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S th t A i W d hi S l fTitle line 1

Southeast Asian Woodchip Supply for Asia: Focus on Vietnam and ThailandTitle line 1

Title line 2NameBob Flynn

Title, date

yDirector, International Timber, RISI16th Annual RISI Asian Conference

Shanghai, June 1-3, 2015

1 © Copyright 2015 RISI, Inc. | Proprietary Information

Southeast Asia provides 55-60% of Asian h d d hi i t ( d 71% f Chi ’hardwood chip imports (and 71% of China’s imports in 2015 first quarter)

80%Sources of Asian Hardwood Chips

60%

70%

40%

50%

20%

30%

0%

10%Southeast Asia

Australia + Chile + South Africa

© Copyright 2015 RISI, Inc. | Proprietary Information2

0%2007 2008 2009 2010 2011 2012 2013 2014

Vietnam and Thailand are the principal sources f h d d hi f A iof hardwood chips for Asian consumers

S th t A i H d d Chi E t12

Southeast Asia: Hardwood Chip Exports

Malaysia/Other

8

10 Indonesia

Thailand

Vietnam

6

lion

BD

MT

4

Mil

0

2


02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

A primary reason that woodchips from Vietnam d Th il d l i A i k tand Thailand are popular in Asian markets:

Price!

250

China: Average Price for Imported Hardwood Chips, 2014

200

, CIF

150

per B

DM

T,

100

US

Dol

lars

0

50


0Vietnam Thailand Indonesia Australia Chile South Africa

Malaysia has been a minor woodchip supplier, d th i littl t ti l f i iand there is little potential for increasing

exports

350

400Malaysia: Hardwood Chip Exports

Other China Japan

300

350

T

200

250

sand

BD

MT

100

150

Thou

s

0

50


02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Serious efforts were made to start woodchip t f C b di b t thi hexports from Cambodia, but this has proven

difficult and no exports are planned in 2015

40Cambodia: Hardwood Chip Exports

Japan

30

35Japan

China

20

25

sand

BD

MT

10

15

Thou

s

0

5


02002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

By far the largest supplier of hardwood chips i Vi t lth h t li iis Vietnam, although new government policies may threaten this supply source

7 000

8,000Vietnam: Hardwood Chip Exports

India

6,000

7,000

T

China

Taiwan

Korea

4,000

5,000

sand

BD

MT

Japan

2,000

3,000

Thou

0

1,000


0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

The largest woodchip exporters include i f T i d J llcompanies from Taiwan and Japan, as well as

Vietnam

Hao Hung21%

Vietnam: Major Woodchip Exporters 2014

21%

Other35%

JBC18%

VijaChip (Sojitz)12%


Itochu14%

12%

In Vietnam, millions of farmers have planted t i f i l t tiextensive areas of acacia plantations

Expansion of Forest Plantation Area in Vietnam

3 000

3,500Expansion of Forest Plantation Area in Vietnam

Total

2,500

3,000

ares

Production

1,500

2,000

sand

Hec

ta

1,000

,

Thou

s

0

500


2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

The majority of Vietnam’s commercial forest l t ti t ll d b h h ldplantations are controlled by households

Vi t Pl t ti F t O hi 2012

2% 1%

Vietnam: Plantation Forest Ownership, 2012

11%

4%3%

46%

11%Household

Forest Management Board

State owned Company

16%

State-owned Company

People's Committee

Private Company

17%

Other Organization

Army

Community


17% Community

Wood supply is not really limiting Vietnam d hi twoodchip exports

• Studies have shown that a typical farming family that growsStudies have shown that a typical farming family that grows acacia and harvests just half a hectare per year can doubletheir expected annual income. The farmers are quite happy

ith th d ti t l twith the revenue and continue to replant.• The volume of timber produced from Vietnamese plantations

is at least three times larger than that reported by FAO Basedis at least three times larger than that reported by FAO. Based just on woodchip and wood pellet exports, and other demand for fiber, the timber harvest in Vietnam was 22-24 million m3.

• Based on estimates of planted area and average growth rates, the timber harvest in Vietnam could potentially increase to around 30 million m3 making it the second-largest timberto around 30 million m , making it the second-largest timber producer in Southeast Asia.


But the Vietnamese government wants to have i d d ti ti bmore processing done on domestic timber

than just woodchip exports, e.g., for furniture

4 500

5,000Vietnam: Export Value of Woodchips and Wooden Furniture

W d F it

3,500

4,000

4,500

rs

Wooden Furniture

Woodchips

2,500

3,000

n U

S D

olla

r

1,000

1,500

2,000

Mill

io

0

500

1,000


If enforced, announced new policies could d Vi t d hi t b 50%reduce Vietnamese woodchip exports by 50%

%• In late 2012, Vietnam announced that a 5% export tax would be levied on woodchip exports. This policy has never been enforced.enforced.

