Overcapacity and Benefit Decline of China’s Wood-based Panel Industry in 2018
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In recent years, as a result of the supply side reform, many enterprises continue to eliminate backward production capacity, introduce advanced wood-based panel production lines, improve the quantity and quality of products, and significantly improve the economic efficiency at the beginning stage. However, many enterprises have over-expanded after improving their efficiency, not fully considering the market’s affordability, so that the wood-based panel industry has entered the track of scale expansion and blind development, the domestic market competition is fierce, and the export market in the international market is blocked due to tariff barriers and other reasons. In 2018, China’s wood-based panel industry experienced overcapacity and reduced efficiency.
I. The rapid development of wood-based panels in China
Overcapacity and Benefit Decline of China’s Wood-based Panel Industry in 2018
(1) The rapid development of plywood
With the increase of market demand, the production of plywood in our country has increased dramatically. The manufacturers of plywood have developed rapidly from state-owned plywood plants to collective, Sino-foreign joint ventures and even individual households. The output of plywood is increasing constantly. With the abnormal production of plywood in Indonesia, a big country in the world, due to resource problems, and the increasing demand for plywood market in the world, and the extensive application of fast-growing poplar and southern Eucalyptus introduced from Italy in eastern and Northern China, the production of plywood in China has sprung up like bamboo shoots after a spring rain.
(2) The development of medium and high density fiberboard (hereinafter referred to as density board) in China is too fast.
With the rapid development of panel furniture in our country, the demand for density board is increasing at home and abroad, and the preferential policies issued by the State encourage the development of wood-based panel industry. In this period, many enterprises are stimulated by the high profit and high rate of return of investment in density board. They have introduced advanced production lines one after another, which improves the quantity and quality of density board and promotes the rapid development of density board industry. However, with the rapid development of the industry, there is a contradiction between excess capacity and inadequate supply of raw materials in many areas. In this situation, many enterprises waste forest resources in order to increase production, participate in market competition with low quality and low price, which leads to the blind development of density board, and makes many enterprises work hard under the condition of low profit and even loss.
With the rapid development of panel furniture, flooring, packaging and decoration industries in China, the demand for density boards has been increasing. In addition, the export market in the past few years is vast, which provides the market for density boards, and the enterprise has a high profit margin. Therefore, with the expansion of the furniture industry in China, the density board industry has developed rapidly, making the development of China’s density board industry enter the stage of blind development. The market competition is fierce and the overcapacity is obvious. Many density board enterprises are forced to withdraw from the market, stop production or change production because of serious losses, and enter a high-risk period of survival of the fittest.
(3) Particleboard develops rapidly in supply-side reform
Particleboard is a product of efficient utilization of wood surplus resources. Therefore, the development of particleboard industry can effectively alleviate the pressure on wood demand. However, in the past, Particleboard in China could not develop because of poor quality. With the introduction of policies to encourage the development of particleboard, the introduction of advanced production lines of Particleboard in various parts of the country has been promoted, together with the continuous improvement of production technology, which has made China’s particleboard industry develop slowly. With the rapid improvement of particleboard quality and its advantages in cost performance and environmental protection, particleboard has gradually become the main raw material for furniture and cabinets, and the demand for high-quality particleboard has increased substantially, which has made China’s high-quality particleboard industry develop rapidly.
1. Supply-side Reform, Elimination of Backward Capacity and Promotion of Particleboard Development
According to the statistics of the Forestry Planning and Design Institute of the State Forestry Administration, the deepening of the supply-side reform has eliminated a large number of small enterprises and family workshops with backward production capacity, guaranteed the timber supply produced by large particleboard enterprises, guaranteed the supply of high-quality products in the market and improved the economic benefits of enterprises.
2. The world’s advanced particleboard production equipment has been imported in large quantities
Promoted by the relevant national environmental protection policies, as well as the increasing demand for high-quality particleboard by furniture enterprises in China, many powerful enterprises have invested in introducing a complete set of particleboard equipment production lines with the world’s advanced level, thus promoting the renewal of the particleboard industry. By the end of 2017, there are 40 continuous flat-pressed particleboard production lines in China. Following the establishment and introduction of 200,000 m/a production line in Guangdong, 450,000 m/a production line in Jiangsu Daya and 250,000 m/a production line in Fujian Furen in recent years, many enterprises have introduced a number of advanced particleboard production equipment in the world. The annual design production capacity of each production line has reached more than 220,000 m/a, and some even reached 300,000 m/a. ,
The construction and commissioning of these large-scale particleboard production lines have a certain role in promoting the quality and output of Particleboard in China. In 2018, 38 particleboard production lines were under construction in China, including 24 continuous flat pressing lines, 10 in Shandong Province, 5 in Guangxi, 4 in Jiangsu and 4 in Hubei.
3. China’s Particleboard Production Increase Decline
With the continuous improvement of the quality of Particleboard in our country, the demand for Particleboard in domestic household industry is increasing, which makes the development of Particleboard in our country very fast. However, since 2018, due to the decline in wood furniture production and the decrease in demand for particleboard, the growth rate of particleboard production in China has declined.
From the above measurement table of Particleboard in China, it can be seen that although the output and demand of particleboard have increased significantly in recent 10 years, the gap between import and export has gradually widened in recent years, and the overcapacity has become increasingly obvious. In 2018, with the decline of export furniture, the growth rate of import of high-quality particleboard has narrowed, while the new production line of particleboard has been built and put into production continuously. With the production of large-scale particleboard production lines in 2019, the pressure from production to market will be greater and the situation will be more severe. This is a phenomenon worthy of our attention. In the development of wood-based panel enterprises in China, it is necessary to achieve orderly development. Through innovation, product quality should be continuously improved, market dynamics should be grasped, opportunities should be seized, added value of products should be increased, and economic benefits of enterprises should be improved.
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