Director MSA Produksiyon ve Dış Tic Ltd Şti
Board Member TORID (Turkish Forestry Business and Industry Association)
"Soft wood timber market highly depends on currency rate, when currency increase buyers prefer domestic producers. And when currency rates are more stable buyer prefer import. After presidential elections currency rate increased about %15 from 1 USD 20 lira to 1 USD 23,60 lira. Nowadays the market is focused on Central bank decision about the interest rate. Economists expect a considerable increase in rates.
Another hot topic for market is Local elections which will be held in March 2024, government doesn’t not want to “cool” market until this time.
We have a better understanding about the market in July after Eid al Adha, 1 week holiday.
There can be periodical changes until the elections.
First half of the year imports especially from Russia were good, unfortunately second half of the year Turkish Economy is expected to be more static and we are waiting a decrease in imports at second half of the year.
Concerning prices for wood materials in Turkey:
- Russian spruce (WW) SF 1-4 grade price is CIF 240 USD to 255 USD / DAP 255 USD to 275 USD
- Russian Pine RW SF 1-4 grade price CIF 240 USD to 255 USD / DAP 255 USD to 275 USD
- Siberian pine U/S 1-3 price 350 USD-400 USD
Price for pine timber highly depends on quality, that’s why there is wide range.
There is no big demand in Glued-Lam beams in Turkey, price is around 450 EUR DAP Turkey
Transportation cost from Russia very high, it is %40 of the cost, if transportation problem solved, mills can increase their profit even CIF or DAP price goes down.
Ratio of transportation cost was around %25 before
As for the forest business trend of buying more wooden goods. Increase in awareness of sustainability and green economy usage of timber and wood-frame building is increasing in Turkey, but it not desired level.
Concrete construction is very strong in Turkey, there are prejudgment against wooden houses. from cost base concrete house are much less than wooden frame house or Glue-Lam houses. Wooden-frame and Glued-Lam house mostly preferred as a second house or summer house In Turkey. We have an Association TORID (Turkish Forestry Business and Industry Association) we try to increase usage of wood in Turkey especially concrete sector.
Turkish market consumption is around 4.000.000 m3 per year,
75% is softwood and %25 - hardwood.
3.250.000 m3 to 3.500.000 m3 provided by domestic market
500.0000 m3 to 750.000 m3 provided by imports
250.000 m3 range shows varies by market situation and currency rate.
Inflation will be most challenging issue of the new government; it is very high in Turkey;
Last 3 months consumer price index;"
Sourcing Manager, China National Forest Products Industry Corporation
Homogenization of brands is serious. Found through experience that inventory is an outcome indicator, a lagging indicator, just like a crisis, we need some indicators in the process to remind us, we found a microcosm, that is invisible inventory, we counted every top brand from Export volumes from all Russian borders to main Chinese ports. The value that is about to be incremented is captured, and we can then calculate the resulting value. We know stress when it's bigger. After this new follow-up, we found that the export volume has relatively never decreased.
We have a lot of inventory, and when the demand side is cut in half, the supply side is not reduced at all.
Therefore, pressure value/market confidence=inventory value at the end of last month+invisible inventory/Russian customs declaration export volume to China-East China monthly consumption
China is not isolated in the world. When the Federal Reserve starts to raise interest rates, creditor countries and debtor countries will have to repay their debts sooner or later (creditor countries repay their credit and eliminate their own credit leverage, because the assets are gone, the credit debt also needs to be eliminated; debtor countries grab U.S. dollars to repay U.S. dollar debts and interest). This is an inevitability of unlocking the lever. As a result, it fell into a vicious circle, selling assets, causing prices to continue to fall, and more people sold off. So, when the real estate declined, they continued to sell off.
As a result, the number of new housings starts officially released by China has been halved.
If deregulation becomes the norm, then there will be a shortage of funds. If we have no money upstream, the downstream building materials will also be out of money. It affects even many multinational companies in China.
Second, in the first half of this year, the decoupling between China and the European Union and China and the United States became more serious. This has led to a decrease in Chinese industrial orders. Decoupling has led to fewer job opportunities in the market than in any year after joining the WTO in 2008.
Third, the unemployment rate of China's younger generation is too high, reflecting the weakening of purchasing power.
