MTIB News Extracts (Vol. 39/09/16)

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1 MTIB News Extract Vol. 39/09/2016 0

This weekly information service provided by MTIB represents one of our efforts to provide the timber industry regularly updated business information on forestry and timber and the trading environment.

2 This weekly information service provided by MTIB represents one of our efforts to provide the timber industry regularly updated business information on forestry and timber and the trading environment. This enables quick reading of trends, developments and business opportunities to be identified. Since its launching, the service is well received and I thank you for your continued support especially your comments and suggestions. We will continue to upgrade the quality of the news items for the interest and benefit of the industry and hope your association s members will continue to benefit from it. Please communicate with us regularly so that we can improve the information flow based on your feedback. We look forward to hearing from you. Thank you. Dato Dr. Jalaluddin Harun Director General Malaysian Timber Industry Board 1

3 VIET NAM: JANUARY-AUGUST 2016 EXPORTS OF WOOD PRODUCTS FALL The Viet Nam Timber and Forest Product Association (VIFORES) said that exports of wood and timber products from Viet Nam in January-August 2016 decreased from a year ago to USD 4.40 billion (EUR 3.92 billion). At present, the US is the largest importer of wood and timber products from Viet Nam, accounting for 39.5% of total shipments. Japan is the second largest importer at 14.6%, followed by China and South Korea at 14% and 8.6% respectively. Wood and timber products exports to Norway and China decreased by 40% in the eight months. VietnamPlus (in English), 14 Sep 2016 SOUTHEAST ASIA: INDONESIAN, MALAYSIAN BANKS AMONG TOP DEFORESTATION FINANCIERS The Forests & Finance report released by TuK Indonesia, Rainforest Action Network and Profundo showed that banks in Indonesia and Malaysia are among the top forest degradation financiers in the Southeast Asian region. In , global lenders provided loans worth over USD 38 billion (EUR billion) that contributed to deforestation in Malaysia and Indonesia. The report revealed that Employees Provident Fund of Malaysia and the largest fund management company in Malaysia, Permodalan Nasional Berhad (PNB) are providing funds for forest-risk organisations. The top two Malaysian financiers 2

4 of such organisations are CIMB and Malayan Banking with loans of more than USD 2.5 billion each. In Indonesia, Sime Darby and Felda Group of Malaysia, Salim Group, Rajawali Group and Wilmar Group are among organisations funded by Bank Mandiri, which provided loans worth over USD 1 billion related to forest-risk businesses. Bank Rakyat Indonesia and Bank Negara Indonesia provided loans worth USD 458 million and USD 678 million respectively. Jakarta Globe (The), 10 Sep 2016 ESTONIA: MANUFACTURERS OF WOOD HOUSES TO FOCUS ON EXPORTS TO SWEDEN Estonian manufacturers of wooden and module houses have been forced to revise the targeted exports of wood module houses to accommodate refugees seeking asylum in Germany or elsewhere in northern Europe, mostly due to the unreliability of prospective partners' demand volume exceeding the capacities of Estonian businesses. Akso-Haus, a module house manufacturer, which had exported over 60 module homes for refugees in Germany, was forced to stop exports due to the inefficiency of the developing partner in Germany. Akso-Haus has re-shifted focus on exports of module schools and kindergartens to Sweden. Postimees, 16 Sep

5 ESTONIA: FINANCE MINISTRY DOWNGRADES ECONOMIC GROWTH FORECAST FOR 2016 AND 2017 Estonian Finance Ministry has revised the country's economic growth forecast to 1.3% in 2016 and 2.5% in 2017 compared to the spring forecast of 2% in 2016 and 3% in The Ministry forecast domestic consumption to remain the main economic growth engine. The Ministry expects Estonia's economic growth to average at the yearly 2.7% over , supported by domestic consumption and growth in exports. Delfi - Estonia, 15 Sep 2016 IRELAND: 2016 SECOND-QUARTER BUILDING, CONSTRUCTION OUTPUT JUMPS The Central Statistics Office revealed that the volume of building and construction output in Ireland grew on a yearly basis by 16.5% and on a quarterly basis by 6.3% in the second quarter of Output value climbed annually by 17% and sequentially by 6.2%. Compared to the first quarter of 2016, the residential segment accounted for a 10.5% jump in output volume while non-residential building rose by 8.1% and civil engineering work increased by 4.2%. RTÉ, 09 Sep

6 GERMANY: EXPORTS OF SAWN TIMBER TO EU UP German exports of sawn timber to the EU were up 6% in the second quarter of 2016 to millimeter cubic metres. Exports to Austria were up 10%, while exports to Belgium were up 24% and exports to the Czech Republic were up 9%. EU exports made up 74% of the total. Exports outside of the EU were slightly under the previous year at 365,038 cubic metres. Exports to Saudi Arabia were down 37% but exports to Japan and China were up by 261% and 63% respectively. EUWID Holz und Holzwerkstoffe, 29 Aug 2016 GERMANY: FURNITURE INDUSTRY TURNOVER UP According to its industry association VDM, the German furniture industry recorded a turnover of EUR 8.9 billion (USD 10 billion) in the first half of This was 4.9% higher than in the same period of This growth exceeded analysts' expectations. The value of exports during the first half of the year rose by 2% to EUR 5.2 billion. Sales of German furniture to EU member states increased by 2.8% to EUR 3.6 billion. Holz Zentralblatt, 29 Aug

