Intra Asian hardwood trade set for growth

Global market trends are seeing the Asian market becoming an increasingly self-reliant timber producer and consumer, writes Michael Buckley of World Hardwoods in Singapore

America is back on track. And the clearest evidence that  the world's number one economy firmly in recovery mode is the pick up in its once beleaguered construction industry  - and that's good news for the timber sector. Americans are back building and buying property and demand for building materials, including lumber, panels and joinery has accelerated through 2013.

At the same time, the world's number two economy is not about to be overshadowed in terms of growth. China continued to expand throughout the western downturn and its confidence in its future remains strong. In fact for many Asian businesses it is becoming the economy that matters most.

 The People’s Daily Online recently published a forecast underlining China’s optimism and the continuing rapid development of its economy.

‘The demand for new property in China is set to soar, ' it stated ' Its urban population is likely to increase by nearly 200 million this decade, according to the UN, and its towns and cities to need around 10 million new residential properties each year over the coming decade.’

This rapid development will of course have key implications for the global timber sector and more specifically the international hardwood market.

Not only will China continue to import hardwood for re-export as finished products, but more and more to satisfy a growing domestic market.

So increasingly it looks like the hardwood trade will be shaped by twin forces of resurgent US demand and China's continued expansion, especially as European economic growth continues to struggle. 

 

Vietnamese furniture in US Black walnut

In fact this is already apparent in changing sourcing patterns.  The USA remains the biggest international hardwood supplier, providing 25% of the world’s traded total from less than 10% of its hardwood forests.  However while the volume of standing timber in the latter has doubled in 50 years, the downturn has seen US sawn wood production capacity drop from 12 million bd ft in 2005 to less than 7 million bd ft.  The combination of this and renewed growth in US demand has seen Chinese buyers - many of whom seem unused to a rising market - scramble to secure supplies elsewhere. Consequently China is now the leading destination for many other hardwood producers around the world.

Among them in Southeast Asia, is Vietnam, which is targeting ever-higher exports of wood products, projecting a further 4% rise for 2013, despite dependence on imported supplies.

Malaysia is in a relatively stronger position, with increasing plantations and certified natural forests in the Peninsular, as well as a healthy plywood industry (see MTCS/PEFC certified timber left).

 Indonesia’s hardwood product exporting performance may well hinge  on acceptance by EU buyers of its embryonic legality assurance export licensing system SVLK (it's FLEGT Voluntary Partnership Agreement has been signed but not yet implemented). Thailand meanwhile remains a smaller player, specialising in exports to Japan. But Myanmar and Cambodia may now emerge as more important suppliers.

So while many Aslan hardwood companies will also continue to look to the west for sales recovery, for both the immediate future and their long-term growth, it is likely to be intra-Asian trade that takes centre stage. Demonstrating the shift, the huge annual Domotex Shanghai flooring exhibition five years ago was an export show.  This year it felt much more like producers from the region and around the world were focused on the local market.”


Domotex 2013 - much more a show for selling into the Chinese market