Therefore, even a low price cannot attract people's attention, and inquiries are constantly shrinking.
About the popular materials in China. Building materials market/export materials market Competitive source country products include dry and wet materials from Belarus, dry materials from Germany and Canada, wet materials from the Far East, and logs from New Zealand, all of which are in the same competitive circle and have a mutual substitution relationship.
The mortgage interest rate for the construction of private houses is 3-4% at present, according active or inactive. most in 4.2%, comparing previous years 2016 5-7%.
In general price in the market is currently lower than 1400 CNY/cbm kiln-dried materials
Another point to be mentioned concerns inflation. You can find out about the situation with inflation in the figure below."
THE SITUATION IN JAPAN IS WORSE THAN WE PREVIOUSLY EXPECTED
Director timber procurement manager at a large company in Japan
Now we are trying to implement WW Maba for July-August.
We see the desire of new suppliers from Europe to cooperate with us, but the exchange rate to JPY is not very favorable for international cooperation. In general, Japanese buyers are afraid to buy imported products.
We say to our client: "It’s time to buy!". But they don't listen to us.
Customers lose a lot of money due to overproduction. In their opinion, imported goods have more disadvantages than those offered by the domestic market. Thus, we expect an increase in the share of the domestic market."
FORECASTS OF THE GLOBAL CONSTRUCTION INDUSTRY
CEO's councelor NK-Group
According to our forecasts, the annual growth of the global construction market will average 8.1%, which is higher than in many other areas. Based on this, by 2030 the estimated value of the market will be 18.3 trillion. US dollars.
Oxford Economics estimates that the fastest growing region will be the Asia-Pacific region, which will provide growth of $ 2.5 trillion. US dollars. The volume of construction during this period will increase by more than 50%, which will become a market worth 7.4 trillion. US dollars. Construction volumes in North America will grow by approximately 32%, or $580 billion. The total growth will reach 2.4 trillion US dollars. In Western Europe, growth will be 23%, which will increase the volume of construction to 2.5 trillion. USD.
The main driving factors will be urbanization, population growth, increased investment attraction and the introduction of new technologies to improve overall efficiency.
The main risks that can affect these forecasts are higher inflation, geopolitical risks and an increase in the shortage of qualified personnel"
AN INTERESTING STUDY
A very interesting study came into my review at one time, I think it is familiar to all the big boys of the timber industry from the international forest business. This study was carried out by the very reputable Koninklijke Eduard van Leer BV (KEVL) from Amsterdam, the Netherlands with the status "Koninklijke", which means "royal".
This study reflects the cyclical nature of the market for the timber trade (I think this refers to sawn timber as a exact industrial commodity), and this cyclicity reaches 9, 7 and 11 years.
The study allows us to understand when the trader needs to sell, when to buy, and also marks the points of "Wood shock". We love working with information and believe that this research has the right to exist. We see that it was produced by great specialists who spent an enormous amount of time studying this matter, accumulating many years of industry expertise. The KEVL company has existed since January 1, 1883, that is, today it is almost a century and a half.
Based on the logic of the post-pandemic phase of the global economy, where inflation occupies a dominant place due to the critical money supply in the world, it can be assumed that these cycles will have a shorter period. That is, the time from the very bottom of the market to the very top will be shorter, and the amplitude is probably longer. If we look at the diagram in 2023, we can see that this is the very bottom and that the market is expected to grow in the coming years.
This is just our subjective opinion. Time will tell and we will test this hypothesis."
SUDDEN GROWTH IN US CONSTRUCTION PUSHES LUMBER PRICE UP. (USA)
An unexpected rise in US house prices in May helped push up lumber prices as demand for basic building supplies increased. The sharp increase in the housing stock last month was the highest since 1990. The growth amounted to about 21.7% per month.
Lumber prices jumped 3% to $540 per thousand feet of board. But prices remain well below the all-time high of $1,700 in May 2021.
It is worth noting that the growth occurs despite the fact that mortgage rates continue to remain above 6%.
AUSTRALIAN EXPORTERS GET NEW OPPORTUNITIES FOR SHIPPING LOG TO CHINA.
At the end of 2020, China banned the import of plantation pine logs from Australia. This decision led to the collapse of Australian exports, as China was the main importer of Australian logs.
