Recent trend of tropical timber trade– From the ITTO “Biennial review and assessment of the world timber
situation 2019-2020” - 1
Fukuda Jun (Forestry Agency, JAPAN)
1.

Introduction

International trade in tropical timber has been blamed as the major driver oftropical forest destruction for a long period of time.

With the progress of theefforts toward sustainable forest management and improvement of woodprocessing capacity in wood producing countries since 1990s, tropical timbertrade has shifted from roundwood exports to processed products exports.
Recently, situation surrounding tropical timber trade are drastically changing, with
China’s huge amount of roundwood imports, limited availability of roundwood
caused by strict regulation on illegal activities in Indonesia and Malaysia, andrelocation of wood processing industry from China to Vietnam.
This article introduces the most recent trends of tropical timber trade in the world,based upon the ITTO “Biennial review and assessment of the world timber
situation 2019-2020,” which was published in August 2021.
The article first explains the overview of ITTO and its biennial report, followed bymajor trends of tropical timber trade, focusing on tropical roundwood and tropicalplywood.

Descriptions of this article fully relies on the report and its statisticalannexes, unless otherwise specified.
2.

ITTO (International Tropical Timber Organization)(1)

Overview

ITTO is an international organization established in 1986 under the “International
Tropical Timber Agreement (ITTA).”
Yokohama, Japan.

The headquarters of ITTO are located in

ITTO is one of a few international organizations whose

headquarters are situated in Japan.
The objectives of ITTO are “to promote the expansion and diversification ofinternational trade in tropical timber from sustainably managed and legally
harvested forests and to promote the sustainable management of tropical timber
producing forests.”

Currently, there are 73 member countries, consisting of 36

Translation of Japanese article published in the monthly journal of “Sanrin” No.1653 (February 2022): 5462.

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tropical timber consuming countries and 37 producing countries, as well as EU.
(2)

Activities(a)

Policy guidance

ITTO develops guidelines and criteria/indicators for tropical forest management.
In 1992, ITTO developed the world fist criteria/indicators of sustainable forest
management, the “ITTO guidelines for the sustainable management of natural
tropical forests”.

Since then, ITTO has been developing a range of guidelines

for sustainable management of tropical forests, including forest fire prevention,
biodiversity conservation, or gender equality.
ITTO also collects and analyzes data on tropical timber production and trade in
the world as a basis for its policy guidance.

ITTO provides the results ofanalyses in its publications, such as semimonthly “Tropical Timber Market
Report” and biennial review and assessment, which is referred in this article.
(b)

Project assistance

ITTO assists projects of wood producing countries for the on-the-ground
implementation of sustainable forest management and the promotion of legal andsustainable timber trade.

Since its establishment, ITTO has assisted more than

1,000 projects in wood producing countries, equivalent to 44 billion yen offunding.
The themes of the projects include the establishment of timber legality
verification system, strengthening of monitoring system against illegal activities,
and introduction of sustainable forest management in local communities.
(3)

Japan’s contribution

When ITTO was established in 1986, Japan invited the headquarters of ITTO to
Yokohama, for the stable supply of tropical timber as the world largest wood
importing country at that time, as well as for the contribution to the international
community.

Since then, Japan has been contributing to the management of

ITTO, mostly through its voluntary contribution to projects in wood producing
countries.

As of FY2021, Japan’s annual voluntary contribution amounts to 93

million yen (78 million yen from the Forestry Agency and 15 million yen from the
Ministry of Foreign Affairs).

In addition, the Forestry Agency also contributes 22

million yen to ITTO for the general expenses of headquarters every year.

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3.

ITTO biennial review and assessment

ITTO has been publishing the biennial review and assessment every two years
since 1987 (every year until 2012), in accordance with article 28 of ITTA.

ITTO

published its 28th report for the period of 2019-2020 in August 2021.
This edition of the report provides the overview of world wood market trends in
2019-2020 with its focus on tropical timber.

The report consists of four chapters(46 pages) and appendices (176 pages).

Chapter 1 describes overall trends ofmajor wood markets, Chapter 2 analyzes data of production, consumption, andtrade of tropical timber including roundwood, lumber, veneer, and plywood,
Chapter 3 analyzes data on secondary processed wood products including
wooden furniture, and Chapter 4 reports India’s wood supply and demand.
Note that the definition of “tropical timber” in this report is “tropical wood forindustrial uses, which grows or is produced in the countries situated between the
Tropic of Cancer and the Tropic of Capricorn”, and “covers logs, sawnwood,
veneer sheets and plywood”, in accordance with the article 2 of ITTA, meaningthat coniferous wood may be included in “tropical timber.”4.

