China Wood Products Prices

01-15th May 2005

Report from China   

Dollar Exchange Rates of 6th May 2005
China Yuan 8.28

New round of rapid growth 

Recently, the China Commerce Federation (CCF)invited leaders from the public and private sector to a "Seminar on National Commercial Economic Trends for 2005. The CCF is a non-governmental chamber of commerce of Chinese industrialists and business people whose aim is to work with the government to manage China's non-public economy, and also provide a link between the Government and private sector entrepreneurs. Representatives from the Ministry of Commerce, the National Development and Reform Commission, the National Statistics Bureau, the National Information Center, as well as economists and academic attended the meeting held in Beijing. 

The gathering reviewed prospects for China's economy and the current policies, the commercial and economic trends, the current situation in the consumer goods market and retail trade trends. They also looked at prospects for the supply and demand for major commodities, trade flows and foreign trade and price trends. 

The group concluded that China's economy will move into a new era of rapid growth in 2005. Zhai Zhihong, Director, Department of Trade and Foreign Affairs and Economy under the National Statistics of Bureau, pointed out that in 2004 total retail sales of consumer goods topped Yuan 5 trillion, up by 13.3%. This figure is expected to be Yuan 6 trillion by the end of 2005 and monthly growth will be exceed 12%.  

Of the total, retail sales to urban consumer goods could be Yuan 4044.8 billion, a year on year increase of 13.7% while retail sales to rural consumers will be Yuan 2035.4 billion, a year on year increase of 11%. According to his estimate, the consumer price index may rise by 3.4% and the retail price index will increase by 2.6% by the end of 2005. It was mentioned that the type of goods consumed and the level of sales will change along with the changing structure of the Chinese population and consumption patterns. 

Zhang Xuhong, Director of the Economic and Trade Department under National Development and Reform Commission, reviewed and prospected China's foreign trade. According to the latest statistics, China's export continued to grow but imports fell at a accelerated rate this year. Mr. Zhang commented that it is difficult for China's exports to keep growing at present rates into the later three quarters of 2005, but the overall trend is still upwards. It is predicted that the total value of China's foreign trade will reach US$1300 billion in 2005, up by over 15%. 

Liu Fuyuan, vice President of Macro Economic Academy under the National Development and Reform Commission, said that the country needs to address issues such as strengthening social security, education and housing. The experts attending the seminar agreed that the prospects are good as long as social order and the political system remain stable.  

Plywood exports soaring 

China's domestic plywood industry has developed strongly in recent years. Plywood output was 7.28 million cubic metres in 1999 but in 2003 had jumped to 20.12 million cubic metres, up by 176%, 3 times more than that in 1999. The overall trend in the trade of plywood is that exports are up significantly while imports are falling annually. 

China's Imports and Exports of Plywood 2000 to 2004 (unit: cubic metre)

 Value of China's Plywood Imports and Exports 2000 to 2004 (unit: million US$)

The above statistics reveal that China's plywood industry has become a mature domestic industry and a globally influential sector with the following features: 

*Even though plywood as a product has been manufactured for decades and is a 'traditional' panel product unlike, for example particleboard and MDF, the pace of development of the plywood industry in China has outstripped the growth in manufacture of other panel products.  This will only change when domestic consumers become more familiar with the versatility, handling and enduse potentials of the other panel products but this will take time. China has become the second largest producer of plywood after the US and China's plywood exports reached 4.291 million cubic metres in 2004 making China one of the major plywood exporting countries. Plywood exports were 5.5 times imports in 2004. 

* While the total value of plywood exports from China exceeded the value of imports for the first time in 2001 the unit value of  imported plywood remained higher than that for exports reflecting quality differences between exports and imports. 

*  Plywood exports began to rise sharply after 2002 and were US$1.245 billion in 2003 making the plywood industry a significant force in national economic development and foreign currency earner.  

* In terms of market demand, raw material supply, production costs and quality, the development of China's plywood is promising and has tremendous potential say local analysts. The continuing growth of the national economy is and will remain a strong driving force stimulating demand for plywood for the future. Logs from plantations in Northen and Eastern China as well as in the middle and lower reaches of the Yangtze River watershed will be able to supply increasing quantities to the sector to complement imported high grade hardwoods. The development of the domestic plywood sector can take advantage of the hardworking and readily trained workforce that will help to control production costs. In addition, the quality of domestically made plywood has improved considerably in recent years and Chinese made plywood has become competitive globally. 

However, local analysts think that there are some potential hurdles for the plywood sector to address. 

