The development status of wood industry

At present, the global economic environment is being hit by the epidemic, climate change and events in Ukraine. The prices of energy-based commodities have risen sharply, and the resulting negative impact has been transmitted to all walks of life. According to the latest WTO trade data, the global merchandise trade growth rate this year will be lowered to 3.0% from the previous forecast of 4.7%.

Against the background of the continuous spread of variants of the epidemic, geopolitical conflicts, global inflation pressure and international supply chain pressure, not only is the prospect of global economic recovery facing certain uncertainties, but the timber industry is also facing rising prices, falling demand and shrinking supply.

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Price increased

The increase in lumber prices in the past two years has to mention the strong demand for lumber in the two major markets of North America and Europe last year. On the one hand, due to heavy rains and floods, the transportation was blocked, the booming real estate development and the new 18% tariff on Canadian softwood lumber issued by the United States led to buyers increasing their stockpiles. end pressure.

A number of factors have driven up lumber prices. Affected by the strong demand in the US lumber market, the European lumber market also continues to be hot.

Unlike last year's disconnect between supply and demand, this year's rise in lumber prices in North America and Europe is related to transportation and logistics constraints. Continuing the torrential rains at the end of last year disrupted the Canadian transportation network, superimposed on the continuous strikes of dock workers, railway workers, freight drivers, etc., it has caused further challenges to the global timber supply chain and transportation, and triggered an increase in timber prices.

However, for the domestic market, the price increase in the timber industry does not mean an increase in the profits of timber merchants, but an increase in costs.

Demand falls

With more and more data pointing to a global economic slowdown or recession, it remains to be seen whether the timber industry is in a downturn, but it seems likely that demand will decline this year.

For the global timber trade, the reason for the drop in demand can be attributed to high inflation. Compared with last year, more households in Europe and the United States have invested in house decoration and other aspects, resulting in the disconnection of demand and supply of wood and wood products.

 

Supply cuts

The Russian-Ukrainian incident will tighten the global timber market in the short and long term, especially in Europe, but also in the United States.

Of these, softwood lumber accounts for almost half of the value of Belarus, Russia and Ukraine's exports. Trade disruptions have had a dramatic impact on global markets, especially as these three countries accounted for nearly 25% of global timber trade last year.

One of the direct effects of the outbreak of the Russia-Ukraine incident and the economic restrictions imposed by Western countries on Russia and Belarus is that the exports of forest products from Russia, Belarus and Ukraine to the global market have decreased significantly.

Major overseas markets (US, Japan and MENA) differ in terms of product demand, price acceptance, exchange rate volatility, political stability and consumption outlook. These different market conditions may lead European exporters to limit their overseas investments to a small subset of markets that match their product portfolio and risk tolerance.

Wood is a renewable resource, and the future policy must be to strictly control indiscriminate logging and develop forestry resources in a scientific and standardized manner, rather than a one-size-fits-all ban. Wood is arguably the most environmentally friendly material. For future environmental protection, the wood industry will also be vigorously developed. In the future, more and more buildings will use wood to replace reinforced concrete. Therefore, the prospects for the timber industry are still very promising.

 

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Post time: Sep-12-2022