It has been a difficult year for the Chinese plywood manufacturers due to the slowdown of the Chinese housing market in 2021. We see a lot of house development companies like EVERGRANDE GROUP facing critical financial problems.
However, this is not the only bad news for the Chinese plywood industry. The inflation has made the material of plywood glue very expensive.
Plywood costs is affected by:
- Energy price
- Glue price
- Veneer price
The heat generated from coal is the major energy source for plywood mills in China. Manufacturers in the plywood industry hub use heap power from heat stations run by the local government.
The coal price almost doubled in the 3rd quarter of 2021. The heat power plant has no choice but to raise the energy price.
For some plywood factories that don’t use heat power, LNG is used instead. The LNG price is also very high at this moment.
The main components of plywood glue are urea and formaldehyde.
Urea prices are heavily affected by energy prices such as oil. It is a by-product of the petro business.
Poplar is the primary material for hardwood plywood production in China.
Poplar veneers are sourced from family-run businesses which are now under the monitor of the tax bureau of China.
In addition, the Chinese government may limit the grown of poplar plantations in rural areas.
Poplar prices will be even higher by then.
The is causing more plywood factories to move to Guangxi to enjoy the cheap source of eucalyptus veneer that are produced locally.