Current trends of tropical timber trade(1)

Tropical roundwood (p16-21 of the report)(a)Production

In 2020, the volume of tropical roundwood production in ITTO member countries
was 285 million m3, a 3.1% decline from the previous year (World total in 2020
(including non ITTO members): 330 million m3.)

Indonesia (80 million m3), India(48 million m3), Vietnam (36 million m3), Brazil (29 million m3), and Thailand (17million m3) account for three fourth of total ITTO members’ production.

In termsof regions, Asia-Pacific accounts for 78%, Latin America for 14%, and Africa for
8%.
In Indonesia, almost all tropical roundwood is consumed domestically.

Recently,roundwood production from industrial plantations for pulp and paper industry andland use conversion for farmland is increasing.
In Thailand, almost all tropical roundwood is rubberwood or other planted
species.
In Malaysia, production from natural forests is decreasing due to the reduction ofannual allowable cut and strict regulation on illegal activities.
(b)

Exports3

In 2020, the volume of tropical roundwood exports by ITTO member countries
was 8.60 million m3, a 19% decline from the previous year (World total in 2020:
11.5 million m3).
Papua New Guinea (PNG) is the world largest tropical roundwood exporting
country with the export volume of 29 million m3 in 2020, a 29% decline from theprevious year.

PNG accounts for 25% of world total exports.

roundwood exports is destined to China.

87% of PNG’s

Roundwood exports from PNG are

expected to continue to decline due to the imposition of log export taxes in 2020
and the government’s intention to halt roundwood exports by 2025.
Solomon Islands also exports huge amount of roundwood to China, with theexport volume of 2.40 million m3 in 2019.

Harvesting in Solomon Islands is

considered as beyond sustainable level, and forest resources in the country are
expected to be depleted in ten years.
Recently, pressure toward alternative roundwood suppliers in Latin America andAfrica is intensifying, as the availability of roundwood from Asia-Pacific countries
declines.

In 2020, the volume of tropical roundwood exports from Latin

American countries was 2.20 million m3, nearly doubled from 2016.

Amongthem, Brazil accounts for 1.40 million m3, although the volume had been only
negligible until 2018.

Most of Brazil’s production is from Eucalyptus plantations.

The volume of tropical roundwood exports from Africa is declining, following thepeak of China’s demand in 2016.

In 2020, the export volume of Africancountries was 2.20 million m3, a 32% drop from the previous year.

Most ofexports are destined to China, Vietnam, and India.
(c)

Imports

The volume of tropical roundwood imports by ITTO member countries has been
declining since 2014, down to 12.2 million m3 in 2020, a 16% decline from theprevious year (World total in 2020: 12.3 million m3).

The figure was the lowest

since the beginning of the survey in 1987.
China (70%), India (11%), and Vietnam (9%) account for 90% of the tropicalroundwood exports in the world.

The major trade flows include (i) from PNG

and Solomon Islands to China, (ii) from Malaysia to India and Indonesia, and (iii)from Equator Guinea, Congo (R), Cameroon, and Brazil to China.
The volume of China’s tropical roundwood imports in 2020 was 8.60 million m3
with an 11% decline from the previous year.
was 59.50 million m3.)

(China’s total roundwood imports

China effectively contained COVID-19 pandemic by the4first quarter of 2020, and resumed economic activities and imports from thesecond half of the year, much earlier than other consuming countries.
PNG and Solomon Islands account for 58% of China’s tropical roundwood
imports in 2019.

Equator Guinea, Congo (R), Cameroon, Mozambique, andBrazil also supply substantial amounts of tropical roundwood to China.
India imports tropical roundwood mostly from Malaysia for plywood processing.
Vietnam has shifted its tropical roundwood supply for manufacturing fromSoutheast Asia to Africa.

In 2019, Vietnam imported 1.20 million m3 of tropicalroundwood, 76% of which was from African countries, including Cameroon andCongo (R).
Japan had been the world largest tropical roundwood importing countries until
1998, but, in 2020, the volume of Japan’s imports was as small as 76 thousand
m3, with the share of 0.6% in the world.
(2)

Tropical plywood (p27-32 of the report)(a)Production

The volume of tropical plywood production in ITTO member countries increased
every year during 2016-2019, but dropped by 2% to 46.30 million m3 in 2020
(World total in 2020: 46.70 million m3).

