Unsold laminated wood at a company piles up in recent months. (Photo: congthuong.vn) Do Van Hai, Director of Hai Oanh Forest Production andImport-Export Trading Co. Ltd., reveals that his firm was busy with orders in2020 and 2021, during which wooden furniture was in high demand.
New orders began to fall in 2022 as his buyers – furniture makersin Ho Chi Minh City and Binh Duong province – saw a sharp decline in theirexports, resulting in weak demand for laminated wood. "Our sales haveground to a halt since Q1/2022," said Hai.
Digging into the situation, the director attributes the exportshrinkage to the high inflation and economic recession in importing countries,which have caused a shift in consumer spending to essential items.
"Wooden furniture fell in sales because it is not anessential item. As wooden furniture can't sell, so does laminated wood, aninput material for the former," he explained.
He also said his company, so far, has 20 billion VND of workingcapital tied up in inventory, equivalent to 1,400cu.m of laminated wood. At theend of Q1, it had to cut staff by 80%.
The situation is no better for Moc Quyet Thang Co. Ltd., which isstruggling with loads of unsold inventory.
Nguyen Hoang Ly, director of the company, said the market has beengloomy for nearly a year and many producers have had to cease production onaccount of falling new orders.
"New orders have plummeted since wooden furniture exported tothe US and EU came to a halt in August," said Ly.
She also said new orders have dropped by 50 % so far, putting hercompany on the line financially.
Luu Phung Linh Tien, Director of Tan Thanh Phu Service andManufacturing Trading Co. Ltd., said her company has 800cu.m of unsoldlaminated wood to date.
It had to make 80% of its staff redundant and close its sawmill inOctober in the face of falling orders. Now, only a few workers remain in thecompany to undertake the task of sawing wood.
Many producers have attempted to lower prices to boost sales butto no avail. Laminated wood finds no new buyers even though it sells at around 8million VND per cubic metre, against its market price of 12 million VND percubic metre in 2021.
Hai estimated that it would take up to eight months for hiscompany to clear its unsold inventory, provided the market gets better in theshort term. Otherwise, its bankruptcy is in prospect.
He also revealed that some producers in Thanh Hoa province havebegun to feel the pinch and reluctantly put their factories up for sale to cutlosses.
While laminated wood prices are falling, wood chip prices aremoving in the opposite direction.
However, the idea of shifting their focus to wood chips seemsunappealing to laminated wood producers as they are uncertain of whether woodchips will keep growing in the next few years and whether it is too late tochange their course.
For the time being, most producers are opting for 'hibernation' tobide their time. How long the hibernation will last depends on the specificfinancial situation of each producer./.
VNA
