- 78% of China’s wood processing companies currently are affected by the Covid-19 pandemic, while the resumption rate of wood industry companies has slowly risen to only 70% of the same period last year. However, wood product sales rate is only about 30% of the same period last year.
The Covid-19 pandemic that began at the beginning of the year has continued to spread around the world, causing all mankind to encounter an unprecedented public health crisis, and also accelerating the world economy into a painful adjustment period.
Anti-epidemic measures such as lockdowns, work stoppages, and home quarantine have caused the world to fall into a state of “major blockade” and have a huge impact on the global supply chain. At the same time, the epidemic has brought an unprecedented impact on my China’s economic and social development. In particular, the offline sales of end products such as traditional wooden home furnishings are very difficult during the epidemic.
China Forest Products Industry Association, China Home Furnishing Industry Green Supply Chain Alliance, Chinese Academy of Forestry Timber Industry Research Institute, National Forestry and Grass Administration Forest Products Industry Planning and Design Institute conducted a systematic survey of among Chinese wood industry companies. The results show that more than 78% of wood industry companies are affected by the epidemic, of which 42% of wood industry companies are affected to a certain extent, 14% of wood industry companies are severely affected, and 8% of wood industry companies are in a state of paralysis.
In addition, the obstruction of international trade has a huge impact on my China’s wood industry. Due to the severe pandemic abroad, the number of international shipping vessels has decreased, and the transportation cost is high. Taking the China-Europe shipping container as an example, the freight rate has increased by 3 to 4 times compared with the same period last year. Previously, many countries adopted measures such as prohibiting entry, leading to the cancellation of business activities and procurement plans, and the decrease in the number of foreign orders, which intensified the survival crisis of Chinese export companies.
The above survey results show that as of the end of April, the resumption rate of wood industry companies has risen to more than 70% of the same period last year, but the product sales rate is only about 30% in the same period last year. Although Chinese forestry industry companies are gradually resuming work, the resumption rate is low and the sales rate is low. In particular, the actual sales of end products such as flooring, wooden doors, and furniture have plummeted, and the operating situation is very severe.
More importantly, inadequate storage of timber by companies will seriously affect annual production. On the one hand, the harvest of wood raw materials is greatly affected. February-April is the peak season for forest harvesting and raw material procurement. Affected by the pandemic, many global companies that supply wood to China have missed the raw material procurement season, and a small number of areas have not fully resumed work and production. It is expected that at the end of September, a considerable number of companies will stop production due to lack of raw materials. On the other hand, logistics problems still exist in most areas, and actual transportation costs rise, which directly affects all links of the industrial chain.
The Chinese forest products industry has inherently low profit margins, coupled with the weak domestic and foreign consumer markets, while individual companies are facing the risk of bankruptcy. In terms of preferential credit support, as a traditional intensive processing industry with low profit margins, most Chinese companies have difficulty obtaining priority support from the state and local finance during the epidemic, and the risk is further increased.
The global spread of the Covid-19 pandemic has had a huge impact on international trade and caused global market turmoil. At present, many international organizations have lowered their economic development expectations for 2020: On June 24, the IMF updated and released the World Economic Outlook, which lowered the forecast of the global economic growth rate in 2020 from -3% in April to -4.9%. Lower the global growth rate forecast for 2021 to 5.4%. The OECD also released a mid-term economic assessment report, predicting the performance of the global economy under two scenarios. Under optimistic conditions, the global growth rate in 2020 will be around 2.4%, and if the pneumonia epidemic continues to spread, the global economic growth rate in 2020 will drop to 1.5%. about.
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