Recently, with the relaxation of blockade restrictions and the general recovery of the global economy, exporters from producing countries, especially those in Asia, have noticed a large shortage of containers and rising prices. Even some shipping companies' container prices have reached half of the value of the plywood transported. In response to this situation, some importers choose to transport bulk cargo, but it is not easy to transport bulk cargo, especially for those who have not used bulk cargo transportation before, because the uniform speed of bulk cargo involves more management. If you fail to arrive at the port on time or fail to reach the predetermined quantity, you may be fined, and the product is more likely to be damaged in transit. Therefore, although bulk cargo transportation is much cheaper than container transportation, considering the above factors, the cost of bulk cargo transportation may be more expensive. In addition, the price of bulk cargo transportation has also risen, and prices have risen accordingly. An importer distributor said: "Bulk cargo operators see an opportunity to make money, and their shipping costs have roughly doubled in the past six months."
In addition to the sharp increase in transportation costs, European plywood import trade also faces other challenges, such as the rise in plywood prices. Especially in the past three months, global consumption has continued to accelerate, and the government's economic stimulus measures have provided the greater impetus to consumption. But at the same time, production in many parts of the world is still restricted by the lack of personnel due to COVID-19 infection or isolation, as well as safe working methods during the pandemic. In addition, the supply of raw materials is also a problem faced by some manufacturers. Therefore, the price of plywood products will continue to rise.
Some European importers expect demand for plywood to decline in the summer. However, as the tourism industry is still suppressed by the new crown pneumonia epidemic, it is expected that the market demand for plywood will not experience the usual holiday slowdown. Most importers generally believe that, for now, consumption is still on an upward curve.
Despite the logistical difficulties and the long production cycle, most importers indicated that they have sufficient purchasing capacity in the coming months. An importer said: "The local inventory is still very short, there is almost no stock. Anything that comes in will be delivered immediately. Customers are waiting for the ship to arrive to receive their goods, and they want to get the goods right away."
The increase in the price of plywood products in Brazil is mainly due to the impact of the country's severe new crown epidemic situation on the manufacturing industry, coupled with the huge demand in the US construction market. An importer reported: “For standard 18-20mm plywood, the price we paid in October/November last year was US$250-300/cubic meter. Recently, the asking price in Brazil was US$500-600/cubic meter. Basically, the price has doubled." Therefore, unless European importers urgently need a particular product, they will more or less stop purchasing Brazilian products when the price reaches this level in March and April this year.
According to reports, the high price of Brazilian plywood, in turn, helped push up the price of Chinese plywood. An importer distributor said: "In the past, people who bought in large quantities from Brazil have been trying to buy alternative plywood from China, which has further increased the inflationary pressure on plywood products." According to reports, the supply of birch plywood in Russia is tight, the order has been scheduled for September this year, and the price has reached a record high. A British importer said: "We have just been asked to pay £62 for the 18mm sheet. Before the new crown became popular at the beginning of last year, its price was £17." Another market challenge is the preliminary anti-dumping duty imposed by the European Union on Russian plywood on June 15. This tax rate is set at 16% DAP (Delivery at Destination) and will be maintained until December this year when the European Union will determine the future tax rate. This has also caused more European buyers to turn their attention to Asia, but the cost of freight has restricted the feasibility of switching from Russia to Asia. But regarding the cost of containers, importers believe that Indonesian plywood producers can use anti-dumping duties to replace Russian plywood with their products.
But things may change over time. If the price of the container drops to US$7,500, plus the EU’s anti-dumping duties on Russia, then Indonesia may attract business from Europe. However, this situation still faces a lot of uncertainty. Looking ahead, some European importers expect that Russia’s log export ban will take effect in the new year, which will have an impact on the plywood market. An importer said: "But this should not have much impact on European production, because European imports of Russian birch logs are limited. But China has been importing a large number of logs from Russia, including birch. Therefore, unless two Otherwise, Chinese manufacturers may face the challenge of shortage of raw materials, and EU plywood importers may bear the pressure of a further increase in plywood prices."
Some plywood importers are also adjusting their strategies to purchase plywood products from Europe instead of importing from other countries. However, due to the limitation of the production capacity of local European manufacturers, this is not a viable option. Moreover, the price of European plywood has been rising following the international trend. In addition, another problem facing British companies is the impact of Brexit. Plywood importers in the United Kingdom report that plywood transportation costs from continental Europe have increased, and shipping companies have increased freight rates to offset the time added by new ports and customs procedures. In addition, there are some problems in trade with Northern Ireland and Ireland. According to the Brexit agreement of the United Kingdom, Northern Ireland remains in the EU single market. This means that plywood and other timber products imported from Northern Ireland from the UK must undergo due diligence under the EU Timber Act. In addition, if importers ship goods to Northern Ireland for re-export to Ireland, they will also incur further tariffs, even if the goods have already paid tariffs when they enter the UK. A plywood company with factories in England and Northern Ireland said: "There are some ways to solve this problem, but this is really not a satisfactory arrangement."
