February 2021 Message from Lead Consultant
IMM publishes market update to October/November 2020
The market update reveals that the COVID pandemic led to upheaval in the EU27+UK wood market and wider economy in 2020. Economic data for the last quarter of 2020 has yet to be published, but the signs are that the recovery came to a sharp end with a second wave of lockdowns starting in October. A “double dip” recession is expected, with another decline in GDP forecast in the first quarter of 2021.
The Pandemic also led to a sharp fall in EU27+UK imports of wood products from VPA Partners and other tropical countries during 2020, although the immediate effects were concentrated in the second quarter of the year and varied widely between product groups and countries. The downturn in 2020 also followed on from a significant rise in trade in 2018 and 2019 and the overall effect was to reduce trade to the level of two years before.
Indonesia’s exports of forest and wood products to all destinations held up better than expected in 2020. However, the pandemic had a severe effect on EU27+UK imports of forest products from Indonesia in 2020, effectively wiping out the significant gains made during the previous two years. In the first 10 months of 2020 compared to the same period in 2019, EU27+UK imports of all forest products from Indonesia fell 22% to US$933 million, with HS44 (wood) products down 24% to US$388 million, wood furniture down 20% to US$290 million and paper down 23% to US$255 million.
Viet Nam appears to have overcome the immediate market challenges of the COVID pandemic remarkably quickly. In April 2020, the Vietnam Timber and Forest Product Association (VTFPA) issued a statement that the wood industry in the country faced a ‘disaster’ as ‘many Vietnamese wood processing enterprises have had orders cancelled or suspended’. However, the situation seems to have been transformed before the end of the year, with exports increasing year-on-year to the USA and China, as well as South Korea, Canada, Australia and Germany. This was partly offset by declining exports to Japan, the UK, France and the Netherlands.
When it comes to EU27+UK wood imports from African VPA partners, the Pandemic reversed gain made in previous years.