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Sylva Wood 2015 Trip Report Shanghai, June 29 – July 1, 2015

A. Travelers No Name Company Arrival Departure

1 An Di Nguyen SEC 27-Jun 1-Jul

2 Scott Leavengood OSU 29-Jun 1-Jul

3 Xiaozhi Cao

29-Jun 1-Jul

4 Kevin Cheung WWPA 27-Jun 2-Jul

5 Wilson Burns Georgia Exports Company 28-Jun 3-Jul

6 Eric Chen Vanport 28-Jun 1-Jul

7 Jiekun Wang Vanport 28-Jun 1-Jul

8 Felipe Carvalho Aljoma Lumber 28-Jun 1-Jul

9 Lena Kasa Universal Forest Products Exports 23-Jun 3-Jul

11 Len Barker Elof Hansson 28-Jun 2-Jul

12 Ellen Huang Super Lumber 29-Jun 1-Jul

13 Jay Zhang KM Lumber 28-Jun 2-Jul

14 Guowei Yang KM Lumber 28-Jun 2-Jul

15 Xu Fang AMSO

16 Freda Ye AMSO

17 Ade Zou AMSO

B. Purpose of Travel China is the world's largest buyer of timber and consumes an estimated 510 million cubic metres every year, trading at an expected value of US$170 billion by the end of 2015. Where China used to be the world’s production powerhouse of furniture, flooring, and doors and windows for export, a burgeoning middle class has driven up the demand for wood, such that a majority of these products are now manufactured and sold back for domestic consumption. At the same time, with China en-forcing a blanket ban on commercial logging of natural forests by 2017, it is expected that 40% of the country’s wood needs will, and can only, be met by imports. Shanghai has a geographical advantage, located in the Yangtze River Delta in East China. It sits on the south edge of the mouth of the Yangtze in the middle portion of the Chinese coast. The munici-pality borders the provinces of Jiangsu and Zhejiang to the north, south and west, and is bounded to the east by the East China Sea. Wood materials imported to Shanghai radiates to provinces border-ing Shanghai and also to inland provinces like Chengdu and Chongqing via barging on the Yangtze

river. Shanghai customs data showed that in May 2015, there was a decline of 721,700 m³wood import at Shanghai port, dropping 54.89% compared to last year and 14.07% on a year-on-year ba-

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sis. Wood market is still slow, volatile at lower pricing. The high inventory led to the decreasing de-

mand for imported wood. A total of 150,800m³lumber was shipped to Shanghai in May, dropping 74.87% compared to last year and 25.38% on a year-on-year basis. A group of 17 delegates comprising of SEC and SFPA member companies, AMSO China office staffs started three days’ trade show at the Sylva Wood Show. Sylva Wood 2015 marks a significant mile-stone for the Asian timber market for many reasons. Apart from being Asia’s only wood materials and wood products expo to-date, the highly focused show is dedicated to the industry’s need for answers in a fluctuating market, one that presents many risks and opportunities at the same time.

C. Itinerary June 27, Saturday: AmSo staff set up booth June 28, Sunday: Participants arriving in Shanghai / AmSo staff set up booth June 29, Monday: Attend Sylvawood Transportation: On your own Show hours: 09:00 - 17:30 June 30, Tuesday: Attend Sylvawood Transportation: On your own Show hours: 09:00 - 17:30 Forum: 11:00-11:50, Speaker: Scott Leavensgood, OSU July 1, Wednesday: Attend Sylvawood & Site Visit/Move-out Transportation: On your own Show hours: 09:00 - 16:00 12:30: Gathering at AMSO booth 13:30 - 14:30 Tour of Shanghai Zheng Shan Wood Co., Ltd. 15:00 – 15:30 Tour of Taicang port 15:45 – 16:30 Tour of warehouse and lumber wholesale market 16:30 Depart for hotel July 2, Thursday: Mission members flying back

