2024 Vietnam’s wood and wood products imports and exports continue to recover

Vietnam’s Ministry of Industry and Trade recently published its Trade Information newsletter on 1 Jul, detailing specialised trade information on wooden products and handicrafts.

Ahead of its 5th edition from 27-30 Nov 2024 in Bình Dương, Vietnam, the Smart Furniture Solutions (SFS) Vietnam exhibition has summarised and compiled the salient trends and performances of wood and wood products in Vietnam from the newsletter for guests and exhibitors.

General situation of Vietnam’s import and export economy

At present, Vietnam’s economy continues to show positive signs, and its import and export activities remain active. It is estimated that it will maintain double-digit growth in the second half of the year.

In June 2024, the total import and export volume of Vietnam is expected to reach US$65.7bn, an increase of 11.6% over the same period in 2023. The export volume is expected to reach $33.2bn, an increase of 10.9% over June 2023, while imports are expected to reach $32.5bn, an increase of 21.9% over June 2023.

In the first six months of 2024, the total import and export volume is expected to reach $369.64bn, an increase of 16% over the same period of last year. Vietnam’s commodity exports recovered strongly, with an estimated export value of $189.48bn, an increase of 14.2% over the same period last year. Compared with the same period of previous years, this has also set a record high.

It is worth noting that the export volume of Vietnam’s domestic economic sector is expected to reach $52.74bn, an increase of 19.2% over the same period of last year. The growth rate is 12.3% higher than that of foreign-invested sectors (including crude oil), reaching $136.73bn. Therefore, the proportion of domestic enterprises in total exports rose from 26.7% in the same period last year to 27.8%.

The proportion of foreign direct investment enterprises decreased from 73.3% to 72.2%. With the strong recovery of exports, the demand for imported raw materials for production activities also increased significantly in the first six months of 2024, estimated at $180.16bn, an increase of 18.1% over the same period in 2023. The trade balance of goods in the first six months continued to have a surplus, with an estimated trade surplus of $9.31bn.

In general, against the background of improving global trade with Vietnam, Vietnam’s commodity exports are expected to continue to grow in the future. In addition, according to cyclical factors, orders are expected to increase sharply in the last few months of this year.

In recent months, the import of raw materials for production has increased, which also indicates that the export will continue to grow in the future and will also be a factor to promote the national economic growth. In a recent report, the International Monetary Fund (IMF) predicted that Vietnam’s economic growth would reach nearly 6% in 2024 with the support of strong international demand, stable foreign investment and regulatory policies.

Overview of Vietnam’s wood and wood products exports in the first six months

In June 2024, Vietnam’s wood and wood products exports reached $1.25bn, down 1.1% from May 2024, but up 13.6% from June 2023. The export of wood products is expected to reach $840m, up 0.6% from May 2024 and 10.4% from June 2023.

In the first six months of 2024, the export of wood and wood products is expected to reach $7.4bn, an increase of 22.2% over the same period in 2023. The export of wood products is expected to reach $5.03bn, an increase of 21.4% over the same period in 2023.

According to preliminary statistics, from 18-25 Jun 2024, Vietnam’s exports of wood and wood products reached $361.8m, an increase of 12.3% over last week. The export of wooden furniture reached $217m, an increase of 14.3% over last week. It is estimated that in the first half of 2024, the export of wood and wood products will increase by double digits.

Vietnam’s export trade continues to show a positive trend, and the import of consumer goods in many countries has increased again, which is a good sign for the export of commodities such as wood and wood products.

So far, many enterprises have received orders before August 2024, and some enterprises have even received orders before the end of 2024. With the arrival of many orders, and the positive growth data in the first half of 2024, the import of raw materials increased, indicating that the export prospects of wood and wood products will grow positively in the second half of the year.

Especially in the last few months of 2024, because according to the rules, the demand for wooden furniture usually increases sharply as the real estate market entered the completion stage, and it was necessary to renovate houses and replace furniture to welcome the new year.

At the same time, Vietnam’s wood processing and export industry has a highly skilled labour force, abundant wood raw materials, legally imported wood, and the ability to produce products that can be traced back to its origin. On the other hand, Vietnam’s product design patterns are becoming more and more diversified, meeting the needs of the world.

However, in the second half of 2024, the export of wood and wood products still faces many challenges. Continued geopolitical tensions continue to push up freight rates. In addition, wood and wood products exported to major markets such as the US and the EU continue to face pressure from trade defense investigations, environmental-related technical obstacles, sustainable development and green transformation.

Specifically, from the end of 2024, Europe will implement laws and regulations to prevent forest degradation. The US market will implement anti-dumping regulations and investigate kitchen cabinets.

