Market

Tropical timber production
Trade of tropical timber products (logs, sawnwood, plywood and veneer)
Trade of secondary processed wood products

This section draws on data and analysis from the International Tropical Timber Organization (ITTO). ITTO categorises its 59 members into producer (tropical) and consumer (non-tropical) countries. Together they account for approximately 80 per cent of the world's tropical forests and 90 per cent of the global tropical timber trade.

The global tropical timber market has evolved significantly since the late 1980s, with many important developments occurring in both producing and consuming countries.

The contribution of logs to total primary tropical timber exports of ITTO producers (in terms of both value and roundwood equivalent (RWE) volume) has dropped significantly from over 60 per cent in the 1980s to approximately one fifth in 2005.

China is growing rapidly as a market for primary tropical timber products, fuelled by demand in the construction and furniture sectors.

Another important trend is evident. While the value of trade in commodity tropical timber products (logs, sawnwood, plywood and veneer) has dropped by almost a third since the early 1990s, that of higher-value (or "downstream") products such as doors, windows, furniture and joinery, has grown almost five-fold. This reflects the growing importance of processed and downstream products - for which demand and prices are more stable - in insulating the trade against the volatility of commodity markets.

Tropical timber production

Tropical industrial roundwood (logs)

Production of tropical industrial roundwood (logs) in ITTO producer countries totalled over 137 million m3 in 2006, a 9 per cent increase from 2005. The Asia-Pacific region produced an average of 63 per cent of ITTO producer members' tropical hardwood logs in 2005-2006. Latin America's share of production averaged about 24 per cent in the two years, with the African region accounting for the remainder (approximately 13 per cent). The top four tropical log-producing countries (Brazil, Malaysia, Indonesia and India, ranked by 2005 production) together comprised almost three quarters of total production by ITTO producer members in 2005-2006. Despite significant recovery since 2002, Malaysian log production still remains far below the levels of the early 1990s.

Major tropical log producers, 2004-2006 (1,000 m3)

Source: UNCTAD secretariat, based on data from the ITTO.
Note: The category "Others" includes other ITTO member countries.

The production of industrial timber is a smaller part of total wood production in Africa than in other tropical regions: tropical industrial roundwood made up about 8 per cent of total roundwood (including fuelwood) production in ITTO's African member countries in 2005. It accounted for roughly 14 and 12 per cent of total roundwood production in the two other ITTO producing regions (Asia-Pacific and Latin America respectively).

Tropical industrial roundwood and total roundwood production
by ITTO producing regions, 2005 (1,000 m3)

Source: UNCTAD secretariat, based on data from ITTO (tropical industrial roundwood) and FAO (total roundwood).
Note: The regional aggregates comprise ITTO producer members.

The proportion of log production utilized domestically (i.e. log production minus log exports) averaged about 89 per cent in Asia from 2004 to 2006. African producers domestically consumed an average of 83 per cent of their total log production in 2004-2006 (up from 42 per cent in 1995). This reflects population and economic growth in producing countries, coupled with a focus on producing and exporting value added products. In Latin America, logs processed domestically accounted for virtually all production throughout the reference period.

Evolution of domestic log processing, by producing region,
1995 and 2006 (1,000 m3)

Source: UNCTAD secretariat, based on data from ITTO.
Note: The regional aggregates comprise ITTO producer members.

Tropical sawnwood

Major tropical log producers still figure prominently in tropical sawnwood production. Production of tropical sawnwood in ITTO producing countries was estimated at 45.5 million m3 in 2006, up 11 per cent from 2005. On average, the Asia-Pacific region produced about 48 per cent of ITTO producers' tropical sawnwood in 2004-2006. Latin America's share of production averaged about 42 per cent over the same period. Africa, which made up only 10 per cent of tropical sawnwood in ITTO producing countries, still suffers from weak infrastructure and environmentally demanding export markets that constrain major investments in wood processing (but production has almost doubled since the mid-1990s, due to log export bans and requirements for further processing in many countries). Brazil was by far the largest ITTO tropical sawnwood producer, at an estimated 15.8 million m3 in 2006. Indonesia (7.6 million m3), India (5.4 million m3), Malaysia (5.4 million m3) and Thailand (3.2 million m3) were other major producers of tropical sawnwood in 2006. Together, they comprised more than three quarters of ITTO tropical sawnwood production. Brazil alone accounted for one third.