D. Summary and Observations Trade show There wasn’t a big crowd of people, but visitors that came to our booth were all industry-related professional visitor with good quality, such as lumber and log importers, distributors, trading com-panies, processing plants, furniture manufacturers, and LC issuing companies. They are very familiar

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with logs, sawn lumber, plywood and panel products, wooden flooring, wooden decking, doors, windows and mouldings. Meanwhile, our observation is that a attractive booth design played significant role in attracting vis-itors' attention. The 36 sqm American Softwoods booth was constructed with SYP and DF lumber, presenting a unique combination between structural as well as interior applications. With warm feeling brought by the wood samples and whole booth design, AmSo booth became the focal point in the show. Visitors praised it was the most beautiful booth that they’ve ever seen. By chatting with these people, we learned some of the importers think US softwood lumber market in China still remains deep in recession with few signs of pick-up. Prices are still the biggest concern among Chinese importers. US softwood lumber suppliers are facing a competitive situation in a still price-sensitive market. Alongside the show, the Sylva Wood conference presents a series of seminars and workshops, from macro-economic trends in the China lumber market to a vision of an Asian urban landscape built on engineered wood structures. Professor Scott Leavengood from Oregon State University addressed topic Innovation in Wood Use on the forum. He presented bio-based raw materials including switch grass, pine bark and corn husks, a new formaldehyde-free adhesive for plywood, and wood innova-tion on polymer-impregnation, acetylation, furfurylation, thermal modification, and mechanical densification. His session was informative with practical insight to educate and navigate the industry. During the show, about 270 visitors stopped by our booth and a total of 92 people left their contact information. We got questionnaire filled by 59 companies. Softwood Export Council and Southern Forest Products Association publications were presented on our booth.

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Site Visit Shanghai Zheng Shan Wood Co.,Ltd. Mr. Zhang Shixing, the GM told us they used to purchase SYP directly from US suppliers but later turned to buy from Super Lumber or KM Lumber who had stocks in China as the purchasing volume shrank. They produce thermal treated SYP decking by themselves. They also consider purchase DF in two dimensions: 1.5*5 inch and 1.5 *7 inch for Japanese post and beam.

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Taicang Port and Furen Lumber Wholesale Market

Mr. Guo Liu, General Manger of Fu Ren Group took us on a grand tour of the fumigation area and log yard of Taicang Port. Later, the delegates had a roundtable discussion with Mr. Cheng Rong, General Manager of TengHong Industrial. Mr. Chen is looking for US suppliers with FSC certificate as required by his cus-tomer IKEA. He was pessimistic about the softwood lumber market in China in the 2H of this year as currently the cheap SPF inventory couldn’t be run out. Although there was emerging market for lumber consumption in inland China, generally speaking, the demand reduced sharply. Over-supply from overseas made the current situation even worse. Dr. Kevin Cheung also gave a brief introduc-tion about U.S market status. His optimistic forecast that 60% softwood will be used for domestic residential construction in the next two years, and 30 % come from Canada. Beside China, Mexico and Japan are main export countries for U.S., Indian and Korea are being new growing market.

Totally 59 completed survey forms were received from Sylva Wood

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F. Conclusions and Recommendations The Chinese market represents good opportunities for those interested in exporting building mate-rials, including wood products. China uses large quantities of wood in both decorative and structural applications including increasing volumes of preservative-treated wood. One growing building ma-terial sector is preservative-treated wood. Many new products attract consumers by the original design and high-quality raw material. Wood material always gives clean, fresh and comfortable feeling to people, therefore, wood furniture and wooden accessories always favoured by a large amount of consumers. Among visitors' sources, Rus-sia’s market share of most imported softwood logs or lumber, other principal suppliers are New Zealand, Canada, and the United States. This mission was successfully conducted as an attempt to offer users from Yangtze River Delta in East China more choices on wood material exporters in addition to local wholesalers. Sylva Wood is a good show worth our participation in the future!