China Wood Products Prices

16-31th January 2005

Booming Timber Market in NW  

Analysts are reporting that China's timber consumption in the western region has been falling behind that in the eastern region in terms of volume, species mix, price levels, stock levels and distribution infrastructure. 

The timber market in the northwest of China, which was weak in the past, is now much stronger and has been growing well particularly in the Gansu Corridor and Yinchuan, Lanzhou and Urumchi and the surrounding regions.  

Previously timber supply in these regions was mainly from three sources: timber from the forested regions of the Qinling Mountains and from sthe state-owned forest  of the Bailongjiang River and Xiaolong Mountains regions as well as from Sichuan and Gansu Province. Timber also came from the northeast state-owned forests and imports especially those from Russia and the Soviet Commonwealth.  

The importance of the domestic forest resource base has declined since implementation of Natural Forest Protection Program (NFPP), therefore, timber from Russia, Turkmenistan and Uzbekistan has become more important for the northwestern region.  

Also, imports of European timber through Xinjiang and timber from Southeast Asia, Australia, Africa and South America have grown and are reaching the northwestern region of China.  

In terms of the structure of demand, the demand for softwood logs for infrastructure construction has fallen off sharply while timber for wood-based panels, furniture, house building and interior improvement and decoration as well as timber for sports arena construction has increased dramatically.

The species in demand on the southeast coastal areas of China are are also now seen in northwestern region. The timbers used include Scots pine, Manchurian ash, White pine from Russia, Beech, Maple, Mahogany, Sapelli, Merbau, Kapur, Merawan and Teak from Myanmar.  Some tropical timbers from South America are also used but have not yet captured a significant share of the market.  

It is noteworthy that timber prices in the northwest region of China are similar to those in the more developed coastal areas. For example, the price for African Wenge is from Yuan 4000 to Yuan 4200 per cubic metre. The price for ironwood is around Yuan 1500. The price for large diametre Southeast Asia Merbau is about Yuan 2400 per cubic metre. The price for Russian Manchurian ash boards is around Yuan 4000 per cubic metre while the price for high quality sawn Padauk tops Yuan 10 000 per cubic metre.  

Analysts note that the timber supply and demand in the whole northwestern region, whether for high grade, middle grade, domestic or imported timber the trade is very active and was particularly robust from the fourth quarter of 2004. 

It is expected that timber demand in northwest region will continue to grow strongly through the spring of 2005. 

Border Trade in Southwest Region  

The timber supply pattern in the southwest of China was also affected by implementation of the Natural Forest Protection Program (NFPP). Sichuan, Yunnan, Guizhou and Guangxi are major timber producing regions but even before the NFPP their timber production could not meet local demand. Since the implementation of the NFPP logging ban especially in the headwaters of major rivers timber production fell sharply. In recent years the timber supply in these regions was mainly from three sources: that legally produced locally, imported timber, especially from Russia and timber from border trade. 

The border trade in Yuannan and Guangxi Province is very active because of the proximity of Myanmar, Vietnam, Laos, Cambodia and Thailand. Large quantities of timber have been sourced to fill the gap in domestic supply. 

The trade in wood products on the borders of the southwest regions has grown rapidly with large volumes of trade and increasing prices especially since the third quarter of 2004. Recently price increases for some high grade timber such as Padauk, Teak, Rosewood and Black Sanders has been strong and is increasing. Local analysts say that as soon as wood arrives it is sold. 

The recent price for large diametre high quality Padauk was Yuan 6500 per cubic metre and the price for high quality Teak was from Yuan 5000 to Yuan 6000. The pace of price increases for large diametre Alder Birchand Walnut was from Yuan 100 from Yuan 250 per cubic metre and these timber sell well. The price for the more precious Rosewood was very high but it still sells well.  

Local experts identify the main reasons for the strength of the timber trade on the border of southwest region as: 

timber demand is tremendous because of the rapid development of the domestic furniture, interior improvement and decoration and construction sectors since the third quarter of 2004;  

timber production, transportation bottlenecks have been addressed;

timber quality is good and the price is reasonable;  

timber transported is mainly by road and recently the weather has not hampered road transport.  

According to local experts, the pace of growth of the border trade in the southwest region will continue into the spring of 2005.  