* The supply of high quality logs for plywood will become increasingly more to secure at reasonable cost. Countries with the forests producing high quality plywood logs will have a growing advantage if the conditions in those countries are conducive to investment in manufacturing. China's plywood industry will depend on imports of high grade logs and the industry will face growing pressure in securing supplies as national and international pressure mounts to further protect natural forests. In addition, many countries will likely further tighten control of log exports to ensure local capacity is satisfied and this will be a tremendous challenge to China's plywood industry in the future. 

* Currently, China's plywood can compete well in the international market due to low production cost but this advantage is being weakened or may be lost due to the increasing cost of oil which is affecting energy costs in production and land transportation and shipping costs. 

* The international markets are becoming more demanding regarding wood products and the consumer is becoming more and more aware of the issues surrounding wood production. Also importing countries have strict health and safety standards that must be met and there is also a growing demand for proof of legality and certification in many countries and this will present a challenge to all manufacturers. Every plywood producing country has to address these issues to meet the requirement of the international market. 

* Analysts also foresee growing protectionism in developed countries through various forms of trade barriers and anti-dumping claims set up to protect domestic industries in those countries especially as China's plywood exports are forecast to increase further.  

Linyi City panel production 

The timber processing industry in Linyi City, Shandong has developed in recent years and today it boasts some 4850 timber processing enterprises. Of these, 26 are large scale enterprises and 520 medium scale enterprises with 118 000 employees, mainly producing particleboard, medium density fiberboard, plywood and overlaid board.  

The total output of wood-based panels from these mils was 4.93 million cubic metres, making up 10.8% of the national total in 2003. The output value of the city's timber processing industry reached Yuan 6.6 billion and the industry is reported to have contributed some Yuan 190 million in local taxes and duties in 2004.  

The city has one of the largest panel wholesale markets, the East China Plywood Market, occupying an area of 300 mu (15 mu is equal to 1 hectare) with 1,500 booths and 5 000 employees.  

The main products available include 20 variety of panels using a reported 800 species! Those using this market are from 20 provinces and cities such as the three provinces of North East, Zhejiang, Guangdong, Jiangsu and Shanxi provinceand they have taken up booths in the market. Linyi City has become one of the largest plywood distributing centres with an annual board volume distribution of 800,000 cubic metres with a transaction value of Yuan 4.5 billion. 

Over the past ten years the city's timber industry has encouraged enlarged enterprises moving from initial family style workshops to larger scale enterprises and many enterprises have achieved professional production methods and modern management. 

* Over the years the proportion of medium and high grade products have increased and the production of MDF, overlaid panels and particleboard has developed rapidly. Many enterprises have managed to achieve production to ISO 14000 levels such that products can be sold into international market.  

In order to further improve the city's timber processing industry, experts suggest the creation of industry associations as soon as possible to the provision of management, coordination and information service training for enterprises. It is also suggested that 3-5 large-scale panel processing enterprises should be created to enhance the capacity for exporting and assistance should be provided to set up a supervisory and quality management systems to improve the quality of products. 

Sino-Russia resource development 

A symposium on Sino-Russia forest resource development and cooperation was held in Beijing recently. Mr. Liao Xiaoqi, vice minister of the Chinese Commerce Ministry, and Viktor Khristenko, vice minister of the Russian Industry and Energy Ministry, delivered speeches on the present situation of the forest sectors of the two countries and on prospects for further cooperation. 

Sun Yongfu, director of Department of European Affairs of MOFOCM and the Trade Representative of the embassy of Russia in China, introduced forest resource development and utilization, related regulations and rules, the current situation of Sino-Russian cooperation in forest industry and related policies.  

Provincial representatives of China and Russia also introduced provincial forest harvesting trends, developments in the forest industry and cooperation intentions.  

The symposium aimed at further strengthening Sino-Russia cooperation in forest resource development and utilization, and in helping Chinese enterprises keep up to date on Russian policies and regulations on forest resource development, Sino-Russia cooperation plans and key projects in forestry. 

New Fiberboard Line 

Having achieved inclusion in the "top 500 enterprises in China " Da Ya Wood Industry has now invested Yuan 500 million in a medium and high density fiberboard production plant with an annual output of 200,000 cubic metres. The mill is in Guangdong Province's Maoming City and is now in operation. The plant uses branch wood, medium and small diameter logs as the main raw material and is one of the so called 'integrative resource use projects' supported by national policy. The output from the mill is mainly marketing in Guangdong, Guangxi and Hainan markets. 

Guangzhou City Imported Timber Market 

 Shanghai Furen Wholesale Market 

 Hebei Shijiangzhuang Wholesale Market  

 Shandong De Zhou Timber market 

 Tian Jin City Huan Bo Hai timber Market 

 For information on China's forestry try: www.forestry.ac.cn

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