An officer of Nghi Son port border gate Customs Branch inspects exported wood chips. Photo: N.Linh

Many fluctuations in the market

According to Mr Nguyen Quoc Tri, Deputy Minister of Agriculture and Rural Development, in 2022, despite many changes, the wood and forest product processing industry still achieved more than 17 billion USD in export value. The growth rate of 7.1% in 2022 is the lowest figure in the past ten years, but it shows that Vietnam is one of the important destinations for international customers.

In 2023, the wood industry sets a target of 7-9% growth, exporting US $ 18 billion.

In 2022, the export volume of wood chips reached 15.8 million tons, up 16.2% compared to 2021. The export value reached nearly $2.8 billion, up more than 60% over the same period last year. The expansion of woodchip exports in recent years is mainly due to the sharp increase in export prices.

The average price in 2022 has increased by more than 38% compared to 2021. The FOB export price increased from about US $130/ton at the beginning of the year to a record level of more than US $200/ton in the period of August - October 2022.

However, since October 2022, the chip price showed signs of cooling down, although it remained at a high level. China and Japan are the two largest woodchip import markets of Vietnam, accounting for nearly 95% of total export volume and turnover.

Impact factors

According to a report by the Research Group of Wood Associations and Forest Trends, the signals of the woodchip export market in 2023 are not clear yet, but it can be seen that a number of factors are affecting the situation. Export and domestic production of wood chips.

Specifically, the export price in 2023 tends to decrease compared to 2022. The export price of this item in the first months of 2023 is decreasing compared to the previous months. According to assessment information from some businesses, this decline may last until the end of the second quarter of 2023.

In addition, information on chip consumption demand in major markets such as China, Japan and Korea is not clear yet, so it is difficult to make accurate assessments of fluctuations in markets. This market in 2023.

However, the demand for woodchips in Japan and South Korea is forecast to continue to increase in 2023 because this item is used to replace coal as an input material for production.

Besides, the domestic supply of special wood chips and pellets from Korean furniture production facilities in 2023 may decrease. Since these facilities have had to reduce their production scale because the world economy in general and Korea, in particular, are going through a difficult period. The decline in domestic supply may require Korea to expand imports in the near future.

Another factor, Vietnam's mechanisms and policies on VAT refund when exporting are not clear which also affects the export situation of Vietnam's woodchips. The situation of woodchip enterprises being unable to refund VAT took place in 2022 and has not been resolved so far.

The stagnation of capital due to tax refunds has caused many enterprises in the industry to consider their production and export activities in the future. If the above case happens, it may affect the production and export of the woodchip industry.

In 2023, it is expected that there will no longer be a "shortage" of input materials for woodchips and the situation of young forest exploitation, and competition for buying and selling between chip enterprises like in 2022. Besides, the export of peeled boards is expected. The Chinese market has shown signs of recovery. Production of peeled boards (and plywood) is mainly concentrated in localities where planted areas are developed.

A by-product from the production of peeled boards (plywood) is used as the input material for chips (and pellets). The recovery of the export of peeled boards encourages the exploitation of forests, thereby promoting the source of raw materials for the development of woodchips. According to Mr. Oemar Idoe, manager of GIZ projects on environment, climate change and agriculture in Vietnam, because Vietnam imports raw wood from more than 108 countries around the world, the development of the timber value chain is important.

Legality and sustainability in forestry are vital conditions for the timber industry in the current context of international integration. Currently, Vietnam has a system of legal documents to control legal timber in order to build and develop a sustainable timber value chain production industry.

“Therefore, we need to work to create an environment that promotes good forest governance so that timber traceability and trade are sustainable in the process of implementing a system of accountability and compliance with forest regulations.

“Meeting this requirement, sufficient resources are needed to develop and maintain the IT infrastructure and strengthen the necessary capacities. Including the mandate of digitalization in one of the regular budget lines of the country is a key action to be able to ensure the monitoring of timber trade and law enforcement,” said Mr. Oemar Idoe.