Following the ban, Australian traders began to explore alternative destinations in Asia and shipped about 1.2 million m3 of logs in 2021 to previously insignificant markets such as India, South Korea, and Vietnam. However, volumes declined rapidly in subsequent years due to fierce competition from US importers.
With the recent lifting of a ban on Australian log imports from China, there is an opportunity for Australian exporters to restore trade, but volumes will not be the same. This is also influenced by negative factors that have developed within the country. The most significant among them is the limitation of the expansion of pine plantations and the large number of fires that have destroyed large volumes of forests.
IN GERMANY THE PRICES OF PELLETS ARE INCREASING BY 20 PERCENT.
Over the past six weeks, wood pellets have risen in price by 20 percent. Meanwhile, prices are consolidating just below the €400 mark. The cheapest time to buy was not in July or August, as was traditional in previous years, but in April. Despite rising prices, pellet heating is still cheaper than oil or gas heating.
The experts from Holzpellets24 report that the market for pellets is currently extremely leaky . Bookings are declining - as is typical in June - but still well above 2015-2021 levels.
FORESTRY IS A HUGE OPPORTUNITY FOR INNOVATORS. (GREAT BRITAIN)
The key difference in forestry is the difference between unmanaged and managed forests. When forest areas are actively managed in a sustainable manner, they have been shown to increase the quantity and quality of environmental, social and economic benefits, including carbon sequestration and biodiversity.
A good example of innovation is the " myForest " digital platform developed by the charity Sylva Foundation from Oxfordshire , which contains georeferenced maps to overcome difficulties in forest mapping. Giving owners and managers a tool to plan their woodlands more accurately.
There are other innovations already being introduced in Europe and Canada. These include:
- Remote sensing;
- Satellite technology with higher resolution 3D images to focus on specific tree types;
- Drones/UAVs for Image, Video, LiDAR Data Acquisition;
- AR - technologies for measuring tree diameters and heights;
- Artificial intelligence (AI) for high-quality data processing and analysis;
- Web applications that help educate and inform decision makers.
REMOVAL OF THE EXPORT BAN. (NIGERIA)
The Nigerian Customs Service has lifted an earlier ban on the export of processed timber, charcoal and other related products. However, certain types of products still remain banned. These include endangered and rare woods such as rosewood.
CANADIAN LAWN MILLS CLOSING DUE TO FIRES, LUMBER PRICES RISING.
The worst ever spring wildfire season in Canada has forced the lumber industry to shut down sawmills.
This year's unprecedented fires have already destroyed at least 4 million hectares, or 1% of Canada's forests, according to industry group, the Canadian Forest Products Association (FPAC).
Chicago lumber futures are up 7% since June 1.
An unexpected disruption to the lumber industry could further slow down new home construction, leading to a severe housing shortage in Canada. Housing investment , after adjusting for inflation, fell in March to its lowest level since June 2020.
COMPANIES CALL FOR SUPPORT AS WOOD EXPORTS FALL. (VIETNAYAM)
Exports of wood and wood products, after many years of rapid growth, have fallen significantly since the beginning of this year.
Statistics from the Vietnam Timber and Forest Products Association showed that timber exports between January and May were valued at US$4.7 billion , a drop of almost 30% from the same period last year.
Viforest President D o Xuan Lap said forest companies are struggling to export due to falling demand in key markets such as the US, Japan, Republic of Korea, China, the UK and the European Union.
Nguyen Liem , President of the Binh Furniture Association Duong , said that at present, enterprises are facing many difficulties, and many companies have had to reduce operating capacity by 60-70%.
The export target of US$17.5 billion set by the Vietnamese wood industry for this year may not be met.
PELLET PRICES ARE REDUCING. (NORWAY)
The price of industrial wood pellets , which are used in power generation, has fallen sharply in Europe this year, despite a ban on Russian materials, market participants said British electricity producers are consuming less than expected.
At the beginning of 2023, industrial wood pellets cost about $300/t, while at the end of 2022 they cost about $400/t.
According to Eurostat , the UK imported 7.5 million tons of wood pellets in January-April this year , which also showed a 24% decrease in imports compared to the same period last year.
TSO data showed that biomass accounted for 4.9% of the UK's energy mix in the first five months of the year, up from 5.6% in January-May last year.