7 POLAND: BOOM IN RESIDENTIAL CONSTRUCTION BY-PASSES MUNICIPAL HOUSING Municipal housing in Poland has not benefited from the current boom in residential construction, according to official statistics and the number of municipal flats built in the first half of 2016 was 57 units or 0.2% down than a year earlier. In contrast, the number of properties released which were destined for sale or rent went up in the period, rising by 10,878 units, and year-on-year increases were also seen in the co-operative and social rented sectors. In total, 73,773 flats were delivered in the first six months of 2016, which is 15.3% or 9,807 units up from a year earlier. Wirtualny Nowy Przemysl, 12 Sep 2016 RUSSIA: PROCUREMENT OF FOREIGN FURNITURE FOR STATE NEEDS MAY BE BANNED The Industry and Trade Ministry has proposed a ban on the purchase of foreign furniture for state needs, except for the EurAsEC countries. The document applies to the procurement of furniture, including kitchen furniture, as well as floor coverings, including parquet and laminate. Over the past 20 years, the Russian furniture industry has significantly upgraded. This allows domestic factories to manufacture products that are not inferior in quality, design and 6

8 environmental friendliness overseas. The capacity of many domestic furniture enterprises is 50-60% utilized. The ban on the foreign public procurement of furniture will be one of the most effective measures to support the Russian industry. Every year RUB 30 billion (EUR million / USD million) is spent to buy furniture and other wood products for state needs. This accounts for 20% of furniture production in the country. If the ministry's initiative is carried out, the Russian furniture enterprises will up production 25-30%. Rossiyskaya Gazeta, 13 Sep 2016 RUSSIA: FURNITURE IMPORTS DOWN According to Lesprom Network, in 2015 furniture imports fell 36.3% in terms of value. The share of imported products dropped to 48.1% from 57.9% in Demand continued to shift towards low-cost furniture. In US dollar terms, imports declined by 42.6%, the average production cost went down by 8.4% to USD 51 (EUR 45.41) per unit. China was the main importer, followed by Belarus. In Russia, furniture production in volume terms sank by 6.1%. Output of office furniture decreased by 18.6%, mattresses and mattress foundations by 16.1%, upholstered furniture by 8.5%. Average producer prices rose by 18.4%. At the 7

9 same time, the market saw a significant increase (+44.1%) in prices for upholstered furniture that have imported fittings. This is caused by the ruble devaluation and new technical regulations on safety of furniture products. The price growth led to a 11.1% rise in furniture production in value terms. Retail sales of household furniture went up by no more than 1%. Sales in real terms are estimated at million units. Rossiyskaya Gazeta (E-edition), 12 Sep 2016 SLOVAKIA: CONSTRUCTION OF FLATS DOWN According to the Slovak Statistical Office (SU SR), the first half of 2016 saw start of construction of 9,340 flats in Slovakia, representing a drop by 8.4% year-on-year. Out of the total, 8,889 flats, down by 12.1% year-on-year, were commenced within the private sector and 451 in the public sector, representing a massive rise of 424.4% year-on-year. The number of completed flats fell by 6.1% year-on-year to 6,257 units in the first year 2016, out of which public sector saw a rise by 32.3% year-on-year to 250 flats, and private sector a drop by 7.2% year-on-year to 6,007 units, with 4,691 flats completed in family houses, up by 12.6%. As of 30 June 2016, a total of 68,895 flats were under 8

10 construction, up by 5% year-on-year, with 67,466 in the private and 1,429 in the public sector, up by 6.2% and down by 32.5% year-on-year respectively. Sme, 10 Sep 2016 SWEDEN: PIPES, KITCHENS AND WET ROOMS HAVE PRIORITY FOR RENOVATION Swedish construction analysis company Industrifakta's yearly survey to Sweden's major construction companies shows that pipes, kitchens and wet rooms remain the priority during renovation and refurbishment. Among municipal housing companies this trend is particularly strong. According to the survey, the municipal housing companies expect that the volume of renovation and refurbishment will grow by an average 2% per year during VVS-Forum, 12 Sep 2016 BELARUS: FOREST AREA TO INCREASE Forestry Minister Mikhail Amelyanovich states that Belarus plans to increase forest area from current 39.7% to 40.1% by Forests cover 9.50 million hectares, standing timber is estimated at 1.74 billion cubic metres. Wood 9

