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Shock Still, Hope Still——an Outlook of Timber Market in the Second Half 2008
Article origin:DONGGUAN FURNITURE  |  By Xu Xiao     [TIME:2008/10/10]



2008 is bound to be a special year. Olympics have not disperse the haze shrouded the global economy, on the contrary, the stock market crashing, the oil prices surging, the inflation, the subprime lending crisis and other major economic issues have been plaguing the global economy, making international economic situation continues to deteriorate, and the pace of domestic economic development also began to slow down. Affected by this, the timber industry has entered a downturn. from the second half of 2007, under the influence of various of factors, such as export disruption, trade barriers, export tax rebates, raw materials prices, the appreciation of the renminbi, peer intensified competition, the implementation of the new labour law, the timber industry suffered unprecedented shocks, consumption of wood products become weak, raw materials sales begin shrinking. In such environment, the timber market got through the first half of 2008 in plain. Then, in the second half of 2008, what images the Wood Market will be? Looking at the timber market in the first half of this year and the economic situation at home and abroad, we can make the following forecasts.



Square-sawn timber market: cost keep rising, most categories are steady in price and sales



According to reports, in the first quarter of 2008, forest products’ production prices rose 13 percent, 6.3 percentage points higher than the fourth quarter of last year, including timber prices rose 10.8 percent, bamboo prices rose 13.4 percent. Xingye timber market many dealers pointed out that due to resource constraints and other rising costs, timber and bamboo price hikes in the quarter is not accident. Taking into account the weakness in the consumer market, the price of wood up a small space, but rising costs of raw materials will continue throughout the second half of this year.



Timber cost rise caused by main reasons of the following points. First, due to the rapid development of the wood processing industry, China became the fastest-largest consumer country of forest resources consumption, solid foundation created huge demand of timber and other resources for China. At present, China's annual timber consumption reached 337 million cubic meters, China's timber imports increasing with a 16 percent annual rate, only the imports of hardwood amounted to 8.4 million cubic meters, of which large-diameter timber and broad-leaved resources in particular scarcity. Wood and raw materials supply shortage will not change in short term. Therefore, the huge market demand will drive prices rising. Second, the timber-exporting countries’ implementation of strict control measures made the international market’s original wood supply short, wood costs will continue to rise. On one hand, with the enhancement of awareness of environmental protection and international political and diplomatic pressure, many countries reduced timber extraction, and take strong measures to combat illegal logging and smuggling, supply situation of the timber resources on the international market is not optimistic, this will promote price rising; on the other hand, to safeguard its national interests, timber exporting countries implemented rising tariffs, export restrictions on logs, processing re-export, and other measures, such as Russia, from April 1 this year, it upraised tariff rate of exports of logs from 20 percent to 25%, and planned to raise the tariff rate to 80% in 2009, these measures will directly increase timber purchasing price; third, intermediate, such as oil prices increased the cost of timber, has also led to rising costs, such as the recent oil prices broke through  140 U.S. dollars/barrel in international market, means that the import and export transportation costs also will rise, indirectly increased the cost of wood. So these elements decided the wood cost rising is a trend.



For the above reasons, in recent years, most of cost of timber will continue to rise, but because of the global real estate, furniture, decoration industry continued to slump, resulting in reduced demand for timber, raw materials market situation does not good, it is very hard for timber dealers to upraise prices under the precondition of the high costs continue to increase. This situation is likely to continue in the second half of this year, original wood market is obviously difficult to change in the second half of this year.



And so assume that all types of timber market prices will be stable in the second half of this year, even if there are changes, the rate of price fluctuations will not be too much. Northeast timber and Russian timber prices generally stable, particularly in the Russian the tariffs temporarily stable, the possibility of cost and price rise is smaller; sales of southwest timber and Myanmar timber is same as the first half of this year, influenced by supply and other factors, prices may have some ups and downs, but they are in a small range; Southeast Asia timber is not missing valuable timber species and the best-selling varieties, the fine texture, short supply, made the price rise continued to the second half of this year, as for the market price, it will depends on the downstream business needs, and if demand booming, prices may rise, if the demand weak, relevant timber prices will remain on the level of the first half of this year; North American timber prices decline stopped, cost and price are stable, it is because the U.S. dollar's depreciation rate slowed down,  plus the North American lumber suppliers offset the negative impact of the devaluation through price increases, direct exploitation of customers, so that the price of wood in North America is stable; Europe timber prices will remain relatively stable under the premise of the rising costs, even higher, considering factors such as attracting customers, the space to rise price will not large; African timber sales will continue smoothly, it is the most highlight in timber market, sand Billy, red roses, etc. various materials after experienced more than half a year "roller coaster" price rise and decline, related products are now gradually become a reasonable interval, and should be maintained in a more stable and reasonable level in the second half of this year.



Veneer and bamboo veneer: sales of hi-tech veneer dropped, others are stable



2008 environment of the timber industry slump makes veneer market began decline, many insiders reflect, on one hand, the cost is rising, price can not upgrade because of market weakness, intense competition, and other reasons, result in business profits fell year by year; on the other hand, sales declined 20 to 40 percent in the first half of the than in last years, the market is still unspeakable in the second half of this year. As for the development of industry, veneer industry is in the structure upgrading, industrial adjustment period, the time will not wait, veneer enterprises and dealers should take appropriate strategy to counter the situation changes.



Bamboo veneers become best-selling product again in recent years. Bamboo products become popular because the making skill is mature, cheap, beautiful and useful. The first half of this year was a hot season of bamboo products, bamboo enterprises realized production and sales booming in spring and summer. But the second half of this year is not hot season, the market may decline. As for price, as skill is mature, material is cheap, veneer and products will keep stable prices. 



As experienced the booming market in January and April, veneer market became stable from May, but the entire sales reached 60% to 70% of the same period last year. As the wood processing industry’s demand on veneer will not have substantial increase, the market in the second half of this year may same as the first half of this year. At the same time, furniture and other enterprises’ demand changing and other factors, determined that the sales of various products will further polarize, such as the hi-quality American maple, and other popular varieties are still in short supply. As for price, most veneer products will keep stable, if raw material cost rise, the relevant veneer products will also appreciate.



Hi-tech veneer market kept booming in the first half this year by the wind of Olympics. From March to June, when the Olympic Games was preparing, hotels and other companies in Beijing also busied in decoration for the purpose of to welcome world guests with brand new appearance. So all kinds hi-tech veneer enterprises, particularly those in Beijing had sales. And after the Olympic Games, the market will return, sales may decline, but as hi-tech veneer is increasingly popular, the overall sales will keep on ideal level. As skill is mature, hi-tech veneer price will not float obviously.



Man-made board market: sales bad before good, price floating with market change flexibly



In the first half of this year, man-made board market was similar as the same period last year, but overall sales declined about 30%. According to wood industry’s current market, we can forecast that in the second half this year, man-made board sales will maintain on the overall level in the first half, but sales will go opposite, namely bad before good. Because in July and August, timber market is low, raw material sales are weak, but from September to December, timber processing enterprises’ demand will resume, and will drive up man-made board sales.  



In the second half of this year, demand for plywood is difficult to attain the level of previous years, but sales of all types of plywood will remain open. Related products will be priced with the flexible adjustment of relationship between supply and demand. Most of the MDF will remain flat posture, and best-selling brands or high quality of environmental protection MDF are still favored by consumer, sales should be more optimistic. Decorative panels, fire boards and other man-made wood-based panel prices very stable, almost all product prices will remain stable, while market same as plywood, is expected to hardly have bright spot in furniture, decoration industry weak summer, in September, sales will rebound.




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