Now we are in January of 2021 and 12th February is the Chinese New Year. We saw the Chinese plywood export shink in the last December.
There are two key reasons:
- Soaring Sea Freight
- Bad USD/RMB Exchange Rates
- State Wide Production Control in China
Soaring Sea Freight
Plywood is a low value product and most of its exports are through 40ft container.
Plywood shipments are mainly from Qingdao port and Lianyungang port of China.
According to shipping forwarders in Qingdao, its freight to many ports in the world is not lower than 6000USD as of January of 2021.
That means there is a 4000-5000USD increase per 50 cubic meters of plywood.
The CIF price of phenolic plywood can increase from 350USD to 430USD per cubic meter. It is a 30% increase only considering freight not others.
Some exporters are switching to bulk cargo ship. But cargo ships are very limited compared with the container ships. Many plywood exporters are far from cargo ship ports.
Bad USD/RMB Rates
USD/RMB rates have decreased from 7.2 to 6.5 in the past six months. It is a 10% cost increase on Chinese plywood exporters.
Major banks forecase the rate to be from 6.3-6.6 in this year.
Pollution Control in China
Plywood factories are mostly located in north China. During the winter seasons, weather goes smogy easily because of the high load of the power plants.
China now has a policy to stop production of many factories (including plywood and other building materials) when the pollution rate get somewhere.
In December of 2020, plywood factories in Shandong only operate for 15 days. Half of the time they are not allowed to do production.
Situtations will get better in March when the temprature rises.