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CHINA SOFTWOOD MARKET OUTLOOK ANNA NI SENIOR ADVISOR, WOOD FROM FINLAND 18.2.2019
CHINA SOFTWOOD MARKET OUTLOOKANNA NISENIOR ADVISOR, WOOD FROM FINLAND
18.2.2019
Coniferous Lumber Imports by Country Jan-Nov 2018
Foreign Trade 2018
Significant Policies Related to Industry
China Coniferous Lumber Market Outlook for 2019
THE STATUP GUIDE
TOPICS TO BE COVERED
CONIFEROUS LUMBER IMPORTS BY COUNTRY
Jan-Nov 2018
Country Jan-Nov 20181000m3
Jan-Nov 20171000m3
Change 2017 Annual1000m3
2016 Annual1000m3
Russia 14,414 13,289 + 8.5% 14,284 11,608
Canada 3,747 4,546 - 17.6% 4,997 5,222
Finland 1,066 1,557 - 31.5% 1,707 950
Chile 688 651 + 5.7% 693 746
Sweden 669 830 - 19.4% 909 692
USA 435 561 - 22.5% 621 639
New Zealand 343 383 - 10.4% 427 360
Brazil 320 294 + 8.8% 322 242
Germany 135 187 - 27.8% 202 173
Ukraine 394 102 + 286.3% 114 27
Others 625 705 - 11.3% 770 416
Total 22,836 23,105 - 1.2% 25,046 21,075
The trade surplus with US accounting for 91.9% of the whole trade surplus value of China 2018
Trade value with Russia will keep high speed growth
RMB Exchange Rate trend in 2019? New negotiation on 14th and 15th Feb
CHINA FOREIGN TRADE 2018
Item Value (USD) YoY Remark
Total Value of Foreign Trade 4.62 Trillion + 12.6% Hit a high record
Total Value of Export 2.48 Trillion + 9.9% Highest growth rate since 2011
Total Value of Import 2.14 Trillion + 15.8% First time reach 2 trillion
Trade Surplus 351.76 Billion - 16.2% Lowest since 2013
Trade Value with Russia 107.06 Billion + 27.1% Growth rate ranks No.1 among Top 10 trading partners
Trade Value with EU ≈666 Billion + 7.9% Export +7%. Import +9.2%. 4.5 Trillion RMB.
Trade Value with US 633.52 Billion + 8.5% Export 478.42 Billion USD,+11.3%. Import 155.1 Billion USD,+0.7%. Trade Surplus 323.32 Billion, +17.2%
2013 China State Council released ‘Action Plan of Air Pollution Prevention and Control ’ President Xi personally deploy and lead
5th Mar 2017 “Blue Sky Protection War” first be mentioned by Premier Li Keqiang in the government report (Storm started)
In the beginning of 2018, President Xi promised to tackle the country’s longstanding environmental problems
27th Jun 2018 Chinese State Council released “Three years’ Action plan to win the blue sky war”
2019 Outlook: 2nd round environmental supervision by central government is under planning. Policy implementing will be flexible according to the country situation.
Logic inside: Social stability (no grand tide of unemployment)＞ Reaching GDP Growth Target ＞ Environmental Protection ＞others
SIGNIFICANT POLICIES RELATED TO INDUSTRY
Environmental Protection Policies
Blue Sky, Clean Water, Pure Land Protection War
EXPORT
Trade War
RMB depreciation /appreciation
CONSUMPTION
Reduce the tax. Tax supervision for rich group. Fight with private smuggling. Social insurance rate might be cut down
INVESTMENT
Infrastructure, real estate industry. Real estate is drug.
SIGNIFICANT POLICIES RELATED TO INDUSTRY
GDP & Marco Economy
GDP Target Final GDP Growth
2018 6.5% 6.6%
2019 6.3% (6.4% ?)
3 Carriages of Chinese Economy
2019 might have at least 3 times RRR cutReduction of interest is possible in 2019
Year Times of RRR cut
2013 No
2014 No
2015 4 times RRR cut3 times interest cut
2016 1 time RRR cut
2017 No
2018 4 times RRR cut (2.3 trillion RMB liquidity)
2019 Already 1 time RRR cut in Jan
Reserve Requirement Ratio (RRR) cut function:
Lower financing costs and inject the liquidity to the market
Deleveraging Stabilize the leverage
Debt Crisis
Monetary Policies
SIGNIFICANT POLICIES RELATED TO INDUSTRY
Labor Policies
Social security insurance will be collected by Tax department since 1 Jan 2019
(Real implementing: in the end of 2018, announced this policy implementing will be postponed especially for the enterprises’ employees
1st Nov : President Xi made a presentation in the private enterprises forum, and emphasized the importance of private enterprises
Social insurance rate might be cut down in the near future
SIGNIFICANT POLICIES RELATED TO INDUSTRY
2018 birth population: 15.23 million(17.23m in 2017)
2018 Birth rate: 10.94 ‰
2018 death population: 9.93 million (7.13 ‰)
2018 natural population growth rate: 3.81‰
2017 marriage registration: 10.631 million couples( -7.0% yoy)
2017 divorce registration: 4.374 million couples (+ 5.2% yoy)
Three Children Policies might be not far away.
Population Policy
SIGNIFICANT POLICIES RELATED TO INDUSTRY
A new arms race might have begun
5 Feb Trump announced he’ll meet with Mr. Kim in Vietnam. Also show the relationship between US and Vietnam.
Pressure to China
Moderately loose direction and increased political risks
OUTSIDE OF CHINA
-
5000 000
10000 000
15000 000
20000 000
25000 000
2002 2004 2006 2008 2010 2012 2014 2016 1-6/2018
m3
Chinese Sawn Softwood Imports
Russia Canada Finland Chile Sweden USA New Zeland Germany Others
GLOBAL SAWN SOFTWOOD EXPORT TO CHINA 2002-2017
SPF peak year
CHINA’S SOFTWOOD MARKET HISTORY
Sawn Softwood Importing
• 2002 1,188,790 m3
• 2007 2,804,276 m3
• 2008 3,645,220 m3
• 2017 25,046,000 m3
21 times compared to 2002,
6.8 times compared to 2008
• 50x100 Chinese Standard
• 45x95 HF/DF
• 38x89 SPF
• 36x86 Radiate pine
Dimension Evolution for Concrete Forming in China
It takes time for China to accept new things, but in a short time.Cost performance is the most important factor
Don’t leave China
CHINA SOFTWOOD MARKET OUTLOOK
• Once you go good, it’s hard to turn back. Finnish and Finnish Timber are UNREPLACEABLE
• Industry need to survive first, so they will still be cost sensitive. Cost performance competition with the global suppliers
• The market is huge, for Fins only need a small piece of cake. High-end ordinary consumers are still there
• The big production companies will have more price power for both sales and purchasing
• RMB exchange rate might be positive for timber industry. Waiting for the trade war negotiation
• No unilateral up/down market
• Pay more attention to e-commerce of China
• The logic: Social stability ＞ Reaching GDP Growth Target ＞ Environmental Protection ＞ others
