Vietnam – In the first seven months of this year Vietnam’s wood and wood product (W&WP) exports earned US$9.6 billion, up 55 percent year-on-year. However, due to the fourth COVID -19 surge here, the suspension of production at local wood processing enterprises is having effects on exports, according to the Vietnam Timber and Forest Product Association (VIFOREST).
Many members of the Ho Chi Minh (HCM) City Fine Arts and Woodworking Association (HAWA) have outstanding orders from overseas but because of the recent surge in infections and the control measures being enforced, factories have experienced severe production problems and more than half the workforce in the industry has been laid off, according to VIFOREST.
HCM City, Dong Nai, Binh Dương and Tay Ninh have reported 134 wood processing enterprises suspended production as they were unable to implement the “3 onsite” model, which involves workers living on site.
Businesses implementing this model face additional costs due to the testing of thousands of employees.
The other issue is that to maintain production, enterprises still have to secure raw materials, chemicals, packaging and other requirements and also process export documents through Customs and their banks, which creates a risk of infection.
VIFOREST has proposed that the Government allow the association and the businesses to buy COVID-19 vaccines and vaccinate staff and workers. The association also said the Government should consider financial support to wood processing enterprises. This could be in the form of a reduction or delay in paying corporate income tax and other taxes, delay of social insurance payments and land rent exemption for this year. The Government could also allow enterprises to extend loan payments and restructure debts.
The association has requested the Ministry of Industry and Trade to add raw materials for the wood processing industry to the list of essential goods to ensure the supply chain.
Europe – At the time of this writing, according to published reports, the sharp rise in the value of EU27 wood product imports this year is partly due to rising timber product prices, the dramatic and unprecedented increases in freight rates from October last year, and to the arrival of a backlog of orders delayed during the pandemic. However, it also comes at a time when more positive signs are emerging on the demand side as the economic recovery in the EU gains momentum.
This trend is expected to continue as vaccination rates are rising, lockdown measures are eased and the full effects of NextGenerationEU, the EU’s large fiscal stimulus program, begin to be felt.
There is also evidence of a beginning revival in tourism activity, which should also benefit from the new EU Digital COVID Certificate. Together, these factors are expected to outweigh the temporary production input shortages and rising costs hitting parts of the manufacturing sector.
Indonesia–The performance of the Indonesian forestry and wood processing sectors in the first and second quarters of 2021, the most current data available, improved compared to the same periods in 2020. There was an increase in log production, processed wood production, non-timber forest products production and export earnings.
Production of logs from both natural forests and plantation forests in the second quarter of 2020 was 11.56 million cubic meters and this rose to 12.8 million cubic meters in the second quarter of 2021. Processed wood production in the first quarter of 2021 increased by 6 percent compared to 2020 and in the second quarter it was the same as last year.
Indonesia’s furniture and craft exports recorded positive growth especially to the U.S. market, rising 35 percent in the first half of 2021.
The chairman of the Indonesia’s Furniture and Craft Industry Association’s (HIMKI), Abdul Sobur, said during the first half of 2021 exports of furniture and crafts were valued at US$1.687 billion, a 35 percent increase year on year.
The main market was the US (50 percent) followed by Japan (7 percent), the Netherlands (5 percent), Germany (4 percent), Belgium (4 percent), Australia (3.6 percent) and the UK (3 percent).
Meanwhile, the Director of Production Forest Business in the Ministry of Environment and Forestry (KLHK) reported that exports of forest and wood products in the first quarter of 2021 increased to US$3.045 billion compared to the US$2.731 billion in 2020. In the second quarter of 2021 exports increased 70 percent year on year.
Germany – The mood in companies in the German wood industry clouded over slightly in August, the most recent month for which data was available at presstime. The assessment of the current situation improved to +45.6 points (previous month: +43.2 points). However, the outlook for the next six months was more pessimistic. The current value is +2 points (previous month: +7 points). In total, the Main Association of the German Timber Industry (HDH) business indicator fell to +22.7 points in August (previous month: +24.4 points). For comparison: during the first wave of the pandemic, the HDH economic indicator was -59.4 points in April 2020. The second wave of the pandemic was overcome by the German timber industry after a slight decline in the business climate to -1.7 points in January 2021.
In view of the uncertain outlook for the further development of the pandemic, the mood in the individual segments of the timber industry is divided. Companies in the sawmill industry (+54.8 points), in the wood-based materials industry (+58.1 points), in the construction-related area of the wood industry (+64.1 points), in prefabricated wood construction (+46.8 points) and in the wood packaging industry (+48.7 points) assessed their current business situation as positive. The current assessment of the business situation in the furniture industry (+32 points) is now positive against the background of the increasing domestic furniture demand and the good export business. However, the expectations for the next six months indicate different developments in the individual segments in the coming months.
The wood-based materials industry, the wood packaging industry and the furniture industry are currently more optimistic than other segments of the wood industry: They expect an improvement in the business situation in the coming half-year. The sawmill industry, the construction-related area of the wood industry and prefabricated wood construction, on the other hand, expect the situation to deteriorate in the next six months. From the HDH’s point of view, this is not only due to macroeconomic causes, but also to the still difficult procurement of raw materials and materials as well as price developments. According to published reports, the delivery problems are not limited to wood for a long time, but affect many raw materials and intermediate products in the wood and plastics industry, such as adhesives, fittings, steel as well as plastics and packaging.
