Treecraft Newsletter - November 2023

We understand that market dynamics can significantly impact our industry, and it's crucial to keep you informed about the ongoing trends. Over the past 3-4 months, we've witnessed a relatively stable environment in terms of raw material prices. However, as we step into the colder months, it's expected that raw material prices will start to rise. A pertinent example is the recent increase in local Chinese Eucalyptus prices during the fourth quarter. This surge is directly attributed to the heavy rainfall experienced in South China over the past few weeks. The persistent rain in September has posed a challenge to the natural drying process of Eucalyptus veneers that are stacked outside. Typically, these veneers should achieve a moisture level of 12°.

Apart from a collective attempt in August by major carriers to elevate sea freight prices, the prices have remained stable at a rate that was giving leeway to replacing expensive stocks with cheaper new production from China. However, with sea freight rates for November and December are seeing an upgoing trend again, it remains to be seen whether the carriers can maintain them through the month November or whether they will take a dive again as was the case in August.

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Our company specializes since many years in plywood coming from China, and we see a clear connection between the LVL / MDF mouldings and the wooden panels we are already long-time familiar with. The addition of mouldings to our range is complementary with our existing focus and expertise. These products include door architraves, door stoppers and skirting boards. After an incredible response from our trusted partners, we're ready to take this segment to new heights, and we'd love for you to join us! We aim to supply eco-friendly products by offering 100% FSC, and now we are in the R&D stage of marketizing a fully degradable primer to be used on our moulding products. We keep you posted.

China is making strides to enhance its forestry sector: In late September the Central Committee and State Council unveiled a comprehensive plan aimed at reforming the collective forest tenure system. This plan now allows farmers with forest rights to benefit from maintaining carbon sinks. The plan also involves an overhaul of how forest property rights function in China. Currently, forests are state-owned and contracted to rural households, granting them short-term, nontransferable rights for management and use. By 2025, under the new system, these rural households will be permitted to lease their forest use rights to third parties, including timber companies. Furthermore, the plan calls for the establishment of "moderate scale" timber operations to manage larger forest areas. It suggests the creation of forest cooperatives and trusteeships, following the model of farmers' cooperatives. This plan has the potential to also stimulate additional economic activities, such as ecotourism and other real estate-related businesses.

The bottom line is that we should anticipate a significant increase in Chinese logging activities in the coming years. China, as the world's largest importer of lumber, has witnessed declining import volumes for over a decade due to a slowdown in construction. The emergence of a thriving domestic logging sector is expected to expedite this decline.

In summary, China's commitment to transforming its forestry and timber sector is poised to have far-reaching effects on the global timber market, including the local Chinese plywood industry. These are all clear signals that China's government is trying to solidify its position as a dependable long-term plywood supplying country and it highlights China's abundant resources. (source gov.cn)

At Treecraft, our dedication to quality is the bedrock of our operations. Our commitment to quality begins with our internal Quality Control (QC) team. They play a pivotal role in meticulously examining every production batch before it leaves the production units. We want to assure you that this isn't just a casual glance; in fact, some clients even require us to label each panel individually! The responsibilities of the QC team include, but are not limited to: monitoring the production process, checking the size and thickness, quality of F/Bs or film and weighing the density of the final product, … and last but not least, performing a boiling test on each order that is leaving the facilities! This is the only way to guarantee quality products and we can conclude that this sets Treecraft apart from any other Chinese wood panel exporting agent.

Our company has recently welcomed a new team member Sarah Zhang to enhance the seamless flow of critical data needed for adherence to the coming EUDR regulations. A key area of her responsibility will be the handling of due diligence statements, with a significant reliance on geographical data pertaining to the plantation wood we primarily procure, notably local poplar and eucalyptus.

Additionally, Treecraft has proactively volunteered to participate in the testing of an online prototype, where Due Diligence Statements can be submitted within the framework of EUDR compliance. This demonstrates our commitment to staying ahead and actively contributing to the development and improvement of the regulatory process.

As we expand our operations into other European markets, we've observed a growing stringency in the enforcement of CE marking. To ensure full compliance with these evolving regulations, TreeCraft has partnered with the Belgian institute Wood.be and our Swedish collaborator, Zatisfy.

Furthermore, it's become apparent that interpretations and enforcement of these regulations can vary across different locations in the EU. In response to this, TreeCraft has engaged local experts who possess an in-depth understanding of the subtleties involved, ensuring that we remain aligned with regional nuances.

With this we hope to have you informed once again on the latest developments in the Chinese plywood market. We hope that those who took some days off this week with All Saints’ Day enjoyed their time off! We are as always grateful to be having you and we are available to all your questions and enquiries.

David, Jan, Susie, Yvonne, Sarah, Hannie, Lao Wang and Wang Long