In addition to objective factors, the internal ability of enterprises is also limited, and most enterprises mainly process according to the orders and designs of foreign distributors. Production and export have continued to grow for many years, but the added value of products is not high by relying on cheap labour and raw materials.

Most enterprises are small in scale and unable to establish brands, with poor resilience to unexpected and persistent fluctuations in the market. Products are rarely distributed directly to customers, but must be distributed through foreign distribution channels.

In order to make the wood industry sustainable, Vietnam’s wood and furniture industry needs to focus on investing in design, innovation and increasing the added value of products, in addition to meeting the regulations and standards of origin and environment.

Moreover, wooden furniture export enterprises need to make efforts to diversify the market, focusing on promoting trade in potential markets such as the Middle East, Africa, Eastern Europe and Northern Europe, which have not yet been developed.

In terms of products, the positive growth rate of most wood and wood products will be in the first five months of 2024, especially for wooden furniture products. The highest export turnover is wooden frame chairs, reaching $1.3bn, with an increase of 27.1% in the same period in 2023; followed by woodchips reaching $1.1bn, an increase of 35.1%; living room and dining room furniture reaching $1bn, an increase of 38.2%; wood, planks and flooring reaching $814.7m, an increase of 24.7%; bedroom furniture reached $772.7m, an increase of 32.3%.

The US, China and the EU are all growing strongly, indicating that the market demand is recovering rapidly. The US is still Vietnam’s largest export market for wood and wood products, and its export turnover in the first five months of 2024 reached $3.3bn, an increase of 26% over the same period in 2023.

The US is the largest import market in the world. It is worth noting that since 2023, the relationship between the two countries has been upgraded to a comprehensive strategic partnership, which has promoted two-way trade.

In addition, the exchange rate difference between VND and the US dollar has decreased, but it is still high. Therefore, due to the low labour cost, exporting wood and wood products from Vietnam to the US has a price advantage.

Although there are many positive aspects in exporting wood and wood products to the US, the risk of trade fraud and counterfeit product sources is increasing. Complex trade competition is also a major challenge for Vietnamese wooden furniture export enterprises. Therefore, Vietnamese enterprises must pay attention to improving product quality and labour productivity, apply digital economy to directly contact with imported enterprises, reduce procedures and costs, and thus improve product competitiveness.

Vietnam exported $887.8m to the China market, an increase of 51.2% over the same period in 2023; For the EU, it reached $240.3m, an increase of 32.8%. Canada reached $94m, an increase of 24.1%, while Britain reached $89.7m, an increase of 18%, and Indonesia reached $77.8m, an increase of 102.3%.

Overview of Vietnam’s wood and wood products imports in the first six months

In the first five months of 2024, the newly planted forest area is estimated to reach 98.2 thousand ha, an increase of 1.3% compared to the same period last year. The number of scattered forest trees planted reached 37.8 million trees, an increase of 1.2%. Timber output reached 7,413.7 thousand m3, an increase of 6.6%.

The damaged forest area was 652.2ha, a decrease of 24.8%, of which the area of forest cut down and destroyed was 376.2ha, a decrease of 24.9%. The area of forest burned was 285.1ha, a decrease of 24.8 times.

According to preliminary statistics, Vietnam’s import of wood and wood products in June 2024 is estimated to reach $250m, an increase of 0.9% compared to May 2024 and an increase of 31.3% compared to June 2023. In the first six months of 2024, the import of this item is estimated to reach $1.266bn, an increase of 21.7% compared to the same period in 2023.

According to preliminary statistics, Vietnam’s import of raw wood in June 2024 is estimated to reach 510.4 thousand m³, valued at $168.4m, an increase of 1.5% in volume and 1.0% in value compared to May 2024; compared to June 2023, it increased by 24.1% in volume and 24.0% in value.

In the first six months of 2024, the import of raw wood is estimated to reach 2.5 million m³, valued at $838.4m, an increase of 18.4% in volume and 11.2% in value compared to the same period in 2023.

According to statistics from data of the General Department of Customs, the import of raw wood in May 2024 reached 502.9 thousand m³, worth $166.8m, up 10.5% in volume and 9.2% in value compared to April 2024. Compared to May 2023, it increased by 10.3% in volume and 4.7% in value. The increase in raw wood imports in May 2024 was due to increased demand from processing factories.

In the first five months of 2024, the import of raw wood reached 2.02 million m³, worth $670.0m, up 17.1% in volume and 8.4% in value compared to the same period in 2023.

