The main news from the UK plywood market is that supplies of Chinese plywood are becoming more and more difficult. Poor weather in China has been a major short-term factor, but a more important long-term structural factor is the gradual removal of tax benefits for Chinese exporters, which is particularly undermining the ability of smaller Chinese mills to compete in the UK market. Other problems facing Chinese mills supplying the UK market are increased competition for wood raw material in China, rising labor and fuel costs, and the difficulties of supplying environmentally certified products from China due to the complexity of supply chains. Longer term, there is an expectation that Chinese mills supplying the UK market may increasingly replace core veneers made from poplar, which are becoming less readily available and are difficult to certify, with core veneer made from eucalyptus or radiata pine.
Freight rates from Asia into the European market are also rising. While FOB prices for Chinese plywood have remained reasonably stable, CIF prices to European importers are increasing.
Malaysia and Brazil are the major beneficiaries of Chinese supply problems in the UK market. Malaysia is benefiting particularly from its ability to supply high quality material, increasing volumes of which are FSC certified, and to exploit a lower GSP tax rate than Indonesia. Brazilian shippers are benefiting from relatively short shipping times in addition to low GSP rates.