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China Wood Products Prices

16-30th June 2013


US Dollar Exchange Rates of  27thJune  2013
China Yuan 6.
1910

Report from China 


 Slowing growth alarms exporters to China

Disappointing data on factory output provided another sign that an economic slowdown in China is well underway. In addition adding to the concern of analysts are growing signs of a credit squeeze in the country.


For many years money has been pouring into infrastructure projects which have helped sustain growth. However, this impressive growth has been fuelled by debt taken by provincial governments who are now struggling to find the funds service these loans.


Countries which have a close trading relationship with China are tracking events carefully as a continuing decline in growth in China¡¯s economy could undermine the recent recovery by exporters.


Importers to feel impact of weaker yuan
After appreciating against the US dollar for most of this year the yuan has started to weaken as foreign funds flow out, largely because of evidence that the Chinese economy is slowing.


However, the yuan is still almost 1.5% higher against the dollar for the year to-date even though there has been a major movement of cash out other Asian countries.


However, the recent decline in the yuan/dollar rate is read as signaling there are real concerns about the pace of slowdown in the Chinese economy.


Until the middle of last year it seemed certain that the yuan, widely considered as under valued, would continue to appreciate but markets have been surprised by the trends in growth and by the decision by the Chinese Central Bank to intervene.


China achieves solid 2012 real estate sales
Chinese residential real estate sales in 2012 grew 14.9 percent according to the National Bureau of Statistics of China. Continued growth in demand for homes is good news for the domestic wood product manufacturing sector and for exporters supplying timber to the Chinese market.

Sales of commercial buildings in China, a major driver of demand for joinery products and office furniture, increased in 2012. The total floor area of office building sold in 2012 increased 12.4 percent.


Preoccupation with the strength of Chinese wood products in the international markets distracts attention from the rapidly developing domestic market for wooden building materials and added value wood products.


The expansion of domestic demand in China serves to balance declines in exports such that demand for timber raw materials will continue to grow.


Price trends for new homes
Data from National Bureau of Statistics show that ,compared to levels in March 2013, prices for newly constructed residential buildings declined in 3 cities, remained flat in 2 cities but rose in the remaining other 65 cities included in the survey. For the complete data see: http://www.stats.gov.cn/english/pressrelease/t20130618_402904575.htm


Compared to levels in March this year, prices for existing homes in April fell in only 3 of the major cities included in the recent survey. For the most part, house prices increased across the country.


Compared to levels in April last year prices in April 2013 fell in only 3 cities. For 67 cities the year-on-year price increase was in the order of 13 percent.


Rising prices add to fears of unmanageable inflation in the housing sector which puts policymakers in a quandary as they try to curb growth house prices while, at the same time, trying to achieve an economic recovery.


Strong domestic demand for ¡®redwood¡¯ furniture drives up imports
In recent years the manufacturing of ¡®redwood¡¯ furniture by Chinese companies has increased and ¡®¡®redwood¡¯¡¯ imports have grown rapidly.


The term ¡®redwood¡¯ includes 5 genera, 8 classes and 33 species. The main imports are of padauk, mahogany, rosewood, sanders, wenge and ebony.


China Customs data show that in 2012, ¡®redwood¡¯ log imports were 760,000 cubic metres, up by 25% from 2011. The value of imports of ¡®redwood¡¯ in 2012 was US$787 million, an increase of 9% year on year.


The average price for imported ¡®redwood¡¯ logs in 2012 was US$1,039 per cubic metre. The main sources of ¡®redwood¡¯ imports to China can be seen in the table below.

Imports of ¡®redwood¡¯ sawnwood have also increased and in 2012 China imported 74.538 thousand cubic metres of sawnwood ¡®redwood¡¯.


The sources of ¡®redwood¡¯ sawnwood imports in 2012 are shown in the table below.

The main sources of ¡®redwood¡¯ are Africa, Southeast Asia and Latin America. Countries in Southeast Asia remain the traditional suppliers of ¡®redwood¡¯ to China but in recent years some African and Latin American countries have become regular suppliers.


In the first quarter of 2013, China imported 250,000 cubic metres of ¡®redwood¡¯ logs at a value of US$239.20 million in value. The average landed price was US$956 per cubic metre, up by around 25% year on year.


Imports of ¡®redwood¡¯ sawnwood in the first quarter of 2013 were 16,800 cubic metres, down by 29% year on year and the average landed price was US$1,556 per cubic metre.

New-for-old furniture policy extended
The Beijing Municipal Commission of Commerce recently re-issued regulations for the New-for Old furniture policy detailing the products included and the scope of subsidy.


Items included in the policy are cabinets, sofas, beds, tables and chairs which must be free standing. There are no restrictions on size or material but the policy states the exchange must be only one old item for one new item of the same type.


The subsidy is a maximum of 10% of the actual price of the new furniture with 5% of this amount provided by government and 5% provided by the furniture seller. The amount of the subsidy for a single piece of furniture must not exceed 1000 Yuan.


The number of companies involved in the programme has increased this year from 5 to 10 and the number of companies involved in recycling of old furniture has increased to 7. The new programme will begin in July and last for 6 months.


New technology institute to promote S. American species
A new institute called the South American Timber Application Technology Institute has been created to provide Chinese manufacturers with technological information on South American timbers.


The new institute, located in Beijing, is supported by the China Timber and Wood Product Distribution Association (CTWPDA), the Timber Saving and Development Center, the China Forestry Group and the Timber and Wood Products Quality Supervising and Testing Center of China Logistics and Procurement Association.


The institute will establish a data bank of South American timbers, compile data on wood properties and be ready to provide advice on appropriate processing techniques and enduses. The four agencies involved will establish a consultative group of experienced local specialists who can provide technical advice to industry.


The institute aims to provide support for promotion of South American timber in China and to expand the range of species traded to China.


First quarter imports reverse downtrend of 2012
2012 imports of logs and sawnwood fell short of the levels in 2011 but first quarter 2013 data shows that this down trend has been reversed. Imports of tropical logs and tropical sawnwood expanded in the first quarter as can be seen in the following table.

Yuan 10 billion root carving business attracts official support
The business of wood and root carving has, until recently, not attracted the attention of the public or government agencies but this is a huge business in China.


The number of companies in China known to be involved in wood and root carving exceeds 10,000 and these companies employ thousands of workers as production is labour intensive. It has been estimated that the output of this industry is around Yuan 10 billion annually.


In May this year a Wood and Root Carving Special Commission was launched by the China Timber and Wood Product Distribution Association to try raising the awareness of the public and policy makers of the growing contribution the industry is to the economy.
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Abbreviations

LM        Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS         Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR            French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF         Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot               Price has moved up or down

Source: ITTO'  Tropical Timber Market Report

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