The global timber market has been slowly recovering from the pandemic over the past year. In addition to the epidemic, this year's global economic recovery has also seen another major uncertainty. From developed economies in Europe and the United States to emerging market economies in Asia to less developed regions in Africa, almost all are affected by inflation.
Crude oil-based commodity prices rose sharply, and other commodities from production and processing to final consumption also rose. Today, global inflation seems to have replaced the epidemic as the main risk to the current global economic recovery. For the global timber market, which has not yet recovered from the epidemic and has been hit by inflation, the market downturn may continue until the end of this year.
It is generally believed that the reasons for this inflation mainly include many aspects. On the one hand, the global supply chain crisis caused by the epidemic has directly or indirectly caused an increase in costs such as production and transportation; on the other hand, extreme weather and Russian The rise in energy prices brought about by the Ukrainian geopolitical conflict has further triggered an energy crisis.
Overseas inflation remains high amid continued interest rate hikes in Western economies. The global economy fell into recession, and the international timber market was inevitably affected.
For a long time, wood has been the main raw material for the construction of American houses, and self-built houses account for about 40% of the demand for wood in the United States. However, high inflation and high interest rates have suppressed the demand for house construction in the United States today.
From March to July this year, North American lumber prices fell by nearly 50%. Although still close to the five-year average, demand in the North American lumber market is clearly weakening compared to the same period last year amid inflationary pressures.
Vietnam, which is mainly exported to Europe and the United States, as early as the beginning of the year, most of its timber merchants and furniture manufacturers said that their orders have been filled until October this year. However, with the intensification of inflation in European and American countries, while the income of consumers in the region has declined, the cost of living has increased and the purchasing power has decreased, so many orders have been forced to cancel.
In this regard, Vietnamese industry insiders said that under the circumstance that high inflation in Europe and the United States suppressed the demand for wood and wooden bottles, export orders in the second half of the year have fallen sharply; at the same time, Vietnam's wood industry will face greater challenges.
Impact on my country's timber market
In the first half of 2022, the global softwood lumber trade dropped by 10%, the demand for lumber from my country, the United States and Europe declined, and the international boycott of Russian lumber and wood products brought great uncertainty to the European lumber market. Lumber prices also started to soften after this spring.
In addition, the international softwood log trade fell by 20%, driven by Russia's ban on log exports and the decline in demand for wood due to my country's epidemic lockdown measures.
Under the circumstance that the international timber market is greatly affected by inflation, my country's timber market is also plagued by demand restraint and reduced import volume.
First, the domestic timber market is still slowly recovering from the epidemic. Although the traditional industry peak season "Golden Nine Silver Ten" has come, according to the current market feedback, compared with the same period in previous years, this year's market performance is far from comparable.
Secondly, as a major exporter of furniture in my country, high inflation affects the distribution of people's living costs. More income is used for daily necessities, and the demand for furniture and other wood products in my country has declined.
On the other hand, affected by the drop in demand, my country's imports of logs and sawn timber have also declined. From January to August this year, the cumulative import volume of logs and sawnwood in my country decreased by 23.5% year-on-year to 47.127 million cubic meters. Among them, the import volume of logs and sawn timber in August fell by 0.3% year-on-year to 6 million cubic meters.
Summarize
Today, the economic prospects of European and American countries are facing "unprecedented" uncertainty, and reducing inflationary pressure has become the most urgent challenge for the recovery of the global economy. Under the pressure of the two "mountains" of the epidemic and inflation, it is foreseeable that the road to recovery of the timber market may not be easy.
No matter how difficult it is to move forward, although the process is slow, the domestic timber market has maintained a small growth so far. Therefore, the timber merchants still have to maintain a good attitude to finish this year. Perhaps, the subsequent development of the timber market is not as bad as imagined.