11 growth exceeds more than 32 million cubic metres per year. Belarus has 0.90 hectares of forest land per capita. Belta, 14 Sep 2016 BELARUS: BELLESBUMPROM PROVIDING OF FURNITURE OUTPUT IN COUNTRY According to Bellesbumprom, over the past two years the number of furniture manufacturers in the country doubled to 600. Furniture production is estimated at RUB 800 million (EUR million / USD million) to RUB 850 million per year. Bellesbumprom's enterprises (20 factories) account for 35.4%. Of these, over the first seven months of 2016, the largest volume of production was provided by Pinskdrev (+6.3% YoY), Molodechnomebel (+1.8%), Gomel Furniture Factory Progress (+8.5%) and Slonimmebel (+3.4%). The top producer of upholstered furniture and furniture for dining rooms and living rooms is Pinskdrev with shares of 47.2% and 68%, respectively. As for kitchen furniture production, the top producer was ZOV-LenEvromebel (96%). The top bedroom furniture manufacturers were Molodechnomebel (20%) and Slonimmebel (19%). Lesprom, 09 Sep

12 HONDURAS: TEAK EXPORTS TO INDIA ARE EXPECTED IN THE COMING MONTHS Honduras is planning to export teak from managed forests to India during the next few months, according to executives from a forestry company based in northern Honduras. Extraction of this wood from a 40 hectares plantation will commence during the week commencing 19 September 2016, with exports set to exceed 1mn board feet (BF), which is equivalent to 4,000 cubic metres, as per a statement from Olvin Andino, general manager of Empresas Exportadoras. Once this timber is removed, new trees will be replanted. The teak will be processed in India and re-exported to markets such as Europe. La Tribuna (Honduras), 13 Sep 2016 SOUTH AFRICA: CHANGE OF LOCAL ADMINISTRATIONS COULD SLOW SPENDING ON HOUSING AND CONTSRUCTION Despite the uncertainty of the second half 2016 timber market prospects could be better than in the first half. The market is beginning to recover from the election hiatus, although the results will have an impact on government housing projects for the time being. Having lost Cape Town, Port Elizabeth, Johannesburg and Pretoria the ruling party has lost control of sectors accounting for more than half of the country s GDP. Despite the uncertain 11

13 times analysts report businesses seem more confident and some projects, such as hotel refurbishments which had been on hold, have now been started. The yearlong steady flow of work in the shop fitting sector continues but, while there is some expansion in the low income housing marketactivity in the more expensive middle and higher priced housing segment is depressed. Major meranti user in liquidation news has emerged that one of South Africa s major door and window manufacturers and users of meranti, Zikiza, has gone into receivership leaving local traders and some Malaysian suppliers unpaid. The strengthening of the rand and sale of Zikiza stocks has put pressure on the market forcing some prices down. South African importers are also seeing some weakening FOB prices for Malaysian sawnwood which is put down to slow sales in Europe. 12

Sawnwood C&F Price Indices Demand for US hardwoods is said to be steady supported by the stronger rand which has resulted in a slight slide in prices.

14 Sawnwood C&F Price Indices Demand for US hardwoods is said to be steady supported by the stronger rand which has resulted in a slight slide in prices. Analysts report a softening of red oak prices and that volumes being traded are about 15% down on last year. Overall, traders report demand is moderate and that there is increased demand in the refurbishment and home alteration markets. Traditionally this is the busier part of the year as all contracts need to be finished by early December when builders begin their holidays. Globalwood, 16 Sep

15 CHILE: FORESTRY EXPORTS MTIB News Extracts (Vol. 39/09/16) Chilean forestry exports totalled USD 3.06 billion (EUR 2.72 billion) during January-July 2016, according to figures from the Institute of Forestry (INFOR), representing a year-on-year drop of 6%, mainly because of falling prices. Of this amount, a total of 51%, or USD 1.56 billion, corresponded to exports to China (at 27.2% of such exports), the US (16.1%) and Japan (7.6%), followed by other nations such as South Korea, Mexico, Netherlands and Peru. Chinese imports of forestry products from Chile reached USD million as of July 2016, representing a year-on-year increase of 11.7%, with demand for pulp rising the most. US imports of such products stood at USD million, which is 3.4% down on levels as of July 2015, linked to falling demand for frames, whilst Japanese imports totalled USD million, representing a year-on-year rise of 2.3%, due to rising woodchip purchases. During January-July 2016, a total of 74.2% of these exports corresponded to Arauco and Chilean pulp and paper company (CMPC), at USD 1.41 billion and USD million, respectively, followed by Masisa (USD million) and Consorcio Maderero (USD 49.7 million). Overall exports of forestry products from Chile are set to reach USD 6 billion during 2016, compared to USD 5.44 billion in the previous year. El Mercurio (Chile), 16 Sep

16 Printed By: Trade Development Division Malaysian Timber Industry Board (MTIB) (Ministry Of Plantation Industries & Commodities) Level 13-17, Menara PGRM, No. 8 Jalan Pudu Ulu, Cheras P.O.Box 10887, Kuala Lumpur 15

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