A Canada Wood Asian manager’s regional meeting took place in Japan from April 25th to 28th. At the meeting, 15 persons from 5 countries (Canada, China, Korea, Indian and Japan) gathered to familiarize themselves with their colleagues and sister markets to exchange information and best practices for developing opportunities and expanding international markets for Canadian wood products. Of the three full days that the manager’s spent together for meetings, presentation and brainstorming sessions, one day was set aside for the group get out of Tokyo to visit Polus Tech’s Post & Beam Pre-Cut Manufacturing Plant in Ibaraki Prefecture, Mitsui Home Component’s 2×4 & Truss Component Manufacture Plant in Saitama Prefecture, and last but not least a tour of a 2,200m² three-storey 2×4 fireproof elderly care facility under construction in Kanagawa Prefecture, designed by Issiki Architects & Partners, constructed by Nagai Construction Co., Ltd. and the structural materials supplied by Wing Co., Ltd. I would like to take this opportunity to thank these Japanese companies and their staff who generously took time out of their busy schedules and hosted our group.
February economic highlights:
- China has lowered its expectation for economic growth to around 6.5% in 2017 which is still in line with analyst predictions.
- The budget deficit target is at 3% of GDP in 2017, while the target for China Consumer Price Index (CPI) is around 3% and M2 growth target is around 12%[i].
- The government intends to eliminate tens of millions of tons of excess capacity in coal and steel industries which would put hundreds of thousands of workers out of work.
- Analysts doubt 2017 can match 2016’s economic growth. For instance, exports will not grow significantly and currency depreciation are expected to be offset by rising wages[ii].
The Chinese government is targeting a 6.5% growth rate in 2017.[iii] The Economist Intelligence Unit pegs its GDP growth forecast at around 6.4%; they predict that there will be high spending on infrastructure, property sector slowdown and tighter monetary policy.[iv]
Caixin PMI decreased from 51.9% in December to 51.0%[v] in January which is still higher than most months in 2016, except October (51.2%). Exports value dropped from USD 209 billion[vi] in December to USD 182 billion in January which is now lower than the average value (USD 189 billion) since July 2016.
China Consumer Price Index (CPI) increased from 102.1(December) to 102.5 (January)[vii] Index Points which marks the highest rate since February 2016. USD/CNY decreased slightly but consistently from 6.94 (January 1st) to 6.88 (January 30th) to 6.88 (February 1st) to 6.87 (February 28th)[viii]; CAD/CNY on the other hand fluctuated from 5.17 (January 1st) to 5.28 (January 30th) to 5.27 (February 1st) to 5.16 (February 28th)[ix].
Building material prices
Regarding common building material prices, price for cement in China declined 0.68% from RMB 293.50 per metric ton on February 1st to RMB 291.50 per metric ton on February 28th [x]; rebar steel was worth RMB 3,219.33 per metric ton on February 1st and then increased dramatically by 15.50% to RMB 3,704.00 per metric ton on February 28th [xi].
Wood Export to China
- China’s log imports in January 2017 reached 4 million m3 with 9.24% growth year-on-year but decreased 2.77% from December 2016. The import volume of softwood log constituted 66.3% of the total with 2.61% decline year-on-year[xii].
- The average price of imported logs in January was USD 168.36/m3 with 1.13% decline year-on-year and 1.74% decline month-on-month[xiii].
- China’s lumber imports in January 2017 reached 2.39 million m3 with 7.92% growth year-on-year. However the volume dropped dramatically by 19.55% compared to December 2016. In the same month softwood lumber imports contributed 72.13% of the total with 4.51% growth year-on-year[xiv].
- The average price of imported lumber in January was USD 250.14/ m3 with 3.02% decline year-on-year and 6.09% decline month-on-month[xv].
[i] Reuters with CNBC(March 4th, 2017). China aims for around 6.5 percent economic growth in 2017
[iii] Reuters with CNBC(March 4th, 2017). China aims for around 6.5 percent economic growth in 2017
[iv] Tom Rafferty. “Politics trumps all: Outlook for reform and growth in China in 2017”. Asia Regional Strategic Forecast 2017 (March 9th 2017), Economist Corporate Network, Shanghai, China.
[xii] BOABC (February 2017). China Wood and Its Products Market Monthly Report
[xiii] BOABC (February 2017). China Wood and Its Products Market Monthly Report
[xiv] BOABC (February 2017). China Wood and Its Products Market Monthly Report
[xv] BOABC (February 2017). China Wood and Its Products Market Monthly Report
By Chuck Dentelbeck, President CLSAB
During the week of April 25th Dr. Shim and Dr. Kim from the Korea Forest Research Institute (KFRI) attended the Alberta Forest Products Association (AFPA) lumber grading school in Grande Prairie, Alberta. Both scientists are very involved in development and implementation of new requirements for wood products in Korea. Dr. Shim and Dr. Kim enjoyed their week and were successful in their exam, obtaining a “B” NLGA grading ticket.
CLSAB, Canada Wood, NLGA, NRCan and Global Affairs Canada have been working with KFRI for two years to secure continued seamless access for Canadian lumber into Korea. This after Korea proposed new import requirements for sawn lumber in 2014. At the first meeting between KFRI and Canadian delegates in 2014, an invitation was extended to Korean officials to attend a lumber grading school in Canada. When the opportunity presented itself Norm Dupuis of AFPA made it happen. In addition, Dr. Shim and Dr. Kim, with CLSAB auditors in attendance, observed an AFPA grade inspection at the Weyerhaeuser facility in Grande Prairie.
Attendance at the training school and participation in an agency grade inspection improves the understanding of the Canadian grading system by key representatives of the Government of Korea. We believe that this will assist in advancing modifications to the proposed import requirements to maintain continued access for Canadian lumber into Korea.
The Canada Wood Group (CWG) helps Canadian wood products manufacturers diversify and expand export opportunities in traditional and emerging markets.
Learn more about Canada Wood’s impact via this infographic report:
Work in the Shadows
Most of what is known and appreciated about Canada Wood activities and programming takes place in the open, often publicized and visible to industry. Frequently however crucial work takes place behind the scenes on issues that have potential to be disruptive and damaging to industry exports: e.g. phyto-sanitary rules imposed by foreign plant protection authorities or technical barriers to trade erected by code authorities. Resolution is usually not straight forward and, while important to advise industry about the emergence of problems, it is not always wise to publicize widely. Continue reading