China Wood Products Prices
1-15th June 2004

Dollar Exchange Rates of 11th June 2004
China Yuan 8.28
Report from China

Domestic Timber Production Increase

It has been reported that China's timber production increased in 2003 after 6 consecutive years of decline, due to the implementation of Natural Forest Protection Program. China's national timber production reached 47.6 million cubic metres in 2003, a year on year increase of 7.3%.  

Of the total, production in the tropical regions of China totalled 2.6951 million cubic metres, or 5.7% of national production. Industrial log production was 43.2 million cubic metres; a year on year increase of 4.7% while wood for non-industrial purposes (mainly fuelwood) accounted for the balance. Rather surprisingly, the 2003 production of non-industrial round wood reportedly jumped some 42% compared to 2002.  

China's national sawnwood production also grew, reaching 11.3 million cubic metres in 2003, a year on year increase of 32%. Of the total, tropical sawnwood production was 726,000 cubic metres, making just over 6% of the national total.  

In recent discussions in China with forestry officials and trade analysts it emerged that consideration is being given to selective easing of the logging restrictions to increase further the domestic log harvest from the natural forest. Several officials have said that, over the almost 10 years of the Natural Forest Protection Program, vegetative recovery in severely affected areas has been better than expected and that a review of logging restrictions would be justified. Even a modest 10% increase in harvests from the natural forest could have a major impact on the market and on imports of logs.  

Wood-Based Panel Production  

According to the latest statistics from the State Forestry Administration, China's wood-based panel production in 2003 reached 45.5 million cubic metres, a year on year increase of 55.4% and over double the 2001 wood-based panel production.  At this level China is ranked first in the world in terms of panel production.  

Of this total, plywood production was 21 million cubic metres, a year on year increase of 85%; fiberboard production came to 11.3 million cubic metres, a year on year increase of 47% (of this total, MDF production amounted to 10.5 cubic metres, a year on year increase of 50.9%).  Particleboard production was 5.5 million cubic metres, a year on year increase of 48% while production of other wood-based panels totalled some 7.8 million cubic metres, a year on year increase of 18%. Of the category Others, block board production came to 6.2 million cubic metres, a year on year increase of 12% 

Local analysts think that rapid development of the domestic construction industry, the real- estate sector, growth in interior decoration and home improvement and expansion of furniture manufacturing industry contributed to growth in wood-based panel production.  

The statistics show that China's wood-based panel production prominently features plywood at the moment (46% of the national total wood-based production). Second is fiberboard, making up 25% (of which MDF makes up 23%). Particleboard only accounts for about 12% of domestic panel production.

Currently, China's wood-based panel production is still centered on the forest-poor provinces in the east such as Hebei, Shandong, Jiangsu and Zhejiang. The combined wood-based panel production of the main producing provinces totalled 31.2 million cubic metres in 2003, accounting for around 68% of the national total.  

Wood-based panel production in Hebei alone reached 11 million cubic metres, accounting for 24% of the national total. Wood-based panel production of Shandong was 8.8 million cubic metres in 2003, accounting for 19% of the national total. In Jiangsu province the equivalent numbers were 6.3 million cubic metres of production or 14% of the national total. Zhejiang province produced 4.5 million cubic metres, which accounted for about 10% of the national total.  

Prices for Imported Timber Continue Upwards

Local analysts predicted that prices for imported timber would be stable in the first quarter of 2004 after the efforts of the government to exert some regulation on the timber import sector however, prices for many imported timber items have increased. In the case of African Okoume, SE Asian Luan logs and New Zealand Radiate Pine, the price increases have been dramatic.  

Compared to prices of about a year ago the average increase is between 20-30%. Prices for Radiate Pine in the local market are reportedly up by as much as 70%. In addition, prices for tropical logs and sawnwood from Africa have continued upwards. Prices for Padauk, Teak, Sapelli and Wenge are up about 5%.  

Prices for the first grade Sapelli have increased to Yuan 7000 per cubic metre from Yuan 6400 per cubic metre in the first quarter of 2004. The price for Maple from North America was Yuan 9500 per cubic metre and had increased to Yuan 11500 per cubic metre in the first quarter and further to Yuan 12000 per cubic metre at the moment.  

Price for imported wood-based panels also continued to climb. The price per panel, wholesale, increased by Yuan 2-5 every month in major timber market of Beijing, Tianjin, Shandong and Zhejiang Provinces in the first quarter. Prices for thick plywood 12-18mm were up as much as 20% but, overall the price increases for wood-based panel was smaller than that for logs and sawnwood.

According to local analysts the main reasons the continuous price increases were:  

·         Strong demand as the seasonal construction sector got underway  

·         Increased international and domestic freight and transport costs. 

·         High demand for raw materials due to the rapid development of domestic wood-based panel (especially plywood) production.  

·         Strong consumer confidence and purchasing along with low interest rates  

·         Rapid and massive inflows of capital into wood based production.  

Tapping Vast Russian Forest Resources 

It has been reported that, from this year on, Heilongjiang's forest and industrial system will strengthen cooperation with Russia to develop and use Russian forest resources. Apparently the Heilongjiang provincial government plans to invest in logging (300 000 cubic metres per year) and in timber, processing (80 000 cubic metres of sawnwood per year) The state investment will reportedly yield some Yuan 150 million and will employ some 1500 Chinese and Russian workers.

By 2008 the plan is that the new enterprise will cut about 2 million cubic metres of logs in Russia. The provincial government reportedly plans 4 projects aimed at developing and using Russian forest resources: 

The Province will cooperate with the government of Krasnoyarsk district to build of 190 kilometres railway from Kabula to Kejinsk.  

The Province will cut apparently harvest about 400,000 cubic metres of timber in the Jewish Autonomous State (Yevreyskaya AO)

in addition to another 200,000 cubic metres of timber in the Habamuxin forest farm and a further 200,000 cubic metres of timber in Chita State.

 This is not the first cross-border cooperation. Heilongjiang's forest industry has small-scale interests by 6 enterprises from Hebei, Suiyang, Qinghe, Hailin, Shanhetun and Dongjingcheng of Heilongjiang Province.  

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  

Source:ITTO