In May 2021, China's PMI index declined to 51.0%, a decrease of 0.1 percentage points from the previous month,and remained at 51% or above for three consecutive months, indicating that the economy continued to recover steadily. This month, the wood production and manufacturing industry still maintained a good recovery momentum, wood production capacity continued to release, and domestic demand continued to release, but the price of raw materials accelerated to rise, and the cost pressure of the industry increased. The GGSC-CN comprehensive index for May registered 65.0% (56.1% for last May and % 51.5% for May 2019), a decrease of 6.1 percentage points from the previous month and was above the critical value of 50% for three consecutive months, It shows that the operation of the superior forest products enterprises represented by GGSC-CN index expand from last month. See Figure 1 for more details.

Figure 1 GGSC-CN index trend from June 2020 to May 2021

Challenges

Ø The price of raw materials is rising, and raw materials are in short supply.

Ø Unstable supply of solid wood raw materials.

Products in short supply

Veneer, Okan, Red Oak, hackberry, Black walnut log board,European oak board, hardware connector of Foreign brand

      Commodity of which the price has been increased

Taun, Fiber Core, Black Walnut, Oak, Fiberboard, Reinforced Paper, Core Board, Veneer, Base Material, Glue, Melamine, Formaldehyde, Urea, Hardware Connector

      Commodity of which the price has been decreased

NONE

As for the GGSC-CN index, in May 2021, two out of five sub-indexes of GGSC-CN index rose and three fall.

The production index registered 70.0%, a decrease of 8.6 percentage points from the previous month, and remained above 50% for three consecutive months. It shows that the production of superior forest products enterprises represented by GGSC CN is better than that of last month.

The new order index registered 70.0%, a decrease of 15.7 percentage points from the previous month, reflecting the ability of enterprises to obtain orders is much better than that of last month. Among them, the new export order index reflecting international trade registered 30.0%, a large decrease of 41.4 percentage points from the previous month,, showing that orders from abroad this monthis decreased inMayfrom last month.

The main raw material inventory index registered 50.0%, a decrease of 14.3 percentage points from the previous month. It shows that the raw material inventory of the superior forest products enterprisesis almost same inMayas last month.

The employment index registered 70.0%, an increase of 5.7 percentage points from the previous month. It shows that the employment of the superior forest products enterprises is increased inMayfrom last month.

The supplier delivery time index was 50.0%, an increase of 7.1 percentage points from the previous month. It indicates that the supply time of raw material suppliers of the superior forest product enterprises is almost same as last month.