Canadians Show Strong Support for India’s Wood Market
First Time to India
I’ve recently returned from the India Wood 2014 exhibition in Bangalore, India. It was my first visit to India and my market knowledge was limited to two fundamental facts. First, India is a hardwood market, the heavier and the harder the wood the better. Second, softwoods are perceived as inferior and overpriced. However, the Bangalore wood exhibit along with FII led visits to saw-mills, manufacturers, and traders revealed much more optimistic market information.
The “China Effect”
Ten years ago when team Canada (NRCAN, FII & Industry) started developing the China market, there were many questions as to what the return on investment might be. After all, U.S. housing starts were at more than 1.5 million starts, and business was good. Despite some pessimism, market development work continued in China. In five short years, China became a major wood customer that would eventually go on to save thousands of Canadian forestry jobs while the U.S. economy languished. As an Industry, we witnessed the importance of market diversification. I supposed the silver lining of the U.S. collapse and the beetle infestation is that it pushed us to out of our comfort zone to find new markets, namely China. Had we not experienced success in China, there would be very little appetite for market development investment in India, at least not at this early stage. China’s emergence has given us the confidence to invest in new uncharted waters like India.
India Wood 2014 (Bangalore)
Team Canada’s participation at this show was extremely impressive, boasting no less that fourteen wood products companies and organizations.The trade show had 600 exhibitors from more than 40 countries and had 45,000 visitors. Canada’s 40,000 square meter pavilion was one of ten country pavilions. The other nine belonged to Germany, Italy, Turkey, Taiwan, China, Sri Lanka, France, Malaysia and the US.
India Wood Market Optimism
India’s wood market can be summed up in two words: Teak Logs. 75% of the world’s supply of teak comes from Myanmar and Myanmar’s number one customer is India. But teak log supply is tightening and as of last week (April 1, 2014), Myanmar’s teak log export ban went into effect. Teak and other hardwood logs will be increasingly more difficult to source, which means India will gradually shift away from logs to lumber.
But a shift away from logs to lumber isn’t the only shift that will take place. Wood consumption in India is growing 20% a year. Increased demand and decreased availability of hardwoods means that the industry will slowly start to substitute softwoods for hardwoods. The shift has started. Most of the door, window and furniture manufacturers we visited had started utilizing softwoods for core stock. And the manufacturing sector (i.e. doors/windows/furniture/millwork) represents more than half of the wood market. This is the most important segment for Canadian
shippers because wood manufacturers are the ones that place high value on quality and higher value wood species. We don’t really want to be competing with wood products used in the low end of the market (i.e. pallets). As more manufacturers do trials with Canadian species, they will figure out how best to use it whether it’s for furniture, door stock or for interior decoration. Add to that the desire by a young Indian generation wanting to source products that are sustainable, it is clear that Canada is well positioned.