Vietnam’s wood industry in the first months of 2023 still faces many difficulties. Output and export turnover decreased sharply compared to in the same period last year. It is forecasted that from now until the end of the year, the wood industry will prosper, but it is difficult to outperform. Measures to support the timber industry by the government are very necessary at this time.
Overview of the Vietnam wood industry in the first months of 2023.
Overview of domestic wood supply and wood imports of Vietnam’s wood industry:
– Overview of domestic wood supply:
Currently, it is estimated that domestic wood materials can meet 75.2% of the demand for raw materials, the remaining 24.8% must be imported.
Source: VIRAC’s report
The domestic source of wood materials is exploited from 3.69 million hectares of production plantations, accounting for about 53%, the rest is from scattered trees and liquidated rubber forests. However, nearly 70% is wood of small size used to produce products such as wood chips, artificial boards, and pellets.
Imported wood materials include sawn timber, logs, wood veneer, etc., mainly imported from markets such as EU, US, and China.
The domestic production of harvested wood materials has grown steadily over the years. In the first quarter of 2023, the harvested wood output reached about 3.4 million m3, an increase of 4.2% over the same period last year.
– Overview of wood import activities:
According to VIRAC’s report, the volume of imported wood materials in the first quarter of 2023 decreased by 3% compared to the same period in 2022; about 1.6 million m3. Corresponding to an estimated import value of USD 710 million, down 1.4% over the same period in 2022.
Also according to VIRAC’s report, sawn timber is still Vietnam’s main import item, with an estimated import turnover of 320 million USD, up 8.5% over the same period last year and accounting for 45.4% of the import proportion of raw wood. Following are products such as round wood (estimated turnover of 196 million USD, accounting for 27.7%), wood veneer (estimated turnover at 82 million USD, accounting for 11.6%).
Source: VIRAC’s report
Overview of wood export activities:
In the first 5 months of this year, the amount of wood and wood products exported fell sharply compared to the same period in 2023.
Export turnover in general decreased:
According to the general report, in the first 5 months of the year, the total export turnover was only 4.7 billion USD. This number decreased by nearly 30% over the same period, causing many wood enterprises to go through difficult times. In it, there are many products with deep discounts. Some of the following processed wood products under the HS 94 code decreased by up to 38% in export turnover. Currently, there are very few items in the HS 44 group that have recorded positive growth.
In the first 4 months of 2023, the export turnover of fiberboard to India reached 21.19 million USD, up 3 times over the same period in 2022 (7.6 million USD). Currently, yarn is accounting for 47% of the total export value of wood and wood products in the Indian market. Fiberboard is a very important item, helping to pull back the export turnover of the whole industry.
According to the general report, the export of peeled boards in the first 4 months of the year reached 69.4 million USD. Thus, the export of this item has increased by 9% over the same period in 2022.
Also according to the general report, the export price of wood chips has had a deep decrease compared to the end of 2022. However, in general, the export turnover of woodchips still increased by 3% over the same period last year. The export turnover of wood chips in the first 4 months of 2023 reached over 4.1 million tons, with a value of 704.4 million USD.
Vietnam’s pellet exports in the first four months of the year reached 1.2 million tons. Export turnover of this item has decreased by 22% in volume and 10% in value over the same period last year. Not only decreased in quantity and value, but the export price of tablets also fell sharply.
Wood export market: There are still many difficulties:
In the first quarter of 2023, the US continues to be the largest export market of Vietnam’s wood and wood products. However, this market decreased by 42.27% over the same period last year, reaching 1.38 billion USD, accounting for 49% of export turnover of the whole industry.
Also during this time, export turnover also decreased sharply in some key markets such as Korea, UK, Canada, France, Australia, Netherlands, Germany. Meanwhile, the export turnover of wood and wood products to less key markets increased slightly. As export turnover in the Japanese market increased by 7.98%, China increased by 5.96%.
Forecast of Vietnam’s wood industry and measures to support the wood industry.
Forecast of raw material wood supply:
– Domestic supply: relatively stable:
The annual volume of planted forest timber harvested domestically is stable at 20 million m3 of round size. However, Vietnam still does not have a large source of plantation timber. Wood from household plantations is mainly small wood. This wood source is usually only used as an input material for wood chips and pellets.
– Imported supply: slowing down:
Vietnam is a country that depends on imported wood for raw materials. Import volume is about 5-6 million m3 of round timber per year. Currently, the inventory of imported wood enterprises is still high. At this time, wood export enterprises have reduced orders in 2022 and have not received new applications for 2023. Therefore, the demand for importing wood materials in the near future will slow down. This is due to low demand from processing plants.
Demand for Vietnam’s wood & wood products in some export markets:
In the US market, inflation is increasing sharply, making people in these countries tend to tighten their spending. More than 80% of US consumers say they will reduce spending on products within the next 3-6 months. This leads to a decrease in the demand for imported wood and wood products of US enterprises. In addition, the US government investigated tax evasion with some Vietnamese wood products. This is causing the door to export wood products to the US to gradually narrow for Vietnamese enterprises.
China is a large market in terms of both domestic consumption, export and import of wood. It is expected that the demand for wood products from the Chinese market in 2023 may recover. The reason is because the real estate market here is showing positive signs.
The opportunity to export wood products to other markets such as Korea and Japan has a lot of growth potential in 2023. Because then when the RCEP agreement comes into effect. According to RCEP, tariff commitments are quite open when removing taxes on a series of key products exported to 15 markets in the bloc. Especially, the industry’s leading export markets such as China, Japan, and South Korea, account for 32% of Vietnam’s export market share.
Measures to support the wood industry:
The wood industry is considered to be in a very difficult period. The decrease in export wood output caused many businesses to struggle. In addition, Vietnamese wood products have not met the quality needs of some demanding markets in the world. To help the wood industry partly get out of the current difficult situation, it needs the contribution of businesses and the state. Enterprises need to actively promote and improve the quality of products and services. In addition, the state also needs to take measures to support wood production enterprises such as:
– Provide information on trade policies of major markets (US, EU and Northeast Asia) especially when these policies change
– Communication support for businesses. In particular, focusing on products with strengths, enterprises have production strengths in key markets.
– Representative agencies need to continue to improve and support the timber industry to expand and diversify markets. Especially the potential markets and still have room such as: India, Eastern Europe, Middle East. At the same time, the state needs to closely coordinate with businesses to improve the effectiveness of prevention, satisfactorily settle disputes and trade remedies, and protect the legitimate rights and interests of Vietnamese enterprises.
The above information is summarized in “Report on Vietnam’s wood industry in the first quarter of 2023“. The report not only provides full information on macroeconomics, trade supply and demand of the wood industry, but also provides all relevant information and forecasts from the latest updated data.
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