Cooling the plywood industry  

Many in China are now asking whether the plywood industry in China is overheating. In recent years China's plywood industry has expanded at a phenomenal rate, matching the rapid development of the national economy  

The total output of China's plywood sector was reportedly over 20 million cubic metres in 2003 putting the country at the top of the league of plywood producers.  

The development of China's plywood has seen four stages.  

Between 1953 and 1980 production increased to 329,000 cubic metres from a reported 35,000 cubic metres and this was a growth of a modest 10, 900 cubic metres annually.  

Between 1980 and 1990 plywood production increased to 759,000 cubic metres over the 10 years, an annual average growth of 43 000 cubic metres.  

Between 1990 and 1998 plywood production increased to 4.465 million cubic metres from 759,000 cubic metres for 8 years, up by 4.88 times and an annual average growth of 463 300 cubic metres. 

In this stage China produced 33.802 million cubic metres of plywood (not including blockboard) and exported 115.803 million cubic metres of plywood.  

Between 1998 and 2003, a five year period, plywood production increased to 20.124 million cubic metres from 4.465 million cubic metres for 5 years, an annual average growth of 3.312 million cubic metres.

Local industry experts say that the main reason for the sharp increase in China's production is that the four provinces (Hebei, Shandong, Jiangsu and Zhejiang) in the North China and East China have pioneered the use of ast-growing Poplar for core and imported logs for the face and back veneer.  

Plywood production in 2003 in the above-mentioned four provinces, Hebei, Shandong, Jiangsu and Zhejiang was 5.579 million cubic metres, 4.455 million cubic metres, 3.679 million cubic metres and 2.866 million cubic metres respectively, totaling 16.578 million cubic metres and accounting for 78.9% of the national total.  

It has been reported that some regions have blindly rushed into developing plywood production capacity. One area apparently wants to increase plywood production in 2004 to 14 million cubic metres (3 million cubic metres in 2003) and to also produce 2 million cubic metres of fiberboard and 2 million cubic metres of particleboard.  

Analysts say that this pace of growth could create severe raw material supply problems and could overload the timber sector infrastructure.  

China is a forest-poor country and its forest stocking volume is only 2.9% of the world's total and its per capita forest area and stocking volume is only one-fifth and one-eighth of the world's average level which say local analysts, cannot meet the needs of the people.  

With the implementation of the National Forest Protection Program, domestic production of large diameter logs suitable for producing plywood, fell sharply and the plywood sector became dependant on imported logs, especially tropical timbers for face and back veneer production. 

As many tropical log exporting countries are taking measures to limit log harvests and log exports large diameter log resources it has become more difficult for Chinese plymills to get supplies and to keep import costs under control. It is because of these two interlinked issues that local analysts think that it's time to slow the pace of growth of China's plywood industry.  

Certainly the dependence upon large diameter logs will change and the processing of smaller logs for plywood and the expansion of the non-veneer panel industries such as MDF and particleboard and OSB, which can be supplied from plantations, will grow.  

Interior decoration 

Song Yi, deputy director of China Development Strategy Institute and secretary-general of the Academic Commission of the State Financial Committee Research Center under the State Council, said recently that the total investment in interior decoration projects will likely exceed Yuan 600 billion by 2005. Of this total, investment in interior decoration materials and products will also exceed Yuan 400 billion.  

According to the estimate from Zhu Xibin, Director of the Home Improvement Commission of Beijing Construction Decoration Association, Beijing residents spend around Yuan 40 billion in home improvements per year.  

In Beijing the area of new construction was in the region of 120 million square metres in 2003 and around 29 million square metres of this has benefited from interior decoration so far.  

The existing, old construction area in Beijing is about 600 million square metres of which it is estimated that only 5% have had interior renovation for the second time from which it is concluded that the market for interior improvement products offers a tremendous opportunity.  

According to the estimate from Zhu Xibin, every house interior improvement will cost an average of Yuan 80 000.  

Furniture for the Olympics  

According to Zhou Weimin, Director of Beijing Furniture Association, in order to host the Beijing 2008 Olympics buildings for the Olympic venues will need furniture which is valued at around 8% of the total construction costs (the price for construction is calculated at Yuan 3 000 per cubic metre. This translates to a demand for furniture valued at some Yuan 98 billion by 2008. 

At present Beijing has more than 1100 local enterprises only with a total output value of Yuan 8.7 billion thus there is a massive gap between local capacity and projected demand, especially for office furniture. Therefore the market for furniture for the Beijing Olympics offers great opportunities.  

Wood floor prices  

The wooden flooring markets in East China have been enjoying strong demand and firm prices since the beginning of this year. The price for wood floors grew is apparently up Yuan 5 per square meter in Suzhou, Wuxi and Changzhou City 

The price for wooden floors has increased by Yuan 40 compared with the same period last year in the whole Jiangsu Province and continues to firm. The price for wooden flooring in the Province adjacent to Jiangsu Province also continues to firm.  

The price for impregnated paper laminated floors is up by around 5% so far this year while the price for solid flooring has grown by around 10%. Currently East China has become an important base of producing and marketing wooden flooring in China.

 

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