Major tropical sawnwood producers, 2004-2006 (1,000 m3)

Source: UNCTAD secretariat, based on data from the ITTO.
Note: The category "Others" includes other ITTO member countries.

Tropical veneer and plywood

There has been a significant reshuffle among veneer and plywood producers since the mid-1990s. In 2003, China became ITTO's largest tropical veneer producer after overtaking Ghana, Brazil, the Philippines and Malaysia, among other countries. Its production reached 750,000 m3 in 2003 (more than double 2001 levels) and was stable through 2004-2006. Japan's tropical veneer production has dropped by two thirds since 2001 (and by more than four fifths since the mid-1990s) as its tropical veneer and plywood industries have contracted due to declining log availability, increased softwood substitution and its sluggish economy during most of that period. Malaysian production has decreased y more than half since the mid-1990s.
Tropical veneer production in ITTO member countries rose to an estimated 3.6 million m3 in 2006. The top five tropical veneer producing countries (China, Malaysia, Brazil, India and Indonesia, ranked by 2005 production) comprised 64 per cent of ITTO tropical veneer production in 2006. China alone accounted for more than 20 per cent of total ITTO production in the same year.

Major tropical veneer producers, 2004-2006 (1,000 m3)

Source: UNCTAD secretariat, based on data from the ITTO.
Note: The category "Others" includes other ITTO member countries.

Major realignments have also occurred in the plywood industry. China has remarkably expanded its tropical plywood production to keep pace with the demand of its growing construction sector and to feed a growing export sector. Production in China rose to 4.4 million m3 in 2005, a dramatic increase from 1995 levels (when it was 550,000 m3). India's tropical plywood production, like China's based largely on imported tropical logs, is also rising rapidly (to an estimated 2.3 million in 2006), overtaking Brazil and Japan. A special feature is the sharp drop in Japan's tropical plywood production. Japanese production fell to 625,000 m3 in 2004-2006, an 82 per cent decrease from 1995 levels (when it was about 3.4 million m3). Japanese plywood manufacturers are increasing the proportion of softwoods used in plywood production, as well as introducing lamination and other techniques to allow re-use of concrete form-ply. Substitution by reconstituted panels is also occurring. Furthermore, several plywood manufacturers from Japan (as well as from Taiwan Province of China and elsewhere) have established joint ventures for plywood and other panel products in producer countries where costs are more competitive. Indonesia plywood production also fell sharply to 4.5 million m3 in 2004 (a 45 per cent decrease from 2000 levels), before rebounding to an estimated 6.1 million m3 in 2006. Plywood production had been falling for several years prior to 2004 due to reductions in logging quotas and crackdowns on illegal log flows.

Major tropical plywood producers, 2004-2006 (1,000 m3)

Source: UNCTAD secretariat, based on data from the ITTO.
Note: The category "Others" includes other ITTO member countries.

Tropical timber production, by region, average 2004-2006 (per cent)

Source: UNCTAD secretariat, based on data from the ITTO.
Note: Regional aggregates include both ITTO producers and consumers. Totals may not sum exactly due to rounding.

