KUCHING: The European Union (EU) has cut imports of tropical wood and furniture products by double digits in first quarter of 2023 (Q12023) from a year ago, adversely affecting key suppliers like Malaysia. In Q12023, the bloc imported 427,000 tonnes of tropical wood and wooden furniture worth US$896 million, which was 12 per cent lower in volume and 22 per cent drop in value as compared to Q12022.
However, as compared to Q42022, the imports in Q12023 were up 3.1 per cent in tonnage terms and 1.2 per cent in value.
“After falling sharply in the second half of 2022 from the 10-year peak recorded in the first half of last year, imports stabilised in the first quarter this year,” according to International Tropical Timber Organisation (ITTO) Tropical Timber Market Report (May 16-31, 2023).
The report said in Q12023, EU import value of tropical wood and wooden furniture were significantly above the long-term average of around US$800 million per quarter between 2012 and 2019, the period of relatively stagnant market conditions for tropical products that prevailed in Europe before COVID-19 crisis.
However, in tonnage terms, EU imports in Q12023 were below the long-term average of about 450,000 tonnes per quarter during the 2012-2019 period. The report attributed the weak start in the European market this year to a combination of relatively high inventory and slow consumption.
“In 2021 and first half of 2022, EU importers responded to sharply rising consumption in the European market — boosted particularly by heavy spending on home improvement and public finance to support economic recovery after the pandemic — by buying in larger volumes as CIF (cost, insurance and freight) prices were rising to record high levels. “However, demand in Europe fell dramatically during the summer months last year with rising economic uncertainty, particularly fuelled by the war in Ukraine and high energy costs.
“At the same time, global prices for wood materials and freight rates fell dramatically in the second half of last year. A big decline in global trade followed on from sharply rising interest rates in the United States and as China struggled to maintain a zero-COVID strategy and suffered a property market slump.
The price of a 40-foot container for delivery into Europe from Southeast Asia, which hit record levels in excess of US$17,000 at the end of 2021, had fallen to around US$1,500 in the first quarter of 2023.” The combined effect of these trends, added the report, was that at the start of this year, many European timber importers were sitting on quite large stocks bought earlier at high prices which they were struggling to shift to their customers.
“The value of these landed stocks was being undermined as prices for new orders in the main supply countries were falling. Costs of holding stocks and manufactured wood products were also rising as interest rates were being pushed up and energy costs were soaring during the winter months.
“The problems associated with high stocks and falling prices particularly applied to products sourced from Asia, including garden furniture, decking, flooring and other joinery products.” In the case of African hardwood, the ITTO said although prices for existing landed stock in Europe have been falling as large volumes arrived in 2022 and consumption has been slow, availability for forward orders from African sawmills in second half-2023 is restricted and prices are firm and expected to remain so.
On tropical wood products, there was a year-on-year decline in EU imports for all wood product groups, except sawnwood and logs, in Q12023. Import value of sawnwood was up only marginally by two per cent to US$218 million while for logs, there was a much larger 41 per cent gain to US$18.8 million. However, these increases were more than offset by the large declines in import value for wooden furniture from tropical countries (-30% to US$350 million), tropical mouldings/ decking (-44% to US$154 million), tropical joinery products (-33% to US$51 million), tropical hardwood faced plywood (-10% to US$50 million), tropical veneer (-19% to US$46 million), tropical marguetry (-32% to US$22 million) and tropical flooring (-22% to US$16 million).
In Q12023, EU imported 74,400 tonnes of wooden furniture from tropical countries with a total value of US$350 million, down 30 per cent in both tonnage and value terms as compared to Q12022. Import value decreased 26 per cent to US$162 million from Vietnam, 24 per cent to US$105 million from Indonesia, 41 per cent to US$54 million from India, 54 per cent to US$18 million from Malaysia and 22 per cent to US$6 million from Thailand. In contrast to other tropical wood products, EU imports of tropical sawnwood in Q12023 sustained the relatively high levels recorded in 2022.
There were large gains in shipments from African countries, like Gabon, Congo and DRC. In Q12023, EU imports of tropical mouldings/decking were slow at 31,100 tonnes worth US$62 million, down 35 per cent and 43 per cent respectively as compared to Q12022. From the largest suppliers of Brazil and Indonesia, the imports plunged 38 per cent to 9,700 tonnes and 45 per cent to 9,000 tonnes respectively. Imports from Malaysia declined 24 per cent to 1,600 tonnes.
On tropical logs, EU raised imports by 21 per cent to 29,800 cubic metres (cu m) in Q12023 from a year ago, mostly from African countries. According to the ITTO report, during the same period of comparison, EU also recorded a 21 per cent and 19 per cent decline in the import of 66,500 cu m of tropical veneer worth US$46 million. Again, the key suppliers were African countries and Indonesia. On the brighter side, EU increased the imports of tropical plywood by six per cent to 61,700 cu m but value had fallen by 10 per cent to US$48 million in Q12023.
“The average per cubic metre value of tropical plywood imported into the EU in the first quarter of this year was US$775 compared to US$907 in the same period of last year, a sign both of the sharp fall in prices and freight rates and shift in product sources this year.” Imports from Indonesia were down 10 per cent to 18,000 cu m but it was up 45 per cent to 8,000 cu m from China and up 55 per cent to 3,000 cu m from Vietnam.
Malaysia was again affected in the supply of tropical wood flooring to EU, which total imports were off 18 per cent to 5,400 tonnes valued at US$16 million (-22%) as compared to Q12022.
“The consistent rise in EU wood flooring imports from Malaysia that began in 2020, stalled in the first quarter of this year. Imports of 2,900 tonnes from Malaysia in the first three months of 2023 were 16% less than the same period in 2022. Imports also fell from Indonesia (-11% to 1,200 tonnes), Vietnam (-9% to 7,000 tonnes) and Brazil (-62% to 200 tonnes).
The report said the value of EU imports of other tropical joinery products, which mainly comprise laminated window scantlings, kitchen tops and wood doors — retreated 33 per cent to US$51 million in Q12023. Despite much lower prices than Q12022, imports are slow this year as many importers already have sufficient stock to meet current slow consumption levels.
In Q12023 as compared to Q12022, imports were down 10 per cent to US$19 million from Indonesia, down eight per cent to US$19 million from Malaysia, down 56 per cent to US$3 million from Vietnam and down a hefty 84 per cent to less than US$1 million from China.
