Current Situation of the Development & Prospect of Wood Industry in China

By CnAgri2018-08-16 11:43:10 Print On July 18, 2018, the international green building materials (Shanghai) expo was held and
Mr. Liu Nengwen, President of China Timber and Wood Products Circulation Association, reported on the current situation of the development and prospect of wood industry in China. The following is part of the report.
I. Wood consumption in China
Over the past 10 years, China's total wood consumption increased from 380 million cubic meters in 2007 to 600 million cubic meters in 2017, with an average annual growth rate of 4.67%. In 2017, the building materials of the total wood consumption was 186 million cubic meters, accounting for about 31% of the national wood consumption; 174 million cubic meters for paper making, accounting for 29% of total consumption; 114 million cubic meters for export, accounting for 19% of total consumption; 72 million cubic meters for domestic furniture, accounting for 12% of total consumption.
II. Overview of commodity wood market
In 2017, the trade volume of China's commodity wood was 185 million cubic meters, up 8.17% year-on-year, of which domestic wood was 76.82 million cubic meters, down 1.2%  year-on-year; the wood imports recorded 108 million cubic meters, up 15.6% year-on-year.
A. The proportion of imported wood is rising
The dependence of imported wood increased from 38% in 2007 to 58.5% in 2017, an increase of 20%. Under the adjustments of national policies, China totally banned commercial forest harvesting especially in 2017, the imported wood market grew rapidly.
B. Centralized imported wood source countries
According to customs data, the wood from the four countries (Russia, the United States, New Zealand and Canada) accounted for 64.3% of the total wood imports of China, of which Russia's wood accounted for 30.8% of the total wood imports of China.
In the first quarter of 2018, the wood imports from Canada saw a significant decline, down 620,000 cubic meters year-on-year, a decrease of 24.7%; the unit-price increased 18.7%, the proportion dropped 3% from last year. 
C. Great changes in the structure of imported wood
In the past 10 years, China's wood imports had doubled from 50.256 million cubic meters to 108 million cubic meters. However, with the increase of labor and transportation costs and the changes of consumption structure, the trade of sawn timber increased year by year. The import proportion of sawn timber accounted for 19.87% in 2007, up 49.94% in 2017; the import proportion of logs accounted for 80.13% in 2007, down 50.06% in 2017.
In 2017, the imports of softwood was 74.053 million cubic meters, an increase of 15.85% year-on-year; the imports of broad-leaved wood was 34.818 million cubic meters, an increase of 17.84% year-on-year. The import ratio of softwood and broad-leaved wood was 68.02% to 31.98%.
D. Imported wood prices remained stable
Customs data shows that in the past five years the softwood prices were relatively stable,   the broad-leaved wood prices soared affected by the domestic market in 2014.
III. Market prospect of wood industry
A. Challenges
a. Prohibition of commercial logging of natural forests
At present, China has totally banned commercial harvesting of natural forests and the supply of domestic commodity wood has decreased. Imported wood has become the main source of China's wood production and its external dependence is more than 60%, the costs of wood acquisition has increased.
b. The prevention and control of pollution has become three major tough battles in China
The problem of insufficient investment in environmental protection and safety production of wood enterprises is outstanding, especially in wood-based panel industry which is listed in high pollution and high environmental risk industry by Ministry of Environmental Protection, and the industry will be under more pressure in the future.
c. Great pressure on the transformation and upgrading of wood industry
Wood processing enterprises generally have problems such as insufficient R & D and investment, low product technology content. Wood industry is a labor-intensive industry, especially plywood and blockboard industry. With the increase of labor costs and raw material prices, the market competition is weak.
B. Expectation
1 The consumption of wood will continue to grow
As a kind of low carbon, green and unique renewable household product, wood products are becoming more and more popular among consumers. At present, China's per capita annual timber consumption is less than 0.4 cubic meters, and timber consumption is expected to exceed 800 million cubic meters in the next few years.  
2 Further upgrading of industrial concentration ratio
The allocation of market resources is further concentrated on large enterprises and big brands. Enterprises’ innovation and transformation sped up and the quality, brand, service and consciousness enhanced.
3 Full house customization becomes the new trend in the industry
The upgrading of consumption structure has promoted the rapid development of smart home, integrated customization and one-stop services. It is predicted that the customized home will maintain a growth rate of more than 20%. The market scale is expected to reach RMB 160.6 billion in 2020.
4 "One Belt One Road" helps more enterprises "go out"
At present, Chinese enterprises’ total amount of overseas investment in timber and wood products has reached USD 1.856 billion. 117 enterprises have invested in forestry in Russia.  76% of China's investment in Russia are private enterprises, 80% are initial wood processing enterprises, 60% adopt the joint-venture cooperation model and 80% of the staff are local residents.