For information on the progress of the spread and the disease situation: https://www.worldometers.info/coronavirus/ We bring you here, and will continue to do so in the coming weeks, the information provided by our members and partners regarding the tropical timber market and the activities of companies in Europe, Africa and Asia.
In its publication of 18 April 2020, ITTO reports on the devastating effects of the spread of COVID-19 on the tropical timber sector and publishes a first analysis of these consequences, based on a survey conducted by ITTO’s Market Information Service (MIS) correspondents in Brazil, India, Indonesia, Myanmar and Viet Nam. To see the full report download the MIS Tropical Timber Market Report 24 of 16 April 2020.
As well as the impact of the coronavirus outbreak in Africa, the appreciation of the market in Africa is different compare to EU. Notably because :
Indeed the difficulties on the demands is notably linked to the usual business trade/contracts/orders on domestic and/or international market specific to each companies. Among the companies that have been working, since the containment measures, are certified companies. Certification allows them to be more resilient, more reactive because of the strong implementation of good practices being already put in place. They are surely more prepared to set-up the measures during the coronavirus outbreak.
Companies in the wood industry continue to work. However, trade is becoming more and more difficult. Indeed the demand is decreasing, the competition is very strong because of the different species present on the wood market. For example, while the production volume of Sapelli increases the sale on the market is difficult because of the competition with other species. For Pallisco, three weeks ago, demand has not changed or only slightly. Today the prolongation of the situation directly affects the demand and threatens commercial activities.
REPUBLIC OF CONGO
The Ministry of Finance and Budget has developed and published customs, fiscal and financial measures to support businesses in the Congo :
Furthermore, in a press release published on 23 April 2020, the World Bank announced funding of $11.3 million for an emergency response project against Covid-19 for the benefit of the Republic of Congo. This project will help the Republic of Congo to fight against Covid-19 and better respond to public health emergencies.
The Government of the Republic of the Congo has taken strong measures in response to the pandemic, including the containment of the entire population. This was followed by decrees on the organization of the public service and memos signed by the Minister of Forestry to regulate activities during this complicated period. It is in this vein that ATIBT (as an interlocutor of the private sector) initiated a study whose objective is to analyze the social and economic impact of COVID-19 on the forest-wood sector companies in Congo and to identify the difficulties of implementing measures related to this pandemic outbreak. The results of this study will be used to carry out the companies advocacy with public services and commercial partners.
According to the information collected from 8 to 17 April 2020, the analysis of the first containment period, carried out on the eve of the announcement of the extension, highlights the following observations:
While CIB and Interholco is still working, it more difficult for some entreprises in the South. Indeed, since the lockdown is being decreeted on 31 March 2020 some of them are facing difficulties in implementing the barrier measures or has stopped their activities. Only administrative staff is working from home. Most of the employee is contained at home far from their place of work. Even if the decree allow them to work, it is still difficult to manage the activities notably because it is difficult for them :
However, following the announcement of the extension of the containment from 21 April for a period of 20 days, these companies from the South have put in place the necessary measures and are now operating according to the minimum authorized by the decree.
The impact on the demands is the same as it is in Cameroun. For example, while Chinese market is picking-up, the Okoumé production is very low. UFIGA is still closely work with the minstry of Forest to support the entreprises authorized to work, to save the wood industry activities. The administrative procedures to set-up the measures due to the containment are on progress (circulation permit to go to work, etc.). UFIAG has informed that the chinese entreprises are stopping their activities even if the decree allow them to work.
Status quo: China Timber Import & Export Market under Pandemic
By: Timber Im- & Exporter Branch, CTWPDA (China Timber & Wood Product Distribution Association) – Dated on the 15 April 2020 (Traduction du Chinois: GIZ)
The situation of COVID-19 prevention & control in China continues being improved, and resumption of production has been carried out stably and orderly; demand for imported wood in China is being rebounded gradually. However, the outbreak globally and rapid spread forced governments in many countries to take anti-measures like home office and border closure, affecting timber harvesting and transportation. On the other hand, China domestic wood processing plants usually did not store much timber, the outbreak might have led to panic on shortage of imported wood supply. While current prices of imported wood reached almost bottom, plants/factories actively purchase for hoarding; speculation occurred from time to time and resulted in a rebound in price for about 100-200 RMB per cubic meter.
Imported timber stock would support a consumption for at least two months
According to the members, from the second half of 2019 to the end of the year, stocks of imported timber remain high and prices hit almost the bottom. Imported wood still arrived normally in January and February 2020, reached a full storage in March. Even after one month’s consumption, as to conifer, stock kept in Taicang/Jiangsu has more than 3.6 million m3, in Shandong Province 2.3-2.4 million m3 (of which 1.36 million m3 in Rizhao), and in Guangdong 300-400 tsd m3. These stocks support a normal consumption for more than 2 months. Pandemic situation abroad is becoming more severe, demand is declining, and foreign trade orders seriously reduced. Imported wood scheduled to be processed in China for re-export converted to domestic sale or orders cancelled. Of wood consumption structure in China, export accounts for 20% of the total consumption.
It is estimated that China’s demand on imported wood will be reduced by 10-20%, as a result of shrinkage in export. This part will replenish the supply of imported wood.
With exception of New Zealand, major timber producers continue to supply normally
In summary, although production in timber-producing areas has declined and their domestic demand has slowed down, only China’s demand is gradually picking up: timber export to China is not a problem in a short term.
Higher freight costs for timber import
In January and February, coincided with the Chinese Spring Festival and the fight against COVID-19, less goods were exported. Containers to Europe, US and other countries were also reduced, with no empty containers transporting timber back. In addition, in order to minimise loss, shipping companies canceled some vessels, resulting in high freight rates, in some cases of 2-3 times.
Domestic demand will still take some time to return to normal
With resumption of production and most construction projects in China, conifer timber delivering from warehouse run faster than weeks ago. Timber has been circulated to hands of second- and third-level distributors and are at the best preparation for possible rebound of demand for construction timber. However, ‘home- & house-living’ business is still languished, and furniture factories generally unfolded declining orders and slow & long recovery in the demand of broadleaved timber. According to enterprises, delivery from warehouse is only ¼ to 1/3 of normal amount in Zhangjiagang and Jingjiang (both are major ports for imported broad-leaved timber in China, located in Jiangsu). Timber stored in both ports is about 2 million m3. From above, we can see, the recent rebound in price of imported timber is due to the active preparation of processing plants and the hypes of some enterprises; timbers were not yet been circulated to the end-users such as furniture factories. China avails sufficiently imported timber supply for the next two months. In a long run, whether to increase timber import, depends on how the pandemic develops and being controlled in China and globally. It is hoped that industry insiders would pay close attention to the recovery in downstream demands; and not to expand timber import blindly.