Trade in tropical timber products
(logs, sawnwood, plywood and veneer)

The composition of primary tropical timber exports for 2002-2005 from the ITTO producing regions is shown below. The contribution of logs to total primary tropical timber exports of ITTO producers (in terms of both value and roundwood equivalent - RWE - volume) has dropped significantly from over 60 per cent in the 1980s to approximately one fifth in 2005. Only Africa continues to export a significant volume equivalent of logs compared to processed primary products, with log exports making up 18 per cent of log production and 45 per cent of total roundwood equivalent export volume (average 2003-2005). Asian tropical log exports accounted for just over a fifth of total primary product export volume and one tenth of log production between 2003 and 2005. Latin American tropical log exports represented a small fraction of both production and total primary exports (1 and 4 per cent respectively on average in 2003-2005).

Composition of primary tropical timber exports by producing regions, average 2003-2005 (1,000 m3 RWE and %)

Source: ITTO Annual Review 2005.
Note: The regional aggregates comprise ITTO producer members.

The Asia-Pacific region is by far the largest trader of tropical timber: more than 70 per cent of all internationally traded tropical wood products (logs, sawnwood, plywood and veneer) originated within it between 2001 and 2005. Malaysia is still the number one exporter of all tropical timber products in the world. The country continued to lead the trade in tropical logs and sawnwood, with respectively 5.7 million m3 and about 3.2 million m3 exported in 2005, or 45 and 30 per cent of total ITTO tropical log and sawnwood exports. Malaysia also maintained its position as the ITTO's dominant tropical veneer exporter, with exports of 414,000 m3 accounting for 36 per cent of the ITTO member total in 2005. In 2004, Malaysia overtook Indonesia as the largest tropical plywood exporter at over 4.3 million m3.

With the exception of Gabon, ITTO producer members in Africa are low-income countries with slow growth and much rural poverty. Tropical timber trade is significant in financial terms - the average annual value of primary timber exports from ITTO producer countries in the region approached US$1.6 billion between 2001 and 2005 - but it also supports an estimated 200 million people who use a wide range of forest products to help sustain their livelihoods. In 2005, the five ITTO member countries in the Congo Basin (Cameroon, Central African Republic, Democratic Republic of the Congo, Congo and Gabon) accounted for the bulk of internationally traded tropical timber from ITTO African member countries (2.8 million m3 of logs, 1.1 million m3 of sawnwood and 171,000 m3 of panels - or 92, 63 and 61 per cent of African producer tropical log, sawnwood and plywood exports).

With the Amazon Basin accounting for roughly a third of the world's tropical forest area, Latin America includes the largest expanse of tropical forest. Nonetheless, tropical timber trade in the region plays a relatively minor (although increasing) role than elsewhere. Latin America accounted for less than 2 per cent of ITTO producer tropical hardwood log exports in 2001-2005. The region's share of tropical sawnwood exports averaged about 16 per cent over the same period. The figures for tropical veneer and plywood were 7 and 9 per cent respectively.

East Asia and the European Union are the main importing regions. Major trade flows by product category are described below. Move the mouse over a link to display direction of trade in volume between major ITTO producers and consumers in 2004.

Major exporters (ranked in order of 2004 export volume) and direction of trade in volume of primary tropical timber products between major ITTO producers and consumers (1,000 m3, 2004)

Source: ITTO ("Mirror" statistics from partner countries).

A special feature is the rapidly growing importance of China as a trader of tropical timber products. China's tropical log imports had soared more than eight-fold between 1996 and 2003 (rising to above 8 million m3 in 2003 from as low as 1 million m3 in 1996), with Indonesia, Gabon, Malaysia, Myanmar and Papua New Guinea the main sources. China's import of non-tropical logs had expanded even more rapidly, with Russia providing the bulk of it. China's growing economy, a continuing ban on domestic harvesting and a zero tariff on log imports were the main driving factors behind its growing imports. China's tropical log imports fell back to about 7.3 million m3 in 2004-2005, an 8.8 per cent decrease from 2003, due to supply constraints and increasing reliance on softwood logs. Despite this decrease, China's imports continued to drive the tropical log market, constituting in 2005 over 47 per cent of total ITTO imports. China also continued as the world's largest tropical sawnwood importer in 2005, with imports at about 2.7 million m3 (an 8.6 per cent decrease from 2004).

