India

B.C. softwood lumber and panel exports to India

(Softwood lumber, plywood, OSB, MDF and particleboard)

B.C. Position

  • 5% of all commodity wood product (lumber and panels) imports by volume
  • 12% of softwood lumber imports by volume

Export Sales

  • 2015: 45,000 m3 of commodity wood products valued at $11 million (this represents a 48% increase in volume and a 38% increase in value over the year before)
  • 2016 (through Aug): 16,544 m3 valued at $4.4 million

Market Overview

In 2015, low crude oil and other commodity prices helped expand India’s economy by 7.3%. Although India’s inflation rate fell to a decade low of 4.9%, the Reserve Bank of India cut interest rates four times to reduce borrowing costs and stimulate consumer spending.

Since taking office in 2014, Prime Minister Narendra Modi has continued to look for ways to grow the economy. With initiatives such as “Make in India”, the country continues to attract foreign investment into various industrial sectors, including the value-added wood sector. In 2016, the government also launched the “Housing for All 2022” program to address housing shortages in urban India.

While India remains reliant on log imports, the nature of these imports has shifted towards softwoods. Myanmar’s self-imposed log export ban created opportunities for New Zealand which, in 2015, surpassed Malaysia to become the India’s largest log supplier. Indian manufacturers’ exposure to softwood logs over the past decade has created an opening for imported softwood lumber.

Softwood lumber imports continue to grow, reaching a record 376,000 m3 in 2015. According to data from India Customs, the EU remains the largest supplier, followed by the US and Canada. According to Statistics Canada, shipments from B.C. increased 47% in 2015 to an estimated 45,000 m3.

Wood panel imports grew 5% to an estimated 588,000 m3 in 2015. Roughly 41% of imported panels were MDF, followed by plywood (32%) and particleboard (27%). Nearby countries such as Malaysia, Thailand, China, Indonesia and Vietnam continue to be the largest panel suppliers.

As tropical hardwood log supplies continue to tighten, Indian importers are looking for new, cost effective wood suppliers – and are increasingly considering softwoods as an alternative to traditional materials. As a result, softwood lumber exports to India since 2010 have increased considerably.

India has recently removed all import permits for wood products, which will help exporting countries establish market presence, and longterm economic indicators remain positive, a trend that suggests increased consumption of wood products in the years ahead.

Market Trends

Filling homes with wood products – India’s developing economy coupled with the country’s growing demographic dividend continues to create more wealth. Since doubling in the past decade, India’s GDP per capita continues to grow leading to a rise in affluence. With the government’s initiatives to boost commercial and residential development, more residential construction activity is expected. Although homes are unlikely to be built with wood, past observations suggest consumers will outfit their homes with wood furnishings such as windows, doors, furniture, floors and decorations.

Selling wood furniture online – The growing online furniture retail segment in India provides potential opportunities for B.C. softwood. As production runs become larger and designs move to a national scale, supply certainty becomes more important. Species from B.C. provide supply certainty and predictable properties for mass production when compared to the mix of hardwood currently used.

Willingness of manufacturers to experiment with softwood – Product trials are emerging as a critical and highly successful means to engage with and motivate Indian manufacturers to try Canadian species, and then convert existing or new production to Canadian species. Several successful product trials have been delivered by the India team and commercial orders resulting from these trials continue to expand.

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