Recently, competition with coniferous

plywood, temperate non-coniferous plywood and other panel products is
becoming intensified.
China (59%), India (22%), Indonesia (8%), and Malaysia (3%) account for 92%
of tropical plywood production in the world.
China is the world largest plywood producing country with the production amountof 27.40 million m3 in 2020.

China dominates 57% of plywood production, and

59% of tropical plywood production in the world, consuming almost all the
production domestically.
India has been expanding its tropical plywood production in these ten years.
The volume of its production was 10.00 million m3 in 2020, with its material input
depending on tropical roundwood imports from Malaysia.
Tropical plywood production in Indonesia and Malaysia has been dwindling due
to the restriction of roundwood availability in these countries.

In 2020, thevolume of tropical plywood production in Indonesia was 3.5 million m3, less thanhalf of the volume in 2000.

Similarly, production in Malaysia was 1.60 million

m3, less than one third of that in 2006.

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(b)

Exports

The volume of tropical plywood exports by ITTO member countries increased
every year during 2015-2018, but began to decline in 2019, dropping to 5.70
million m3 in 2020 with a 20% decline from the previous year (World total in
2020: 6.60 million m3).
Indonesia (35%), Vietnam (22%), and Malaysia (20%) accounts for 77% oftropical plywood exports in the world.

Exports from Indonesia and Malaysia

decreased due to the short supply of roundwood and labor shortage under the
COVID-19 crisis, as well as the restricted availability of ocean transportation
containers.
Indonesia is the world largest tropical plywood exporting country.

In 2020,

Indonesia exported 2.30 million m3, a 22% drop from the previous year.

Major

export destinations include Japan (27%), South Korea (15%), the US (13%), andMalaysia (6%).

Among them, exports to the US are rapidly increasing.

In the same year, the volume of tropical plywood exports from Malaysia was 1.30
million m3, a 17% drop from the previous year.

The major export destinations

include Japan (52%), South Korea (9%), the US (7%), and Taiwan (6%).

Mostof its exporting plywood products are concrete formwork panels.
In contrast, Vietnam is increasing its tropical plywood exports, exporting almost
all its production.

In 2020, the Vietnam’s tropical plywood exports reached 1.50

million m3 with a 32% increase from the previous year, exceeding Malaysia’s
exports for the first time.

Nearly half of Vietnam’s exports are destined to the

US market.
The volume of China’s exports of tropical plywood decreased from 810 thousand
m3 in 2017 to 500 thousand m3 in 2020.
(c)

Imports

The volume of tropical plywood imports by ITTO member countries continued toincrease from 2016, but dropped by 15% in 2020 from the previous year,
reaching 5.80 million m3 (World total in 2020: 6.60 million m3).

While Japan’s

imports decline, the US imports are increasing.
The volume of Japan’s tropical plywood imports has been declining, due to theshift of demand toward domestically produced coniferous plywood for structuraluses.

In 2020, the volume of imports declined to 1.99 million m3 with a 29%

drop from the previous year.

Japan’s share in the world imports also declined to18%, exceeded by the US for the first time.
6The volume of the US imports of tropical plywood has been rapidly increasing
since 2017.

In 2020, the volume of US imports reached 1.70 million m3, morethan doubled from 2017, due to the sharp increase of wood demand in housing
construction and repair/remodeling after the first wave of COVID-19 pandemic.
The share of the US in the world tropical plywood imports reached as high as
25% in the same year.
The major supplying countries to the US include Vietnam (35%), Indonesia(28%), and Malaysia (9%).

Until recently, China has been one of the mostimportant suppliers of the plywood to the US, but the US began to impose antidumping and countervailing duties from 2017 and additional duties from 2019 on
hardwood plywood imported from China.

In response, Chinese manufacturers

have relocated their plywood production facilities to Vietnam.

As a result, theUS imports from China decreased, while those from other countries including
Vietnam increased.
It should be noted that the US Department of Commerce initiated an inquiry into
whether imports of hardwood plywood completed in Vietnam, using components
from China, are circumventing countervailing duties imposed on hardwood
plywood from China in June 2020, following the surge of imports from Vietnam 2.
(3)

Tropical sawnwood(a)Exports

In 2020, the volume of tropical sawnwood exports from ITTO producing countries
was 9.20 million m3 with a 10% drop from the previous year (World total in 2020:
9.60 million m3).
Thailand is the world largest tropical sawnwood exporting country with the export
volume of 3.60 million m3, mostly produced from rubberwood plantations.
of its sawnwood exports are destined to China.

