Italy – Fordaq reports that between rising prices and a shortage of raw materials, the Italian wood-furniture supply chain is in a particularly delicate phase.
On the one hand, there are account losses due to “COVID-19”, estimated at a drop of 8.7 percent in turnover in 2020; on the other hand, a rebound is expected for 2021 of 8.2 percent – and while although positive and a sign of a restart in the sector – collides with the record rise in wood prices.
In fact, wood prices in Italy went from 264 euros per cubic meter in April 2020, shortly after the start of the lockdown, to 989 euros per cubic meter in September 2020 to reach 1,686 euros per cubic meter in May 2021, recording an increase of over 500 percent.
That rate of increase in prices puts Italian companies in the supply chain in serious difficulty, which clashes with the “diversion” of materials by producers to “more favorable” markets.
A structural trend accelerated by the post-COVID-19 crisis, which accelerated the demand for furniture for homes and, consequently, forced operators in the sector to change pace from initial processing to the panel industry. In the United States, for example, the price of building panels has jumped from $300 to $1,400, while the European average is between 600 and 700 euros. For this reason, many manufacturers divert their goods to the most profitable markets.
The large German sawmills import raw materials from Ukraine, the Czech Republic and Slovakia and then divert their business overseas, while small producers feel a greater difficulty. Structural solutions are needed to be able to fill a gap that continues to widen, despite the fact that 36 percent of the Italian territory is covered by woods.
Vietnam – Exports of wood and wood products plus non-timber forest products surged 62 percent year-on-year to reach a record high of over US$6.628 billion in the first five months of 2021 despite global supply chain disruptions.
Of this figure US$5.120 billion came from high value-added wooden furniture, up 80 percent against the same period last year.
Domestic producers have adapted well to the “new normal” by stepping up digital trade meetings and product promotion with foreign buyers in order to boost sales, said Deputy Minister of Agriculture and Rural Development Ha Cong Tuan, as reported by Fordaq.
There is plenty of room for the global wood and furniture market to grow, said Bui Chinh Nghia, Vice Director General of the Vietnam Forestry Administration under the Ministry of Agriculture and Rural Development.
Vietnam now makes up 9 percent of the global market, he noted, stressing that with the current growth rate, Vietnam will soon rise to the fourth or even third place among the world’s largest exporters of wood products.
According to several foreign importers, COVID-19-induced social distancing orders and travel restrictions have forced people in many countries to work from home triggering increased demand for home furniture.
Made-in-Vietnam furniture has been more and more favored by importers as producers have strictly complied with rules of origin. Insiders, however, warned that rising orders may cause trouble for Vietnamese producers as disruptions in supply of material wood remain of concern.
Africa – Central/West African producers in the region have reported steady demand in international markets. Chinese companies are sticking to their preferred species, which include Belli, Okan, Bilinga, Okoume and Ovangkol. Buyers in the Philippines are reported to be keen to secure sawn Okoume, which now has to be shipped plastic wrapped in conventional vessels because shipping containers are not available.
Demand in Middle East markets are reported as stable but some producers report a weakening of orders from buyers in Europe for certain species. One example is the rapid slowdown in demand for Bahia (Abura) in Italy.
Producers are now looking ahead to the second half of the year when vaccination roll-outs will bring the pandemic under control in the main western markets, the holiday period is over and construction activity and consumer spending should expand.
Heavy and prolonged rain in recent months has damaged many of the main highways used for log transport. Mills in Gabon’s SEZ continue to experience problems securing sufficient logs.
Japan – The Japanese Forestry Agency recently held and emergency meeting to exchange information to deal with shortages of wood products. The main subject was the recent incident of sharp decline of imported wood products from North America and Europe with inflating prices and demand increase to domestic wood.
Associations that included precutting businesses and contractors participated in the meeting and complained about shortages of necessary wood products. They reported they may be forced to reduce production or decline taking orders if this situation continues. Precutting plants in Tokyo and Osaka regions, which rely on supplies of imported materials, reportedly are struggling to secure necessary materials and are reducing operations.
Some Japanese plants use their own supply of domestic wood but that is also getting tight so there were comments that growing log export activity should be restricted temporarily until the supply eases.
The Japan Lumber Importers Association reported that booming housing starts in the U.S., which was cited as a main reason of supply tightness of North American lumber, may last through this year and beyond.
The National Federation of Forest Owners Cooperative Association attended the meeting to represent domestic log producers and log suppliers are not sure if this demand increase is real since plywood mills reduced log purchases last fall due to production curtailment program. They are worried about price drops by oversupply of logs, so log production is being held down partially by this reason. If domestic logs are used to substitute imported logs, manufacturing of logs would be changed, such as length and diameter sorting.
The Japan Federation of Plywood Manufacturers Association and the Japan Laminated Lumber Manufacturers Association participated in the meeting and reported that the production has been increasing since March, but the production is not enough to satisfy the demand and the prices would continue to climb.
Russia – Recently, the Russian Arkhangelsk-based company Onega Sawmills—part of the Segezha Group—sent its first high-speed container train via Grodekovo to Ganzhou Guojigang. 62, 40-foot containers with a total of 2,850 cubic meters of export wood were transported from Russia to China. At the border, the containers were loaded onto Chinese railway wagons that took them to their destination. Similar transports are to take place twice a month in the future and take 15 to 20 days.
Pakistan – Within the chaotic market situation Pakistan faces challenges in being a nation of import, but also does not buy huge volumes for the highest price. According to current published reports, that leads to a low ranking on the priority list for deliveries because countries like China get preferential treatment in terms of log supply – even though Pakistani importers are used to going the first step in terms of risk and down payments before delivery.
That leads to unsure shipping and delivery dates and often spontaneous delays for weeks. Current reports indicate that there is a rise in sales of local timber beating previous price records and evaluated almost similar to imported softwood. The shortage of local and imported timber has caused panic buying and some started storing the wood. Prices are reportedly on a stable high level.
The country’s prime minister has released the new budget for fiscal year 2021-2022 waving off the custom duty on imports from 121 items while giving a lot of benefits to exporters. The market is hopeful for better economic conditions in the near future.