Wood industry rebounds: Prices surge for cultivated timber

New orders for businesses in the wood industry

At the beginning of 2023, due to the substantial inventories of timber and reduced orders from the majority of foreign customers, the outlook for the wood industry in Binh Dinh province was unfavorable. However, businesses in the wood industry from Binh Dinh province have reported the resumption of new orders from foreign customers since July 2023, albeit at a smaller scale compared to the past. Nevertheless, these signals present a positive outcome for the local wood industry in the following months.

"Our company has started receiving new orders since the beginning of July 2023, albeit at only 70% of the past number of orders. Nevertheless, these are promising news as it allows us to maintain stable production until the beginning of 2024. Upon receiving these new orders, we re-employed 210 workers. Due to the extended production halt, several skilled workers have transitioned to other departments or a new employment. Consequently, we had to train additional new workers to meet production demands," shared the Director of Tan Phuoc Limited Company in Phu Tai Industrial Zone, Quy Nhon city, Binh Dinh province.

Mr. Le Van Luong, Director of Dai Thanh Wood Technology Joint Stock Company in Quy Nhon City reported that his company's operations have gradually resumed. Many of the company's main customers have returned with specific plans to place orders in the near future.

"This is a positive signal for the wood industry in Binh Dinh province. However, we must remain cautious because wood consumption in major markets has not recovered to the levels of prior years. We must continuously survey and investigate, keeping in mind that consumers in these major markets have not expanded their purchases due to ongoing economic difficulties. We hope that as the global economy recovers, Binh Dinh's wood processing industry will regain its prosperous state," stated Mr. Luong.

According to Mr. Le Minh Thien, Chairman of the Binh Dinh province's Wood and Forest Products Association, out of the 130 local wood production companies in the province, several businesses have contributed significantly to the province's industrial production value and export turnover. These exemplary actors include Phu Tai, Tien Dat, Dai Thanh, Hoang Hung, Duc Hai, Duc Toan, Nghia Tin, Phu Tai Biomass Energy, Gia Han, among others.

"These businesses have attracted the majority of the world's leading wood product buyers in the markets of United States, the EU, the UK, Australia, such as Ashley, Masterbrand Cabinet, Noble House, Walmart, Target, HomeDepot, Kingfisher, JP, OBI, etc. New orders are returning to the export wood processing industry in Binh Dinh province. However, the volume of orders is small, with strict requirements on shortened delivery times and changes in designs," reported Mr. Le Minh Thien.

Rising prices of cultivated timber

In 2022, the price of cultivated timber from Binh Dinh province, purchased by export wood chip processing plants and pellet manufacturers directly at the factories, ranged from 1.8 to 1.9 million Vietnamese dong per ton. However, these prices sharply dropped to only 1.2 million Vietnamese dong per ton in early 2023. Notably, traders' buying prices for cultivated timber reached as low as 900,000 Vietnamese dong per ton. However, the prices cultivated timber as raw material from Binh Dinh province have rebounded. Accordingly, their prices are currently standing at nearly 1.5 million Vietnamese dong per ton (at factory purchasing prices).

The mountainous district of Van Canh is the most active area in Binh Dinh province in terms of the forest cultivation movement, with a cultivated forest area of over 13,500 hectares. Forest growers in Van Canh district are pleased with the resurgence of wood raw material prices. Despite the stark difference compared to peak prices in 2022, the current increase paints a promising outlook.

According to Mr. Le Minh Tien, Deputy Director of the  Van Canh district's Department of Agriculture and Rural Development, the primary source of income for local residents originates from forest cultivation and cattle farming.When prices for cultivated timber dropped, forest growers in Van Canh district were deeply concerned about the loss of a vital income source. However, the recent resurgence of cultivated timber prices has motivated the locals to engage in new forest cultivation endeavors.

Ms. Nguyen Thi Trang in Nhon Phu Ward, Quy Nhon city, specializes in purchasing raw wood from the forest to resell to wood processing plants. She commented, "My husband and I lack capital, so we engage in small-scale trading activities. We bought an auto rickshaw for over 20 million Vietnamese dong and a motor saw for 6 million Vietnamese dong. Everyday we would travel together and buy small areas of acacia and eucalyptus forests. My husband saws the wood, I peel the bark, and after loading on our auto rickshaw, we sell the wood to the processing plant and receive payment immediately. At the end of the day, we earn enough for a day's work, which we are happy with."

"Due to the drop in the prices of raw wood, many forest-growing households have switched to cultivating eucalyptus instead of acacia, as eucalyptus wood is lighter than acacia, and after harvesting eucalyptus, the trees can regenerate," explained Mr. Nguyen Van Chat in Quy Hoi Hamlet, Phuoc An commune, Tuy Phuoc district, Binh Dinh province - a trader specialized in buying cultivated timber to sell to wood processing plants.