China's increasing imports more than offset steady declines in Japan, traditionally a major player in the tropical timber market. Japan's tropical log imports dropped to 1.4 million m3 in 2005, down 81 per cent from 1994. Japan's imports had fallen for several years due to its sluggish economy, competition from China for available log supplies, and its increasing reliance on softwood logs for plywood manufacture. Formerly a major tropical veneer importer, Japan is now less significant than producer countries such as the Philippines and Mexico.

Tropical log imports by China and Japan, 1994-2006 (million m3)

Source: UNCTAD secretariat based on ITTO data.

Many of China's tropical log imports are converted to plywood, and as of 2005 the country was the world's third largest exporter of this product. Growth of China's tropical plywood exports has been rapid and notable, reaching nearly 950,000 m3 in 2005 (up from as low as 10,000 m3 in 1997), and increasing a further 18 per cent in 2006 to over 1.1 million m3. Conversely, Chinese plywood imports remain at only around one quarter of mid-1990s levels as authorities continue policies, including tariffs, to increase domestic plywood production from imported logs to boost employment and offset reduced domestic log supplies. Malaysia and particularly Indonesia and Brazil are facing strong competition from Chinese plywood exporters and losing market share in Europe and the United States.

Secondary processed wood products

Many traditional exporters of primary timber products in South-East Asia have been changing into exporters of secondary processed products (SPWP) as a result of the development of processing industries and resource constraints. SPWP include high-value products such as joinery and furniture. These products provide higher revenues to producers and are less prone to cyclic swings in prices.

Exports of SPWP by ITTO producers have been expanding steadily since ITTO started regularly tracking them in the mid-1990s. SPWP exports by these countries reached almost $9.9 billion in 2004, exceeding the value of primary tropical timber exports by ITTO producing countries. The top five ITTO producer country exporters of SPWP in 2004 (Indonesia, Malaysia, Brazil, Thailand and Mexico) accounted for 88 per cent of total ITTO producers' SPWP exports (or 14 per cent of the world's exports of these products in 2004). Indonesia and Malaysia were the only ITTO producer countries among the world's top SPWP exporters.

ITTO producer's exports of primary and secondary processed wood products 1991-2005 (billion US$)

Source: UNCTAD secretariat, based on ITTO data.

Japan and the United States remained the two largest markets for SPWP from ITTO producers, with such products making up 31 per cent and 22 per cent of their total SPWP markets respectively in 2004. However, these shares have declined since 2000, primarily due to competition from China.

United States SPWP imports from China and from major tropical SPWP exporters, 1991-2005 (billion US$)

Source: UNCTAD secretariat, based on Comtrade data.
Note: "Major tropical SPW exporters" includes Indonesia, Malaysia, Brazil, Thailand, Viet Nam and Mexico (top tropical exporters of SPWP ranked by value of 2004 exports). Trade data for China includes aggregate figures from mainland China; Hong Kong, China; and Macao, China. SPW categories considered in the analysis: wooden furniture and parts (SITC Rev 3 (S3)- 8216, 8215), builders' woodwork (S3 - 6353), mouldings (S3 - 2483, 2485), other SPWP (S3 - 6351, 6352, 6354, 6359), cane and bamboo furniture and parts (S3 - 82113, 82179).

With SPWP exports of $9.5 billion in 2004, China was the world's largest exporter of SPWP, after overtaking Italy in 2003. China's rapid expansion has been due largely to its booming exports of wooden furniture to the United States and Japan. This growth is expected to continue as many companies from the United States and from traditional Asian producers continue to establish SPWP joint ventures in southern China because of the low costs and policies encouraging downstream timber processing. Like its plywood exports, most of China's SPWP exports are based on imported logs, both tropical and temperate.

For a complete analysis of trends in the production, consumption and trade of primary and secondary tropical timber products, see ITTO's Annual Review and Assessment of the World Timber Situation.