25 August 2021
The plywood price in Europe is increasing due to material price increase, freight increase, delivery delay and booming demand for plywood in the construction sector.
Increasing demand in the U.S. is pushing up plywood prices in Brazil. Then this will give pressure on Chinese plywood prices. European plywood importers have to buy more expensive Chinese plywood.
Historically High Freight from China
According to some European plywood importers, the container freight from China has begun to fall from the peak after the covid-19 epidemic. However, some other importers stated that the freight of the 40-foot container recently is still between 15,000 and 20,000 US dollars, which is still inflated compared to the 1,500 to 2,000 US dollars in October 2020.
Recently, with the relaxation of lockdown and the recovery of the global economy, plywood exporters from China have found that there is a large shortage of containers and freight increases. Even some shipping companies’ freight costs have reached half of the value of the plywood transported. Because of this, many importers choose to transport the plywood on the breakbulk cargo ships.
Many importers now import plywood with bulk cargo ships. Even though the breakbulk cargo ship cost less freight, it has some problems that some importers can not endure:
- Not always on time.
- Plywood are more likely to be damaged in transit.
- Requires large volume to ship.
- Freight for breakbulk cargo are also increasing fast. Breakbulk cargo shipping rates have roughly doubled in the past six months.
Plywood Material Cost Increase
European plywood importers also face the rise in plywood prices. Especially in the past three months, global consumption has continued to accelerate, and the government’s economic stimulus measures have provided a greater impetus for plywood consumption.
But at the same time, plywood production in many parts of the world is still limited by the lack of personnel due to COVID-19 infection or isolation.
The supply of raw materials is also a problem faced by many plywood manufacturers. Veneer and glue prices have been increasing since March. Therefore, the price of plywood products will continue to rise.
Increasing Demand For Plywood in Europe
Since the summer of 2020, the European DIY and home improvement market is considered to be the main driver of plywood demand. Although epidemic control is being relaxed, many people still need to work from home, and it is expected that this will become a permanent state for many people. Therefore, they are spending more on improving and expanding their properties.
The European construction industry is recovering faster than expected. Importers also report that demand in the joinery, furniture manufacturing, packaging and shipbuilding industries is also growing well.
Despite the logistics difficulties and the long production cycle, most importers indicated that they have sufficient purchasing capacity in the coming months.
The local inventory is still very short, there is almost no stock. Anything that comes in will be delivered immediately. Customers are waiting for the ship to arrive to receive their goods, and they want to get the goods right away.
More Plywood Are Sourced From China
In terms of sources of supply, China is becoming an important supplier. Despite the long delivery time and increasing prices.
The price increase of Chinese plywood in the first quarter was moderate, but in the second quarter, the FOB price rose by 15-20%, but this is not too bad compared to Brazil. Because when you factor in shipping costs, you will find that the cost of importing Brazilian plywood will be higher.
Some plywood exporters are trying to renegotiate outstanding contracts, especially for orders in April or May 2021, which may require an additional 15-20 US dollars per cubic meter. The reason is that they are facing raw material cost increase. The increase in prices includes glue and veneer. If you do not increase the price, you may not be able to produce plywood. If you book a space for a bulk carrier, then you may face empty cabin charges and demurrage from shipping companies Fees.
China’s ports are also congested by bulk carriers, and shipping companies are asking for surcharges to subsidize the additional waiting time.
Brazillian Plywood Is Not As Competitive as Chinese Plywood
The increase in the price of plywood products in Brazil is mainly due to the impact of the country’s severe coronavirus situation on the manufacturing industry, coupled with the huge demand in the U.S. construction market.
For standard 18-20mm plywood, the price in October/November 2020 was US$250-300/cubic meter. Recently, the price in Brazil was US$500-600/cubic meter. Basically, the price has doubled.
The high price of Brazilian plywood helped push up the price of Chinese plywood. People who bought large quantities of plywood from Brazil have been trying to buy plywood from China, which has further increased the inflationary pressure of plywood products.