China Wood Products Prices
1-15th Oct. 2004

Forest industry leading the way  

It has been estimated that, since the foundation of modern China, forests have provide society with more than 5 billion cubic metres of timber, 10.6 billion bamboo stems, 14.04 million tons of rosin and 233 million cubic metres of wood-based panel.  

The annual rate of growth of the value of output of the national forestry sector has been over 10% because of the rapid development of the wood-based panel sector, bamboo products processing, forest products chemical processing, forest tourism, flower cultivation and forest cash crops. The total value of the output of the national forestry sector was Yuan 586 billion in 2003, a year on year increase of 26% and analysts think this rate of growth will be maintained for some time. 

The production of forest products in China has been increasing in recent years and production of many forest products is ranked high in the world. In 2003 the production of the wood-based panel, furniture and rosin products were 45.6 million cubic metres, 165.46 million pieces and 443,300 tons respectively and all ranked high globally. The production of forest cash crops and flowers also ranked high globally.  

Foreign trade in forest products was US$27.7 billion in 2003. Of this the export value of forest products was US$12.2 billion, a year on year increase of 28%. Among the  export products, plywood exports continued to increase to over 2 million cubic metres, a year on year increase of 14%.  

The exports of sawnwood and veneer increased by 17% and 52% respectively compared with 2003.

The value of furniture exports in 2003 accounted for around 10% (2.5% in 1994) of the world's total.  

The export value of wooden products was US$2.3 billion, a year on year increase of 23%. Exports of rosin products in 2003 totalled 301,200 tons and accounted for half of the world's total trade. 

Exports of edible fruits and nuts reached 1.63 million tons in 2003, a year on year increase of 36%. In addition, exports of non-wood forest products such as fungi, bamboo shoots and wild vegetables also increased dramatically.  

MDF and HDF developing 

The demand for medium and high density fibreboard has been increasing sharply because of rapid development of the domestic furniture, sound equipment, interior renovation, packaging and automobile sectors.  

According to estimates, the furniture industry consumed 10 million cubic metres of medium density fibreboard. Also the impregnated paper and laminated flooring sectors also consumed 1.44 million cubic metres of MDF/HDF in 2003. It is estimated that the domestic consumption of medium and high density fibreboard could be as much as 12-13 million cubic metres at present. 

Top 10 Provinces with MDF/HDF Production  

Shandong       2.16

Jiangsu          0.99

Guangdong       0.88

Zhejiang  0.87

Fujian            0.82

Hebei            0.73

Guangxi  0.70

Anhui            0.56

Jiangxi           0.45

Yunnan          0.38  

Local analysts identify several reasons for the rapid growth in consumption of  medium and high density fibreboard. Besides huge market potential and the reportedly high profits in the industry it is the favorable policies that are also a driving force.  

For example, in order to encourage protection of high quality forest resources and to encourage development of efficient utilization, the government introduced a favorable value-added tax policy on manufactured products using residues, low grade and small sized wood.  This policy was introduced in 2001 and stipulates that products made of residues and low-grade material can enjoy the favorable tax policy up to December 31, 2005.  

Moreover, the government decision to speed up forestry development, issued by the State Council, includes some policies to encourage afforestation. These policies are to increase the pace of development of the forest industry based on fast growing and high yielding timber plantations. This policy also includes elements to encourage private planting by individuals who can now benefit from ownership of the resource. These policies have contributed to the fast pace of development of China's medium and high density fibreboard industry. 

It is observed that some major listed companies and large scale private enterprises have invested in advanced equipment in order to take advantage of the profitable market. 

For example, Da Ya Wood Group has reportedly invested some Yuan 3 billion to develop medium and high density fibreboard production capacity and is a world first class producer with up an to date research and development facility. It is forecast that the group's production of medium and high density fibreboard will reach 1.5 million cubic metres in 2004. 

Zhejiang Luyuan Wood Co. Ltd ranks second in terms of size with an annual production of 800,000 cubic metres. Guangxi Sanwei Forest Products Industry Co. Ltd ranks has an annual production of 650,000 cubic metreswhile Zhejiang Lishui European Science Wood-based Panel Co. Ltd has an estimated annual production of some 600,000 cubic metres. 

In Guangdong, the Guangdong Weihua Group ranks fifth in terms of production capacity in China with an annual production of 480,000 cubic metres. This group plans to plant 1.2 million mu of plantation so as to be able to eventually increase capacity to 1.2 million cubic metres in the future. 

These mills are not only large but they have entered the market with high quality products and competition in the market is increasing. As analysts say, China's medium and high density fibreboard industry has entered a mature and rapid development period. However market competition will continue to be very fierce in terms of raw materials sourcing and product quality. Local analysts point out that the many enterprises with no secure raw material sources and poor quality products will eventually disappear. 

Kitchen Cabinet sector potential 

According to a recent market research investigation conducted by a unit of the State Council, there is a huge difference between China and the developed countries in respect of the possession defined kitchen areas and bathroom/toilets. 

The report says that while possession of a dedicated kitchen and bathroom can be taken as universal in the developed countries in China the ownership of a kitchen and bathroom is not at all common. The report says the ownership rate is highest in the eastern coastal regions but is still only around 1.5% of households.  

In the middle and western regions of China the possession of a bathroom and kitchen is only enjoyed by some 0.8% of households. The results of this investigation highlights that the market potential for kitchen and bathroom items is huge. 

Households in Shanghai, it is reported, are very well developed in terms of the dedicated kitchen. There are some 200 well know kitchens furniture and appliance makers with a annual turnover of Yuan 1 billion and Shanghai has become one of the important kitchen production bases in China. 

The main issue in the development of China's kitchen sector has been the rapid growth of small scale workshop type enterprises which operate without clearly controlled production quality control which means the customer has no guarantee in terms of product quality and safety. Local analysts say that production and safety standards need to be developed and enforced to encourage quality production in domestic plants.  

Export of Wooden Doors 

Local analysts say that, in step with the developments in the housing sector, the demand for wooden doors will continue to increase over the next ten years.  

According to statistics from China's Customs, China exported 124,300 tons (customs data are recorded in tons)of wooden doors valued at US$168 million and these exports went to Europe, the USA, Japan, Korea and Singapore. China makes high quality wooden doors, especially solid wooden doors, using a high quality timbers such as Red Oak, Sapelli and Cherry.

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