How does the coronavirus epidemic affect the tropical hardwood veneer supply?

The International Tropical Timber Organization (ITTO) website reports that Brazil, Gabon, Ghana, Indonesia, Malaysia, Myanmar, Peru, Thailand, and Vietnam are the major producers and traders of tropical wood products worldwide, and their wood products account for more than 50% of global trade. To understand the impact of the new coronavirus epidemic on the tropical timber and plywood industry, ITTO Market Information Service (MIS) and Trade Advisory Group (TAG) conducted questionnaire surveys in these nine tropical countries.

tropical hardwood veneers for plywood

The questionnaire set a total of six questions: whether the plywood factory is still operating; whether or not workers are fired and how they earn; whether the company receives government assistance; whether domestic or international orders have been cancelled; whether the containers are still available and whether they are loading timber; The time it takes for timber production to increase to pre-epidemic levels. The survey results show that epidemic prevention and control measures have a huge impact on the tropical timber industry.

Jobs Lost in Hardwood Industry

Thousands of workers have been laid off and market demand has plummeted. Some governments are providing support for workers and enterprises, but some governments have not yet responded. Although it is difficult to draw further conclusions on this questionnaire survey at the current epidemic stage, the common concern of all countries is whether the market demand for tropical timber will recover quickly after the epidemic is controlled, thereby enabling tropical timber producers to resume production. The normal flow of orders is the lifeblood of the factory. There is no order without demand; without production there is no cash flow and workers are not paid. Throughout the tropics, thousands of workers have been dismissed and their lives have been affected.

In response to the outbreak of the novel coronavirus, many governments in tropical regions ordered the closure of border crossings, leading to production stagnation. With the relaxation of restrictions on the movement of people, plywood veneer processing plants that have not completed orders may resume work. However, many veneer buyers demand to postpone delivery or simply cancel orders, which is a serious situation for many manufacturers, and the situation will be further deteriorated due to the unlikely recovery of domestic or international demand. The cash reserves of domestic wood product users and importers in most tropical countries have been greatly reduced, and the financial situation of most wood product users will take a long time to recover, thereby increasing the downward pressure on forwarding purchases.

Against this background, countries urgently need to take extraordinary measures to deal with the epidemic, reverse unemployment, and rebuild the income flow of the tropical timber sector. In particular, they need to find innovative solutions to ensure the normal operation of wood processing plants. Measures include providing revolving funds to end-users and importers so that they can order and pay in advance, and then deliver the wood; and, for example, private wood processing plants receive discounts through early payment.

Plywood Market Under Covid-19

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Not only the plywood supply chain is impacted, but the plywood market has also shrunk so much that Chinese plywood factories are receiving fewer orders from overseas. Orders are getting less for manufacturers from Malaysia, Vietnam, and Russia.