Tiếng ViệtAnalysts said that the outlook for the wood and wood products industry in 2023 is still less favorable due to weak demand in both the US and EU markets.
However, companies in the wood and wood products industry will recover in 2024 thanks to cooling home loan interest rates and improved housing supply in the US (Vietnam’s major export market).
According to data from the General Department of Customs, it is estimated that in March 2023, the export turnover of wood and wood products reached $1.2 billion, up 36.3% compared to February 2023, but down 22.8 % compared to March 2022; in which, export turnover of wood products is estimated at 823 million USD, up 47.7% compared to February 2023, but down 30% compared to March 2022.
Generally in the first 3 months of 2023, export turnover of wood and wood products is estimated at 2.88 billion USD, down 28.3% over the same period in 2022; in which, export turnover of wood products is estimated at 1.87 billion USD, down 38.5% over the same period in 2022.
According to VNDIRECT Securities Joint Stock Company (VNDIRECT), after decreasing 6.8% year-on-year in the fourth quarter of 2022 due to weak orders, Vietnam’s export turnover extended its downward trend when it decreased by 17 % yoy in 2 months of 2023. However, VNDIRECT has seen positive signals from both domestic and international markets.
According to analyst Nguyen Duc Hao from VNDIRECT, inflation in the US and EU shows signs of cooling down in the first months of 2023, VNDIRECT thinks that the export sector will be less difficult in the second quarter of 2023. However, demand for wood and wood products will not recover until 2024.
In 2022, about 90% of the value of Vietnam’s wood and wood products will come from export markets, 54% from the US and followed by China with 13.4%. The negative macro outlook of the US has affected the residential real estate and housing construction market. The US home loan interest rate rose to 6.1%, the highest since 2011 while the median home price increased 10.4% year-on-year in the fourth quarter of 2022, which dented purchasing power. home in the US. The US housing demand index fell 48.1% year-on-year in February 2023.
According to the National Association of Home Builders – NAHB (USA) forecasts US single-family home sales will fall to 744,000 units, down 25.5% year-on-year in 2023 before rising again. 925,000 units by 2024.
Meanwhile, the consulting firm Forest Economic Advisors (USA) forecasts that demand for softwood lumber in North America will decline by 8.3% in 2023, after falling 1.6% in 2022 due to a weakening consumer market. and the possibility of a recession is still possible. However, this will be short-lived with a forecast 7.5% year-on-year increase in 2024 at 62.5 billion feet (1 foot equals 0.3048 m).
Therefore, VNDIRECT forecasts that plywood prices will decrease year-on-year in 2023. However, wood and wood product companies will have to reduce their average selling prices to attract more customers. As a result, the industry’s gross profit margin will decrease in 2023.
Mr. Nguyen Duc Hao said that the challenges will be more than advantages for Vietnamese wood and wood products enterprises after China reopens.
China’s National Bureau of Statistics said today (March 31), the purchasing managers’ index (PMI) fell to 51.9 in March 2023 from 52.6 in February 2023. but the index is still above the 50 mark indicating more expansion in production compared to the previous month.
The non-manufacturing index, which measures activity in both the services and construction sectors, rose to 58.2 in March, its highest level since May 2011.
VNDIRECT expects China to fully reopen its economy in the second quarter of 2023. China is Vietnam’s second largest wood import market, accounting for 13% of total export value.
However, 80% of Vietnam’s total exports to China in 2022 are wood materials (HS44 code) with more than 20 items, mainly wood chips. Currently, wood chips exported to China are mainly small businesses, not listed on the stock exchange.
In contrast, China is Vietnam’s main wood import market, accounting for 37% of the market share by 2022. The reopening of some Chinese net exports can help reduce input costs of other countries. wood enterprises such as Phu Tai Joint Stock Company (stock code: PTB), Truong Thanh Wood Industry Corporation Joint Stock Company (stock code: TTF) and Duc Thanh Wood Processing Joint Stock Company (stock code: TTF) : GDT). On the other hand, the reopening of China’s economy may pose many challenges for wood furniture businesses in 2023.
Currently, China is Vietnam’s main competitor in the US market. The two countries have the same market share in the US, at 31%. Companies in the wood and wood products industry with a high proportion of exports to the US will face difficulties in the second half of 2023.
From a rather positive point of view, Mr. Nguyen Quoc Khanh, Chairman of Ho Chi Minh City Fine Arts and Woodworking Association. Ho Chi Minh City (Hawa), Chairman of the Board of Directors of AA Architecture Construction Joint Stock Company, said that at present, there is no accurate forecast of the prosperity of furniture and furniture orders, but the market’s potential is still very large. big. The size of the world furniture and furniture market is up to 200 billion USD.
Meanwhile, although Vietnam is in the Top 5 largest wood furniture exporting countries in the world, it only exports over 16 billion USD/year. In addition, over the past time, Vietnam has mainly exported to traditional markets such as the US, EU, Korea, Japan…. Other potential markets are still open.
In fact, during the COVID-19 epidemic, the supply chain of the wood and furniture industry has had a clear shift when many Chinese buyers have moved to Vietnam. Typically, there have been customers from Israel and Greece to order Vietnam. These are orders that have not been in history.
Analysts said that although difficulties are continuing, the recovery of the furniture market has come closer. Accordingly, on the basis of tracking sold-out inventory, international buyers have started to come to Vietnam more and more to look for products for new orders.
In addition, the deep reduction in sea freight rates also helps buyers significantly reduce cost pressure and be bolder in planning to order again. The perseverance, flexibility and investment in the right direction of enterprises will soon bring the wood export industry back to growth.
Comments on stocks in the wood and wood products industry, analyst Nguyen Duc Hao said that the stock valuation is at a reasonable level due to reduced global demand and pressure on the gross profit margin of wood businesses. remains, at least until the fourth quarter of 2023. VNDIRECT recommends that investors wait for clearer recovery signals to invest in wood stocks.