In the first five months of 2024, the import volume of raw wood from major markets such as China, EU, US, Thailand, Chile, Laos, Brazil, New Zealand… increased compared to the same period in 2023. Meanwhile, the import volume from some other markets decreased, such as Cameroon, Malaysia, Congo, Suriname, Indonesia.

Specifically, the import of raw wood from the largest market, China, accounted for 17.3% of the total import volume in the first five months of 2024, reaching 348.5 thousand m³, worth $137.1m, up 71.6% in volume and 39.9% in value compared to the same period in 2023.

Next, the import of raw wood from the EU market increased by 4.0% in volume and 9.3% in value compared to the same period in 2023, reaching 275.3 thousand m³, worth $88.6m, accounting for 13.7% of the total import volume.

The import of raw wood from the US market increased by 18.1% in volume and 18.2% in value compared to the same period in 2023, reaching 255.4 thousand m³, worth $110.1m, accounting for 12.7% of the total import volume.

In addition, the import volume of raw wood from some other markets increased compared to the same period in 2023, such as: from Thailand increased by 27.0%; Chile increased by 87.9%; Laos increased by 3.4%; Brazil increased by 39.9%; New Zealand increased by 25.8%; Papua New Guinea increased by 71.3%.

In contrast, the import volume of raw wood from some other markets in the first five months of 2024 decreased compared to the same period in 2023, such as: from Cameroon decreased by 35.6%; Malaysia decreased by 12.9%; Congo decreased by 32.5%; Suriname decreased by 28.0%; Indonesia decreased by 6.6%.

In the first five months of 2024, the import volume of major wood species such as pine, eucalyptus, pachyloba, oak, cajuput, walnut wood, xoan wood, beech wood… increased compared to the same period in 2023. Meanwhile, the import volume of some species decreased, such as ash, lim, huong, rubber, teak, linh sam…

Specifically, in the first five months of 2024, imports of total raw wood item reached 2.02 million m³, worth $670.0m, an increase of 17.1% in volume and 8.4% in value compared to the same period in 2023.

Next, the import of eucalyptus wood increased by 27.9% in volume and 12.7% in value compared to the same period in 2023, reaching 142.1 thousand m³, worth $53.5m, accounting for 7.1% of the total volume of imported raw wood.

The import of oak wood increased by 27.7% in volume and 30.0% in value compared to the same period in 2023, reaching 135.4 thousand m³, worth $77.7m.

In addition, the import volume of some types of wood increased compared to the same period in 2023, such as: pachyloba increased by 18.9%; eucalyptus increased by 82.4%; walnut wood increased by 35.5%; xoan wood increased by 24.2%; beech wood increased by 61.3%; lagerstroemia wood increased by 4.1%; pyinkado wood increased by 26.5%.

In contrast, the import of lim wood in the first 5 months of 2024 decreased by 39.0% in volume and 45.2% in value compared to the same period in 2023, reaching 120.8 thousand m³, worth $45.9m, accounting for 6.0% of the total volume of imported raw wood.

In addition, the import volume of some types of wood decreased compared to the same period in 2023, such as: huong wood decreased by 7.5%; rubber decreased by 17.0%; teak decreased by 30.3%; fir decreased by 1.6%; sen decreased by 60.0%.

Trend forecast for Vietnam in the second half of 2024

The Vietnamese wood industry witnessed an impressive export growth momentum in the first six months of 2024 with a growth rate of 22.0% compared to the same period in 2023, estimated at $7.4bn. This is considered a positive sign compared to the sharp decline in this market last year.

This recovery is attributed to the rebound in market demand, especially in major markets such as the US and Europe. Many domestic enterprises have quickly adapted to this trend by diversifying products, expanding markets, and optimising costs.

Currently, the wood industry in Vietnam has expanded its export market to 170 countries around the world, penetrating deeper into important markets such as the US, Europe, South Korea, Japan. More specifically, it has become more present in emerging markets such as the Middle East and India.

Signals from import markets have been improving since the beginning of the second quarter, but Vietnamese wood businesses are also facing challenges such as short orders, high raw material prices, customer partners requesting price reductions, and increased shipping costs.

In the last six months of 2024, Vietnam’s export of wood and wood products will continue to receive positive opportunities from the US and EU markets, such as cooling inflation, increasing job market, active construction and real estate trading, and the problem of high inventory is gradually being resolved.

In order to prepare raw materials for export processing, in addition to the domestic raw wood supply, enterprises also increase the import of types of wood that are not sufficient to meet the demand of processing factories. It is forecasted that the import of raw wood will continue to increase in the last six months of 2024 due to increasing demand.