• In December 2014, the government announced new efforts aimed at increasing wood processing in Vietnam. Maximum exports under this policy are supposed to be 5.5 million BDMT in 2015 and 3.5 million BDMT in 2016-2020, compared with more than 7 0 million BDMT in 2013 and 2014more than 7.0 million BDMT in 2013 and 2014.

• Through the end of the first quarter of 2015, there was no slowdown in exports of woodchips from Vietnam. But if this new policy is enforced, it will throw the market into confusion and quickly create an artificial shortage.


One option for Vietnam: wood pellets are id d “ l dd d” d t bj tconsidered “value-added” and are not subject

to export restrictions

1,200

Southeast Asian Wood Pellet Exports

I d i1,000

Indonesia

Thailand

Malaysia

600

800

Tonn

es

Vietnam

400

Thou

sand

200


02012 2013 2014

In any case, domestic demand in Vietnam is lik l t i hi h ill tlikely to increase, which will prevent any increase in woodchip exports• Vietnam Trading Engineering Construction Joint Stock

Corporation (Vietracimex) is moving the closed pulp mill from T ft N t Vi t ith d ti t d t t tTofte, Norway, to Vietnam, with production expected to start up by late 2016.

• Manh Thong is moving the closed Biowood Norway woodManh Thong is moving the closed Biowood Norway wood pellet plant (400,000 tonnes capacity) to Vietnam, and will build pellet storage silos at the port of Dung Quat.

• Sumitomo Forestry built a large particleboard plant in Long An Province, and Dongwha has built a very large MDF plant in partnership with the Vietnam Rubber Grouppartnership with the Vietnam Rubber Group.

• Small acacia logs are already being sawn in hundreds of very small sawmills to provide lumber for the furniture sector.


Unlike Vietnam, Thailand’s woodchips are 100% l t ith l ti l l l i ldeucalyptus, with a relatively low pulp yield

3,000Thailand: Hardwood Chip Exports

India

T i

2,000

2,500

MT

Taiwan

Korea

China

1,500

usan

d B

DM Japan

1,000Thou

0

500


2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Most woodchip exports from Thailand are to Chi d J lth h D bl A h lChina and Japan, although Double A has plans to export to France

India

Thailand: Woodchip Exports by Destination, 2014

Korea1.0%

Taiwan8.0%

India0.5%

Japan40.0%

China49.9%


France0.6%

Shaiyo Triple A has been by far the largest d hi t i Th il dwoodchip exporter in Thailand

Thailand: Major Woodchip Exporting Companies 2014

IWC

Others9%

Thailand: Major Woodchip Exporting Companies, 2014

VWC2%

5%

SCG (Siam Forestry)

6%

STD (Itochu)12%

Shaiyo66%


Thailand is also a major supplier of lumber and d l t b t th i ilwood panel exports, but these are primarily

rubberwood based products

900

1,000Thailand: Wood Products Exports

Lumber

700

800

900

s

Particleboard

MDF

Woodchips

500

600

US

Dol

lars Woodchips

300

400

Mill

ion

0

100

200


02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

The largest surplus of eucalyptus in Thailand i i th U N th t f f th tis in the Upper Northeast, far from the ports

4.5

5.0

Thailand: Eucalyptus Supply and Demand

Total Demand

3.5

4.0

ers

Total Supply

2.5

3.0

Cub

ic M

ete

1 0

1.5

2.0

Mill

ion

0.0

0.5

1.0


East Upper Northeast Lower Northeast West/Lower North

Summary: Outlook for woodchip supply from Vi t d Th il dVietnam and Thailand

• Vietnam• Vietnam– Because of the importance of the woodchip export markets to

the local economy, we believe the Vietnamese government will be cautious in implementing its policy of encouraging greater domestic consumption of wood. Over the next five years, we expect Vietnamese woodchip exports will decline 12-15%, but total wood supply will expand from plantations, thus allowing more domestic wood processing as well.

• Thailand• Thailand– Although exports are up in early 2015, over the next five years

we project that exports to Asian markets will be stagnant to slightly (5-6%) lower, due in part to greater competition from other markets for the wood.


Mark your calendars: 2015 International Woodfiber Resources and Trade Conference to be held inResources and Trade Conference to be held in Savannah, Georgia, November 2-4!

Th 8th f f dThe 8th conference focused on international trade in woodchips and biomass, and the first one to be held in the USA.

Previous conferences have proved to be valuable business networking eventsbusiness networking events for those involved in the trade, attracting buyers, sellers and traders fromFor details contact: sellers and traders from more than 30 countries.Bob Flynn

[email protected]


1-360-471-6578

Thank you for your attention!f

International Timberland Ownership and Investment Database

For more information:

www.risi.com/timberland

Southeast Asia: Regional Timber gSupply and Market Outlook www.risi.com/SEATimber

International Pulpwood Trade Review www.risi.com/pulpwood

Contact: Bob FlynnEmail: [email protected]: 360-471-6578


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