate broadleaf logs mainly come from Russia, Europe, the United States and Canada, of which Russia accounted for 43.5%, an increase of 20.2%.

Tropical broadleaf logs mainly come from Africa, Papua New Guinea and Solomon, collectively accounting for 84% of imported tropical logs, decreased by 40.2%, 16.2% and 21.8% respectively.

Several major source countries in Africa have experienced a sharp decline, among which Nigeria has basically stopped log exports.

Broadleaf sawn timber: In the first half of the year, China’s imports of broadleaf sawn timber reached 4.1238 million m³, valued at US$ 1.536 billion, and the average unit price was 372 US$/m³, decreased by 12.4%, 17.4% and 5.6% respectively. Among them, tropical broadleaf sawn timber took up 3.0591 million m³, accounting for 74.2%.

Among the imported broadleaf sawn timber, Thai rubber wood panels took up 1.672 million m³, accounting for 40%. Due to the downturn in the furniture industry, imported rubber wood panels fell by 6.6% year-on-year, and their unit prices also dropped by 14.7%.

Gabon is the largest exporter of sawn timber in Africa, exported 279,200 m³ to China in the first half of the year, a year-on-year increase of 2.7%. The unit price fell by 11.1%. Gabon sawn timber exports accounted for 63.1% of the total sawn timber exports in Africa.

Due to the decline in global timber demand, the unit price of imported timber at the port has been on a downward trend since 2019. At present, domestic inventory is sufficient, demand is declining, and there is no room for price increases. Main timber supplying countries remain normal, and there is no need for buyers to increase timber stock.

2. Wood products export

In the first half of 2020, wood products exported by China reached US$ 13.2 billion, a year-on-year decrease of 18%.

The export of wooden furniture and seats accounted for 57.3% of the export value of wood products, and the plywood accounted for 14.5%. These two categories accounted for 71.8% of the export value, which is very important. In the past, the export of wooden furniture, plywood, and plywood was over-weighted to the United States. Changes in Sino-US relations have had a great impact on the export of wooden products. In 2017, the export of wooden furniture to the United States accounted for 40.9%. In the first half of this year, it fell to 29.2%, a decrease of 11.7%. However, the proportion of exports to Europe, Asia, Britain and Japan has increased. Seat exit direction.

Followed by plywood, the second largest export category of wood products. For many years, exports of plywood have ranked the first in the world. However, since 2019, China’s exports of plywood started to drop. In the first half of this year, the exports of plywood decreased by 14%. Vietnam's plywood exports have developed rapidly in recent years. In the first half of this year, a total of 900,000 m³ plywood have been exported by Vietnam, an increase of 14%, which shall draw attention by plywood sector in China, to adjust the direction of plywood industry development. To compete with Vietnam, we have no advantage in raw materials and labor costs.

III. Comparison

Despite the severe economic situation at home and abroad this year, in the long run, the pandemic will not change the fundamentals of China's long-term economic growth. Compared to the 1^st quarter, the 2^nd quarter has already improved a lot.

The import of Pinus radiata logs fell sharply this year. In the first half of the year, China’s imports of Pinus radiata logs decreased by 2.97 million m³, a decrease of 28.2%. In the 2^nd quarter, timber imports of other tree species increased positively. Only imports of Pinus radiata show a decrease of 16.9%.

During the pandemic, especially in the 1^st quarter, manufacturing companies faced reduction or cancellation of orders, restricted logistics and shortage of employees. They show less confident toward future prospects. As the resumption of work and production proceeded in an orderly manner, the pressure from manufacturing companies has been reduced. As can be seen from the above table, in the 2^nd quarter, imports of timber and exports of wood products both increased significantly.

With the policy adjustment to strengthen the internal economic cycle, investment and real estate market is on the rebound, the CPC Central Committee and the State Council issued the Guiding Opinions of on Promoting the Development of Western Region to Form a New Pattern in the New Era, with infrastructure construction as the key task. It aims to develop the western region of China, expand China's economic development space and support a stable and positive economic situation of China. The characteristic and advantageous industries in the western region will usher in a new round of vigorous development. With the introduction of the "upgraded version" of western development strategy, the western region is expected to enter another rapid growth period. Infrastructure construction is still the focus, and urbanization will be accelerated. Timber trading and processing companies must seize the opportunity to get ready for a rebound in timber demand.