Guangxi timber industry  

The Guangxi Zhuang Autonomous Region is located in the southwest of China and has a rich forest resource base but the wood products industry was slow to develop as the economy of the region was weak for a long time. However, with a national economic development priority focused on the west of China and with the implementation of the western development strategy the timber sector has grown rapidly. According to recent statistics, the total output value of the wood industry was Yuan 20.4 billion in 2003 and it is forecast to be in the region of Yuan 23 billion by the end of 2004. 

In terms of wood-based panels, Guangxi had 165 enterprises in 2003 with an annual production capacity of 2.5 million cubic metres. 

The actual output of wood-based panel was 1.43 million cubic metres (810 000 cubic metres of fibreboard, 270 000 cubic metres of particleboard, 260 000 cubic metres of plywood and 90 000 cubic metres of block board). 

The wood-based panel downstream processing capacity was said to be 5 million square metres of impregnated paper laminated floors with an annual actual output of 1.34 million square metres;

5 million square metres of decorative overlaid board with an actual output of 5.71 million square metres and 20 million square metres of impregnated paper laminated floors.  

In 2003 the total output value of Guangxi's wood-based panel sector was Yuan 1.8 billion and both the production capacity and output exceeded expected targets set in the Tenth Five-Year Plan (2001-2005). 

It is estimated that Guangxi will have 170 enterprises of wood-based panel with an annual production capacity of over 2.8 million cubic metres and its output will top 2 million cubic metres by the end of 2004, ranking fifth in China and first in the western region. The sales value of Guangxi's wood-based panel could be around Yuan 3 billion.  

In terms of paper making from wood and bamboo pulp, Guangxi had 14 enterprises with an annual production capacity of 600 000 tons in 2003.  The output of commercial wood and bamboo pulp and paper products was 428 000 tons with industrial output value of over Yuan 1.6 billion in 2003.  

It is estimated that Guangxi's production capacity of pulp and paper could reach 650 000 tons by the end of 2004. The output of commercial pulp and paper products will be a little higher than the previous years.  

In terms of non wood forest products, Guangxi had 110 enterprises producing rosin with an annual production capacity of 600 000 tons. Guangxi can produce 370 000 tons of pine gum, 289 000 tons of rosin and 38 000 tons of turpentine annually.  

The output of downstream processing products from rosin and turpentine was 50 000 tons with a sales value of Yuan 1.6 billon. It is estimated that the output of Guangxi's rosin in 2004 will remain at a similar level with that in 2003. The output of Guangxi's tanning extracts was 5,756 tons in 2003 and it is estimated to be around 6,000 tons by the end of 2004.  

According to "The Eleventh Five-Year Forestry Industry Plan", the total output value of Guangxi's forestry industry will be Yuan 50 billion by 2010. Of the total, the primary industry will be Yuan 19.5 billion, the secondary industry will be Yuan 28 billion and the tertiary industry will be Yuan 2.5 billion. 

In terms of major forest products, by 2010 the output of wood-based panel will be 6 million cubic metres with an output value of Yuan 7 billion. The output of the wood and bamboo pulp and paper products will be 2.2 million tons with an output value of Yuan 9 billion. The output value of furniture and bamboo and rattan products will be Yuan 9 billion. The output of rosin products will be 540 000 tons with an output value of Yuan 2.6 billion.  

The development goal for the commercial forest sector by 2010 forecasts that raw material supply will require some 15.2 million mu of land (14 million mu of raw materials forest bases for forest, pulp and paper integration project in the coastal areas, 1.2 million mu of bamboo pulp forest bases). It is expected that Forestry sector will become one of the leading sectors in Guangxi's economic development by 2010.  

US Anti-dumping duties 

According to recent announcement from China's Bureau of Fair Trade, Ministry of Commerce, the US Department of Commerce has amended its final determination of the anti-dumping duty investigation on wooden bedroom furniture from China. Overall the average duty rate on China's 115 enterprises (makeing up 60% of imports to the US) was reduced to 6.65% from the previous level of  8.64%, down some 50% compared with the average duty rate of almost 13% set in June 2004.  

Plywood Anti-dumping case  

It has been reported that EU through regulation 1942/2004 imposed a definitive anti-dumping duty on imports of plywood (Okoume plywood tax code 44121310) from China to Europe. The regulation came into force on November 13, 2004 with a five-year validity. According to the regulation, four of China's enterprises got "market economy" status and anti-dumping duties ranged from 6.5% to 23.5%. The duty rate for other enterprises rose to 66.7% from the preliminary penalty level 48.5%.  

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  

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