Ports are congested due to low consumption.
AUSTRIA'S PELLET INDUSTRY IS IRRITATED. (AUSTRIA)
pellet heating systems , the industry is now in crisis. Pellet heating manufacturers report insecure customers who cannot decide to switch from fuel oil and gas to pellets due to the lack of a legal framework. This causes a kind of inhibition in the development of the industry.
“We feel a stagnation in politics that we cannot afford,” Christian says. Rakos , managing director of proPellets Austria .
NATIONAL SUPPORT PROGRAM FOR PELLET HEATING INSTALLATION. (ROMANIA)
Currently, 3.5 million households in Romania use 12-14 million tons of firewood per year in traditional stoves with low energy output. At the same time, at the height of the global energy crisis, Romania produces 600,000 tons of pellets , of which it consumes only 200,000 tons, and exports the remaining 400,000 tons.
In the energy balance of national consumption for the production of thermal energy, firewood and other types of biomass occupy a share of 42%, the rest is electricity (11%) and fossil fuels (natural gas, coal, etc.)
Given all the costs and benefits of pellet heating, the possibility of a full transition to this type of fuel for home heating is now under consideration . To stimulate the transition, based on the practice of other European countries, it is supposed to allocate subsidies from the state.
INTERNATIONAL LOGS AND TIMBER PRICES.
Recent observations by operators in the region indicate a slowdown in demand in several markets. In Iraq, for example, the rate of new orders has fallen; in China, demand is assessed as weak. The Chinese market is expected to continue to show weak demand until the end of the year. The European market is assessed as slow but stable.
Ghana exported thirteen different wood products to international markets during the first 2 months of 2023. The volume of exports is estimated at 19.92 million euros, which is slightly higher compared to the same period last year (19.26 million euros).
Of the total exports of wood products, 62% went to Asia, 16% to Europe , 12% to Africa, the remaining amount was distributed between America and the Middle East
The production and export of wood products in Malaysia has undergone a transformation. The number of exported wood products has increased by more than 20 times.
An increase in the cost of export furniture from Sarawak was recorded . At the end of 2022, it amounted to about $57.4 million , which is 23% higher than over the past five years. Further expansion of furniture production in this state is planned , for which additional investments will be attracted.
The Ministry of Environment and Forestry plans to increase the volume of forestry with the goal of achieving a reduction in carbon dioxide by 140 million tons by 2030.
The Ministry is supporting the growth of green investment in the forestry sector, which promises returns for investors as well as a positive impact on the environment and social environment.
According to the Department of Commerce for the 2022-23 fiscal year ending March 31, 2023, timber exports were $139 million, including $4 million from border trade. In fiscal year 2021-22, timber exports were at $128 million.
According to the latest report from the IMARC Group, the Indian plywood market will reach 306.5 billion in 2028, while it currently stands at around 208.5 billion. The expansion of the construction industry, the growing trend of urbanization and consumer preferences for plywood for structural purposes will continue to drive growth. this market.
In addition, there is an upward trend in the number of nurseries and ambitious targets for growing trees in the country.
Exports were valued at $1.2 billion in May, up 10% from April 2023 but down 14% from May 2022, according to the General Administration of Customs .
In the first 5 months of 2023, imports of wood raw materials amounted to 1.6 million cubic meters. m, worth $ 579.2 million, which is 31% less compared to the same period last year.
In the first 4 months of 2023, the leaders in export turnover were: wooden frames ($ 831.5 million), which is 32% lower than the same period in 2022, followed by wood chips ($ 691.7 million), an increase of 2% followed by dining room furniture ($644.4 million), a decrease of 43%.
CHINA IMPORT MARKET IN THE FIRST QUARTER.
According to Chinese customs, log imports in the first quarter of 2023 amounted to 9.27 million cubic meters, valued at US$1.606 billion, down 7% in volume and 18% in value compared to the first quarter of 2022. In addition, the average price of imported logs is $173 per cubic meter (CIF), which is 12% lower than the same period in 2022.
Of the total imported logs, imports of softwood logs rose slightly by 1% to 6.72 million cubic meters, accounting for 72% of the national total. However, the average price of imported softwood logs fell 16% to $146 per cubic meter (CIF) compared to the same period in 2022.