99%

In the first half of 2020, therubberwood sector in Thailand was hard hit by the drop of demand anddisruption of supply chains in China caused by COVID-19 pandemic.
Malaysia is the world second largest tropical sawnwood exporting country withthe export volume of 1.20 million m3 in 2020.

Its major destinations are China,

Thailand, India, and Philippines.
(b)

Imports

USDOC (2020) Press Release “U.S. Department of Commerce initiates circumvention inquiry on
hardwood plywood completed in Vietnam” (June 10, 2020)2

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In 2020, the volume of tropical sawnwood imports by ITTO member countries
was 9.80 million m3 with a 2% drop from the previous year (World total in 2020:
10.50 million m3).

The volume of tropical sawnwood imports in the world isequivalent to only 7% of global softwood sawnwood imports.
China is the world largest tropical sawnwood importing country with the import
volume of 6.60 million m3 in 2020, accounting for 63% of world’s imports.

59%

of China’s tropical sawnwood imports are rubberwood products from Thailand.
Most of imported rubberwood sawnwood is used for manufacturing of furniture(45%), wooden doors (24%), and cabinets (26%) in China.
Japan’s imports of tropical sawnwood in 2020 was 66 thousand m3.
5.

Conclusion

Regarding tropical roundwood, China imports huge amount of tropicalroundwood mostly from PNG and Solomon Islands, dominating 70% of world
trade volume.

Although Japan was once the world largest tropical roundwood

importing country, Japan’s imports of tropical roundwood is close to extinction,with the last domestic plywood mill sourcing imported tropical roundwood was
dissolved in March 2021.
Regarding tropical plywood, Indonesia and Malaysia, the major producing
countries, are decreasing its production and exports of tropical plywood, due tothe limited availability of roundwood under the strict regulation on illegal
activities.

In contrast, Vietnam is increasing its production and exports, with therelocation of processing industry from China.

Although Japan had been theworld largest tropical plywood importing country for a long period of time, its
imports are decreasing due to the demand shift toward softwood plywood forstructural uses.

In 2020, Japan was downgraded to the second largest importerfor the first time, exceeded by the US.
As the situation surrounding tropical timber trade dynamically changes, thesignificance of tropical timber trade for Japan is becoming smaller.

Consideringsuch changes, Japan’s contribution to ITTO needs to be reconsidered, since theobjective of ITTO is the promotion of tropical timber trade.
In 2020, the COVID-19 pandemic severely damaged economies of wood
producing countries dependent on wood exports, with the sudden drop of export
demand.

Given such volatility in wood exports, ITTO proposed the expansion ofwood consumption in wood producing countries, pointing out that “dependence
on exports of unprocessed wood products should be reconsidered” and8

“domestic consumption has proven to be a stabilizer for tropical timber
production in previous economic crises.” 3
Based upon the ITTO proposal, the Japan’s Forestry Agency decided to start a
new initiative for the promotion of sustainable wood use in wood producing
countries in FY 2022, with the new budget program, named as the “Japan’s wooduse system dissemination projects.”
Under this program, the Forestry Agency will provide voluntary funding to ITTO
for the assistance of sustainable wood use promotion projects in wood producing
countries.

At the same time, the Forestry Agency will also provide valuableadvice to the planning and implementation of those projects, taking advantage ofJapan’s rich experiences of wood use promotion activities.
The projects intend to develop people’s understanding on the advantages ofwood as a “sustainable” material, in comparison to carbon-intensive materials
such as plastic, concrete, or steel, focusing on urban societies with the prospectsof economic and population growth.

Consumers’ preference of wood to plastic,

concrete, or steel would enhance their demand for domestic wood products,
helping promote sustainable management of forests in each country, in a manner
different from the expansion of international trade.
Japan will continue its contribution to sustainable management of tropical forests
through ITTO, while carefully monitoring the trends of tropical timber trade in theworld.
(END)

3

ITTO (2020) Impacts of the COVID-19 pandemic on tropical timber production (November 2020):
https://www.itto.int/direct/topics/topics_pdf_download/topics_id=6575&no=1

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