Hardwood imports fell 24% to 2.55 million cubic meters. The average price of imported hardwood logs fell 12% to $245 per cubic meter (CIF) compared to the same period in 2022.
In the first quarter of 2023, New Zealand and Germany were the largest log suppliers in China. Imports to China from New Zealand rose 13% to 3.78 million cubic meters, while log imports from Germany fell 24% to 1.17 million cubic meters.
In the first quarter of 2023, China's log imports from Russia decreased by 38% to 460,000 cubic meters. Imports from Poland rose to 330,000 cubic meters.
In the first quarter of 2023, tropical log imports in China decreased by 14,1.537 million cubic meters. The top three suppliers of tropical logs to China are Papua New Guinea ( 45%), the Solomon Islands (27%) and the Republic of the Congo (10%). In the quarter of 2023, 82% of China's tropical log imports came from these three countries.
IMPORT OF THE CHINESE LUMBER MARKET.
According to Chinese customs statistics, total lumber imports in the first quarter of 2023 were 6.522 million cubic meters, worth $1.658 billion. Volumes increased by 3% but value decreased by 8% year-over-year.
Imports of sawn softwood increased by 9% to 4.42 million cubic meters.
Imports of sawn hardwood fell 8% to 2.102 million cubic meters.
Imports of tropical lumber amounted to 1.372 million cubic meters. Compared to the same period in 2022, volume and value decreased by 16% and 14%, respectively.
Russia is China's largest lumber supplier in the first quarter of 2023. Imports of sawn timber from China from Russia amounted to 44% of the total imports of sawn timber. China imported 2.878 million cubic meters of lumber from Russia (up 4%). Thailand is the second largest supplier. Deliveries decreased by 17% to 849,000 cubic meters.
US lumber imports rose 27% to 326,000 cubic meters. While imports from Canada are down 25% to 326,000 cubic meters in the first quarter of 2023.
THE PERM TERRITORY DOUBLES THE EXPORT OF FOREST PRODUCTS TO THE EAEU COUNTRIES.
In total, since the beginning of 2023, the timber merchants of the Perm Territory have sent 10.02 thousand m³ of timber to the EAEU countries. In this volume, 3.75 thousand m³ of timber went to Kazakhstan, 5.74 thousand m³ to Kyrgyzstan, 0.53 thousand m³ to Armenia. For comparison, in the same period of 2022, the Perm Territory exported 4.8 thousand m³ of timber to the EAEU countries.
THE IRKUTSK REGION EXPORTED ALMOST 2.4 MILLION CUM OF FOREST IN FIVE MONTHS.
The volume of export supplies amounted to 2373 thousand m³ of wood, while the main volume of timber exports - 92% - was sawn timber (2175 thousand m³). Roundwood was exported in the amount of 179 thousand m³.
It is reported that in May timber products from the Irkutsk region were exported to China, Japan, South Korea, Mongolia, Uzbekistan, Tajikistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Belarus, Turkey, Georgia, Morocco and India. China remains the main importer of wood from the Angara region with a share of 82% (478 thousand m³) in the total timber export .
ALMOST 500,000 CUBO METERS OF FOREST HAVE BEEN EXPORTED THE BEGINNING OF THE YEAR FROM TOMSK REGION.
The key importer of wood from the Tomsk region was Uzbekistan, which accounted for 41% of supplies. Timber products were also exported to China - 27% of deliveries, Kyrgyzstan - 16% and Kazakhstan - 14%. Another 2% of timber exports went to Iraq, Tajikistan, Belarus, Afghanistan and Vietnam.
As for the export of roundwood, 2.1 thousand m³ of birch were supplied to China. Another 4.6 thousand m³ of round timber and 4225 wooden cable drums were delivered to Kazakhstan.
KOSTROMA REGION INCREASED FOREST EXPORT TO GEORGIA 12 TIMES.
In January-May 2023, the region exported about 600 m³ of sawn timber and 210 tons of wood-fuel briquettes to the country. It is known that the Kostroma region supplies Georgia with products made from pine, spruce and birch wood. For comparison, in the first five months of 2022, the volume of timber exports to Georgia from the Kostroma region amounted to only 48 m³ of sawn timber.